Q4 2023 Clean Harbors Inc Earnings Call

Operator: Greetings and welcome to the Clean Harbors fourth quarter and full year 2023 earnings conference call. At this time, our participants are in a listen-only mode.

Greetings and welcome to the clean harbors fourth quarter and full year 2023 earnings conference call.

At this time all participants are in a listen only mode.

Operator: A brief question and answer session will follow the formal presentation. To ask a question today, please press star 1 on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael McDonald, General Counsel. Thank you, sir.

A brief question and answer session will follow the formal presentation.

To ask a question today. Please press star one on your telephone keypad.

As a reminder, this conference is being recorded.

Michael Robert McDonald: It is now my pleasure to introduce your host Michael Mcdonald General Counsel. Thank you Sir you may begin.

Michael Robert McDonald: You may begin. Thank you, Christine, and good morning, everyone. With me on today's call are our Co-Chief Executive Officers, Eric Gersenberg and Mike Battles, and our EVP and Chief Financial Officer, Eric Dugas, and SVP of Investor Relations, Jim Buckley. Slides for today's call are posted on our Investor Relations website, and we invite you to follow along. Matters we are discussing today that are not historical facts are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Participants are cautioned not to place new reliance on these statements, which reflect management's opinions only as of today, February 21, 2024.

Michael Robert McDonald: Thank you Christine and good morning, everyone with me on today's call are our co chief Executive officers, Eric Hirshberg, and Mike battles, and our EVP and Chief Financial Officer, Eric <unk>, and SVP of Investor Relations, Jim Buckley slides for today's call are posted on our Investor Relations website, and we invite you to follow.

Michael Robert McDonald: Matters, we are discussing today that are not historical facts are considered forward looking statements within the meaning of the private Securities Litigation Reform Act of 1995 participants cautioned not to place undue reliance on these statements, which reflect management's opinions only as of today February 21, 2020 for information on potential factors.

Michael Robert McDonald: Information on potential factors and risks that could affect our results is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision to the statements made today other than through filings made concerning this reporting. Today's discussion includes references to non-GAAP measures.

Michael Robert McDonald: Risks that could affect our results is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision to the statements made today other than through filings made concerning this reporting period.

Michael Robert McDonald: Today's discussion includes references to non-GAAP measures clean harbors believes that such information provides an additional measurement and consistent historical comparison of its performance reconciliations of these measures to the most directly comparable GAAP measures are available in today's news release on our website and in the appendix of today's presentation.

Michael Robert McDonald: Clean Harbors believes that such information provides an additional measurement and consistent historical comparison of its performance. Reconciliations of these measures to the most directly comparable GAAP measures are available in today's news release, on our website, and in the appendix of today's presentation.

Speaker Change: Let me turn the call over to Eric Christopher Schott Eric.

Eric Gerstenberg: Thanks, Michael. Good morning, everyone, and thank you for joining us. Our full year and fourth quarter 2023 performance underscores the role of our environmental services segment as the long-term growth engine for Clean Harbors. The strong core we have built through organic initiatives and strategic M&A continues to strengthen our sustainable business model with unique competitive advantages. These advantages include a portfolio of difficult to replicate assets, a diverse customer base, high-value services anchored by strong pricing, as well as an outstanding and highly skilled workforce.

Speaker Change: Thanks, Mike Good morning, everyone and thank you for joining us our full year and fourth quarter of 2023 performance underscores the role of our environmental services segment as the long term growth engine for clean harbors. The strong core we've built through organic initiatives and strategic M&A continues to strengthen our sustainable.

Speaker Change: This is small with unique competitive advantages. These advantages include a portfolio difficult difficult to replicate assets a diverse customer base high value services anchored by strong pricing as well as an outstanding and highly skilled workforce.

Eric Gerstenberg: As our ES results throughout 2023 demonstrated, we continue to drive increased efficiencies in areas such as labor, transportation, and logistics, while capturing meaningful acquisition synergies as we advance our Vision 2027 strategy. Before discussing the quarter, I want to take a moment to recognize the valuable contributions and substantial efforts of our entire team in delivering a terrific 2023. To our employees, thank you for everything you do to make Clean Harbors successful.

Speaker Change: Our es results throughout 2023 demonstrated we continue to drive increased efficiencies in areas, such as labor transportation and logistics, while capturing meaningful acquisition synergies as we advance our vision 2027 strategy.

Speaker Change: Before discussing the quarter I want to take a moment to recognize the valuable contributions and substantial efforts of our entire team in delivering a terrific 2023.

Speaker Change: To our employees. Thank you for everything you do to make clean harbors success.

Eric Gerstenberg: Turning to Q4 performance on slide three, Environmental Services capped a record year with an outstanding fourth quarter and its ninth consecutive quarter of year-over-year EBITDA growth. That concluded an exceptional 2023 for this segment, where we increased our annual adjusted EBITDA margin by 160 basis points. All of our ESP.

Speaker Change: Turning to Q4 performance on slide three environmental services capped a record year with an outstanding fourth quarter and its ninth consecutive quarter of year over year EBITDA growth.

Speaker Change: That concluded an exceptional 2023 for this segment, where we increased our annual adjusted EBITDA margin by 160 basis points.

Speaker Change: All of our businesses technical service safety clean environment.

Eric Gerstenberg: Technical Services, Safety & Clean Environment, industrial services, and field services delivered growth in Q4 as demand for our highly trained workforce and unique asset base continued to be strong. SKSS fell short of our expectations in Q4. The market pricing improvements we saw in October faded as the quarter progressed.

Speaker Change: Just real services field services delivered growth in Q4 as demand for our highly trained workforce and unique asset base continues to be strong.

Speaker Change: <unk> fell short of our expectations in Q4, the market pricing improvements we saw in October faded as the quarter progressed volume sold was positive metric and increased significantly from Q4 of 2022 as the team worked hard to continue to grow its sales pipeline, especially with a blended in value.

Eric Gerstenberg: Volume sold was a positive metric, an increase significantly from Q4 in 2022, as the team worked hard to continue to grow its sales pipeline, especially with our blended and value-added products to offset weaker prices. Mike will provide more detail on SKSS in his remarks. As we often do, I want to highlight our remarkable safety results. The team delivered a Q4 TRIR of 0.51, which resulted in a full year 2023 rate of.63, the best safety performance in our history and far exceeding our annual goal. We can't say enough about the great work the organization continues to do around safety and how meaningful it is to all of our stakeholders. Turning to environmental services on slide four, segment revenue increased 7% due to continued service growth, increased disposal volumes, solid pricing, and the addition of Thompson Industrial, while EBITDA increased 16%, resulting in a margin expansion of 190 basis points from the fourth quarter of 2020.

Speaker Change: <unk> added products to offer.

Speaker Change: The weaker pricing.

Speaker Change: We'll provide more detail on S. K S S in his remarks.

Speaker Change: As we often do I want to highlight a remarkable safety results. The team delivered a Q4 tier I or <unk> five one which resulted in a full year of 2023 rate of.

Speaker Change: Six three.

Speaker Change: Safety performance in our history and far exceeding our annual goal.

Speaker Change: Can't say enough about the great work the organization continues to do Rob safety and how meaningful it is to all of our stakeholders.

Speaker Change: Turning to environmental services on Slide four segment revenue increased 7% due to continued service growth increased disposal volumes solid pricing and the addition of the Thompson industrial while EBITDA increased 16%, resulting in margin expansion of 190 basis points from the fourth quarter of 2020.

Speaker Change: You too.

Eric Gerstenberg: In the quarter, as it has all year, our safety clean environmental services business led the way with 11% top line growth. Containerized Waste Services continued its strong growth trajectory stemming from sales initiatives designed to drive more waste into our network. Technical Services revenue rose 5%, led by pricing and greater year-over-year volumes into our incinerators, landfills, and our TSPFs. Q4 incineration utilization was 85% versus 84% a year ago. Average incineration pricing was up 7% in the quarter due to a favorable mix of pricing initiatives, and for the year, incineration pricing was up 9%.

Speaker Change: In the quarter as it has all year, our safety Kleen environmental services business led the way with 11% top line growth containerized waste services continued its strong growth trajectory stemming from sales initiatives designed to drive more waste into our network.

Speaker Change: Technical services revenue rose, 5% led by pricing and greater year over year volumes into our incinerators landfills and our T. S. T S.

Speaker Change: Q4, incineration utilization was 85% versus 84% a year ago.

Average incineration pricing was up 7% in the quarter due to a favorable mix and pricing initiatives and for the year incineration pricing was up 9%.

Eric Gerstenberg: For 2023, utilization was 84% as we conducted substantial repair work, including winterization at our southern plants due to the deep freezes of the past several years. We continue to see a consistent flow of remediation and waste projects in the quarter, which helped drive a 24% increase in Q4 landfill volumes, with the average price up 3%. For the year, landfill volumes and average price were both up 10%, reflecting the growth and larger project opportunities we captured in the market in 2023. In addition, we have seen the pipeline for a unique total PFAS solution continue to grow. We believe we are the only company that can provide a fully integrated end-to-end solution to the market, which includes commercially scalable destruction. Despite no large-scale emergency response events, field service revenue was up 3% in Q4 through better cross-selling and leverage of our organization.

Speaker Change: For 2023 utilization was 84% as we conducted substantial repair work, including winter irritation at our southern plants due to the deep freezes over the past several years.

Speaker Change: We can say, we continue to see a consistent flow of remediation of waste projects in the quarter, which helped drive a 24% increase in Q4 of landfill volumes, but the average pricing up 3%.

Speaker Change: For the year landfill volumes and average price both up 10%.

Speaker Change: Selecting the growth and larger project opportunities, we captured in the market in 2023.

Speaker Change: In addition, we have seen a pipeline for our unique total P fast solution continue to grow.

Speaker Change: We believe we are the only company that can provide a fully integrated end to end solution to the market, which includes commercially scalable destruction.

Speaker Change: Despite no large scale emergency response events field service revenue was up 3% in Q4 through better cross selling and leverage of our organization.

Eric Gerstenberg: Industrial Services revenue grew 8% in the quarter as it benefited from a strong fall turnaround season and the addition of Thompson Industrial. As I mentioned a moment ago, overall EF segment EBITDA was up an impressive 16% in Q4, more than double our revenue growth of $7 billion, as we leverage our facilities, fix assets, and work for it. For the full year, the ES margin rose 160 basis points.

Speaker Change: Industrial services revenue grew 8% in the quarter as it benefited from a strong fall turnaround season, and the addition of Thompson industrial.

Speaker Change: As I mentioned, a moment ago overall Es segment EBITDA was up an impressive 16% in Q4 more than double our revenue growth of 7% as we leverage our facilities.

Speaker Change: That's and workforce for the full year, the Es margin rose 160 basis points to 24, 4%.

Eric Gerstenberg: 24.4. We enhanced our margins, not only from pricing but from our cost savings programs, as well as our productivity and technology initiatives. In 2024, we will continue to seek innovative ways to apply AI analytics. Greater Automation Tour.

Speaker Change: We enhanced our margins not only for pricing, but from our cost savings programs as well as our productivity and technology initiatives. In 2024, we will continue to seek innovative ways to apply AI analytics and greater automation.

Eric Gerstenberg: For example, we are enhancing our proprietary wind system, minimizing revenue leakage, eliminating or lower rental costs, applying more sophisticated pricing strategies, and pursuing sales opportunities more rapidly. Before turning it over to Mike, please turn to slide 5 for an overview of our recently announced HEPA-GO acquisition. We believe that HEPACO will be a terrific addition to the company and contribute to considerable shareholder value in the coming years. It is a $400 million, all-cash transaction that we currently expect to close in the first half of this year. Pepico operates across 40 locations in 17 states and, on an adjusted basis, generated about $270 million in revenue and approximately $36 million of adjusted EBITDA last year.

Speaker Change: For example, we are enhancing our proprietary <unk> system to minimize revenue leakage eliminate a lower rental costs apply more sophisticated pricing strategies and pursue sales opportunities more rapidly.

Speaker Change: Before turning it over to Mike Please turn to slide five for an overview of our recently announced <unk> acquisition.

Speaker Change: We believe that happen to go will be a terrific addition to the company and contribute to considerable shareholder value in the coming years.

Speaker Change: It is a $400 million all cash transaction that we currently expect to close in the first half of this year.

<unk> operates across 40 locations 17 states not adjusted basis generated about $270 million in revenue and approximately $36 million of adjusted EBITDA last year.

Michael L. Battles: It is an attractive deal that we expect will generate approximately $20 million in synergies after its first full year of operation, which would equate to a 7.1 times multiplication. The acquisition of HEPCO gives us access to additional markets and new customers, as well as enhanced capabilities around railway and transportation response. We look forward to adding approximately 1,000 employees to the Clean Harbors family. We are confident that they will benefit from our deep knowledge of field service and greater scale in career opportunities. Mike, Eric, and I visited with their team right after we announced the deal, and we see a very strong cultural fit that should lead to a seamless integration. With that, I will turn things over to Mike to discuss SKSS and capital allocation. Thanks Eric and good morning. Turning to SKSS on slide 6, after a promising start in October following September pricing, Base Oil and blended pricing began to shift the other way and grew more challenging as we moved through the quarter. As a result, SKSS revenue was 7% lower year-over-year in the quarter.

Speaker Change: It is an attractive deal that we expect will generate approximately $20 million of synergies. After its first full year of operation, which would equate to a seven one times multiple.

Speaker Change: The acquisition of <unk> gives us access to additional markets and new customers as well as enhanced capabilities around railway and transportation responses, we look forward to adding approximately 1000 employees.

Clean harbors fan.

Speaker Change: We are confident that they will benefit from our deep knowledge of field service business greater scale and career opportunities, Mike Erik and I have visited with their team right. After we announced the deal and we see a very strong cultural fit that should lead to a seamless integration.

Speaker Change: With that let me turn things over to Mike to discuss S. K S. S in capital allocation Mike.

Michael L. Battles: Thanks, Eric and good morning, turning to Essakane is that's on slide six after a promising start in October or.

Michael L. Battles: The September price increase base oil and blended pricing began to shift the other way and grew more challenging as we moved through the quarter.

Michael L. Battles: As a result S. PSS revenue was 7% lower year over year in the quarter, but.

Michael L. Battles: The weakness in base oil and blended pricing was partially offset by a greater volume sold of both base and blended oil, as well as a shift to charge-for-oil versus a pay-for-oil average a year ago for our waste oil collection services. SKSS adjusted inventory declined 14% in Q4, entirely related to the more narrow spread compared to last year and the pricing slowdown we experienced over the course of the quarter. Despite the lower year-over-year revenue, we maintain a healthy adjusted EBITDA margin of 21.7%. To feed our re-refineries, we collected 53 million gallons of waste oil in the quarter. The team worked diligently to secure gallons at the best possible price, while ensuring our plants had the feedstock they needed. As we've highlighted previously, one of our strategies for reducing the volatility of this virus... is to grow our blood and vines. Not only does blended oil generate more dollars than base oil, but it tends to be more stable because we're selling branded products such as motor oil and hydraulic fluid.

Michael L. Battles: The weakness in base oil and blended pricing was partially offset by greater buying shore base and blended oil as well as a shift to charge for oil versus the paper will average year ago fraud waste oil collection services.

Michael L. Battles: S. K S. That's adjusted EBITDAR declined 14% in Q4 entirely entirely related to the more narrow spread compared to last year and the pricing slowdown we experienced over the course of the quarter.

Michael L. Battles: Despite the lower year over year revenue, we maintained a healthy adjusted EBITDA margin of 21, 7%.

Michael L. Battles: To feed our refineries, we collected 53 million gallons of waste oil in the quarter.

Michael L. Battles: Team worked diligently to secure gallons at the best possible price, while ensuring our plants have the feedstock they need it.

Michael L. Battles: As we've highlighted previously one of our strategies for reducing the volatility of this business is to grow our blended volumes now.

Michael L. Battles: Not only did blended all generate more EBITDA dollars in base oil it tends to be more stable because we were selling branded products such as motor oil and I draw on flu.

Michael L. Battles: In Q4, blended volumes increased by more than 60%. We intend to continue to focus on opportunities to sell a larger percentage of branded products going forward. Blended product sales accounted for 23% of volumes sold in Q4, up from 17% a year ago.

Michael L. Battles: In Q4 blended volumes increased by more than 6%, we intend to continue to focus on opportunities to sell a larger percentage of branded products going forward.

Michael L. Battles: Blended product sales accounted for 23% of volume sold in Q4 up from 17% a year ago.

Michael L. Battles: We recognize that this business faced challenges in 2023 as the market continues to adjust after an extraordinary 2022 and after a series of price declines and de-stocking by customers throughout much of 2023. Going forward, our strategy for SKSS will continue to center on affecting those areas within our control, including the price we charge for the collection of used motor oil, labor and transportation costs, and re-refining production. We will continue to focus on the expansion of our blended products, such as motor oil and hydrogen. In 2024, we intend to increase sales of our blended volumes through both direct and wholesale channels. We're also moving ahead with our promising group-free program we outlined on our last earnings call.

Michael L. Battles: We recognize that this business has faced challenges in 2023 as the market continues to adjust after an extraordinary 2022 and after a series of price declines and destocking by customers throughout much of 2023.

Michael L. Battles: Going forward our strategy.

Michael L. Battles: <unk> will continue to center on affecting those areas, but they're not control where the price we charge for the collection of used motor oil labor and transportation costs and we were finding production rates will continue to focus on the expansion of our blended products such as motor oil and hydraulic fluids and <unk>.

Michael L. Battles: 24, we intend to increase the odds of a bunch of volumes through the both direct and wholesale channels. We're also moving ahead with our with our promising group III program, we outlined on our last earnings call. We expect to launch this initiative that you did.

Michael L. Battles: We expect to launch this initiative in Q2. Turning to slide 7 in our capital allocation strategy, at our investor day last March, we shared our five-year strategy, Vision 2027, which outlined our plan to grow both organically and through acquisition. The foundation of that strategy is to drive margin improvement each year through economies of scale on a highly leverageable network of permanent facilities, unique assets, and trained personnel. This will continue to lead to increasing cash flow generation and value creation for our shareholders. On the M&A front, we evaluated a number of transactions during the quarter, culminating in the HEPACO agreement we announced earlier this month.

Michael L. Battles: Turning to slide seven and our capital allocation strategy at our Investor Day last March we shared our five year strategy vision, 2027, which outlined our plan to grow both organically and through acquisition.

Michael L. Battles: The foundation of that strategy is to drive margin improvement each year through economies of scale are highly leverage on that I have is that ratable network program facilities unique assets and trained personnel.

Michael L. Battles: We will continue to lead to increasing that this will continue to lead to increasing cash flow generation and value creation for our shareholders.

Michael L. Battles: And then on the M&A front, we evaluated a number of transactions during the quarter, culminating in an ethical agreement we announced earlier this month we.

Michael L. Battles: We continue to see a healthy flow of potential candidates for both offering segments and will remain very active on the M&A front as we execute our Vision 2027. In terms of growth CapEx, the largest internal investment in our history is our new Kimmel, Nebraska incinerator, which is on track to open commercially later this year. We expect the original design and build to cost $180 to $185 million.

Michael L. Battles: We continue to see a healthy flow of potential candidates for both operating segments and will remain very active on the M&A front as we execute our vision 2027.

Michael L. Battles: In terms of the growth Capex the largest internal investment in our history is our new Kimball, Nebraska incinerator, which is on track to open commercially later this year.

Michael L. Battles: We expect the original we expect the original design and build costs $180 million to $185 million based on our ongoing conversations with customers about Kimball and respond and respond to their future plans. We have elected to add several enhancements to that facility at an aggregate cost of approximately $15 million.

Michael L. Battles: Based on our ongoing conversation with customers about Kimball and in response to their future, we have elected to add several enhancements to the facility at an aggregate cost of approximately $15 million. These enhancements, done by demand, will include more direct burn bays and additional specialized lines designed to handle certain types of highly hazardous materials. These additions will enable that site to handle and process even more high-margin materials in containerized ways. We still anticipate that the new incinerator will commence operations late this year. To that end, we do expect to incur some non-recurring startup costs relating to Kimball this year. Since they are one-time in nature, we likely will adjust the amount of our reported... It is difficult to estimate the exact amount today, as it partly depends on our official launch date, but we know it'll be $7 billion.

Michael L. Battles: These enhancements driven by demand will include more direct burn base and additional specialized lines designed to handle certain types I hazardous materials.

Michael L. Battles: These additions will enable that tried to handle and process, even more high margin materials and containerized waste.

Michael L. Battles: We still anticipate that the new incinerator will commence operations late this year.

Michael L. Battles: To that end, we do expect to incur some nonrecurring startup costs related to chemical this year.

Michael L. Battles: So that's a one time in nature, we will likely we likely will adjust them out of our reported EBITDA.

Michael L. Battles: Difficult to estimate the exact amount today is it partly depends on our official launch date, but we know it'll be several million dollars. We will report on that as the closer to a commercial launch.

Michael L. Battles: We will report on that as we get closer to our commercial launch. We are also planning a second sizable capital project. It relates to our Baltimore site.

Michael L. Battles: We're also planning a second sizeable capital project this year.

Michael L. Battles: It relates to our Baltimore sight.

Michael L. Battles: We recently purchased a large parcel of land next to our existing plant, and we intend to invest in and upgrade that property with an eye toward consolidation of our branch service offerings, adding more recycling capabilities for our network, and creating a production line for containerized manufacturing servicing our entire network. The total cost of the real estate and site upgrades we intend to make will total approximately $20 million.

Michael L. Battles: We recently purchased a large parcel of land next to our existing plant and we intend to invest and upgrade that property with an eye toward consolidating the comp with an eye toward consolidation of our branch service offerings, adding more recycling capabilities broad network and creating a production line for containerized manufacturing servicing our entire network.

Michael L. Battles: The total cost of the real estate and site upgrades, we intend to make will total approximately $20 million, we expect a ramp up activities at that location over the course of this year.

Michael L. Battles: We expect to ramp up activities at that location over the course of this year. I'll let Eric Duguid speak to our debt structure and leverage, but I'd like to conclude by emphasizing that we continue to be bullish on our growth prospects for our ESN. We entered 2024 with considerable momentum in this segment, and we expect favorable market conditions, whether it be reshoring, infrastructure spend, or regulatory trends, to continue to support our profitable growth plan for 2020. Our backlog and dialogue with customers gives us confidence about demand this year. Our project pipeline is strong. Our pricing strategies are working. Industrial services is coming off a record year, and we expect that business to continue to grow.

I'll, let Eric give you speak to our debt structure and leverage but I'd like to conclude by emphasizing that we continue to be bullish on our growth prospects right yes.

Michael L. Battles: We enter 2024 was because we entered quite considerable momentum in this segment.

Michael L. Battles: We expect the favorable market conditions, whether it re shoring infrastructure spend or regulatory trends two continues to support our profitable growth plan for 2024.

Eric: Our backlog of dialogue with customers gives us confidence about demand. This year, our private pipeline is strong our pricing strategies are working industrial services is coming off a record year and we expect that business to continue to grow and field services will greatly benefit from the addition of Pepco once that closes.

Eric Dugas: And field services will greatly benefit from the addition of HEPCO once that closes. After a challenging 2023, we see SKSS returning to growth and profitability in 2024, with market pricing appearing to have stabilized following a decline toward the end of last year, as well as a host of growth projects I outlined earlier. We have much to be excited about in both environmental services and SKS. With that, I will turn the call over to our CFO, Eric Ducey. Great. Thanks, Mike. Good morning, everyone.

Eric: After a challenging 2023, we see SaaS actually returning to growth and profitability in 2024 with market pricing appears to have stabilized following a decline towards the end of last year as well as the hosted growth projects outlined earlier, we have must be excited about in both environmental services and <unk> with that let me turn the call over.

CFO Eric: Our CFO Eric duties.

Great. Thanks, Mike and good morning, everyone.

Eric Dugas: Turning to the income statement on slide 9, as Eric and Mike outlined, the Environmental Services segment posted strong Q4 results to finish off a record year. Revenues across our service lines in ES were up from the prior year, and the demand picture for our environmental service offerings remains strong. Profitable growth in our ES segment this quarter more than offset the decline in SKSS and resulted in 14% year-over-year EBITDA growth for the entire company. Adjusted EBITDA was in line with our expectations at $254.9 million, and up more than $30 million from Q4 a year ago. Our adjusted EBITDA margin for the quarter was 19%. 150 pages and driven by improvements in the ES margin that Eric Gersonberg outlined earlier. Rose margin in the quarter was 31%, an increase of 70 basis points from a year ago.

CFO Eric: Turning to the income statement on slide nine as Eric and Mike outlined Environmental services segment posted strong Q4 results to finish off a record year.

Eric: Revenues across our service lines and yes, we're up from the prior year and the demand picture for our environmental service offerings remained strong.

Eric: The profitable growth that aren't yet segment this quarter more than offset the decline in SaaS apps and resulted in a 14% year over year EBITDA growth for the entire company.

Eric: Adjusted EBITDA was in line with our expectations at $254 9 million.

Eric: With $30 million from Q4, a year ago.

Eric: Our adjusted EBITDA margin in the quarter was 19%.

Eric: 150 basis points and driven by improvements in the Es margin air Gerstenberger outlined earlier.

Eric: Gross margin in the quarter was 31% an increase of 70 basis points from a year ago.

Eric Dugas: For the year, our gross margin was $30.7 billion. As we move into 2024, we are focused on executing several initiatives to drive greater productivity improvements and operational efficiency, which we expect will continue to drive Mars' growth. SG&A expense as a percentage of revenue was 12.4% in Q4, which is 80 basis points better than the prior year. For the full year, we also landed at 12.4%, as we remained focused on managing SG&A headcount and offsetting wage and other inflationary pressures. For 2024, we anticipate our SG&A expense as a percentage of revenue to be at a similar or slightly lower level. Amortization and depreciation in Q4 came in at $98.3 million.

Eric: For the year, our gross margin was 37%.

Eric: As we move into 2024, we are focused on executing several initiatives to drive greater productivity improvements and operational efficiencies, which we expect will continue to drive margin expansion.

Eric: SG&A expense as a percentage of revenue was 12, 4% in Q4.

Eric: Which is 80 basis points better than the prior year's quarter.

Eric: For the full year. We also landed at 12, 4% as we remain focused on managing SG&A head count and offsetting wage and other inflationary pressures.

Eric: For 2024, we anticipate our SG&A expense as a percentage of revenue to be at a similar or slightly lower levels.

Eric: Depreciation and amortization in Q4 came in at $98 3 million.

Eric Dugas: For the full year, our depreciation and amortization was $365.89, up from 2022, which reflects the Thompson acquisition and incremental amortization resulting from increased landfill volumes in 2023. For 2024, we expect depreciation and amortization in the range of $300 to $390 million. Income from operations in Q4 was $147.3 million, up 16% from the prior year; for the full year, income from operations was $612.4 million. Net income for the quarter was $98.3 million, resulting in earnings per share of $1.81.

Eric: For the full year, our depreciation and amortization was $365 8 million.

Eric: From 2022, which reflects the Thompson acquisition and incremental amortization, resulting from increased landfill volumes in 2023.

Eric: For 2024, we expect depreciation and amortization in the range of $300 million to $390 million.

Eric: Income from operations in Q4 was $147 3 million up 16% from the prior year.

Eric: For the full year income from operations $612 4 million.

Eric: Net income for the quarter was $98 3 million, resulting in earnings per share of $1 81.

Eric Dugas: For full year 2023, our EPS was $6.95 per share. Turning to the balance sheet highlights on slide 10. Cash and Short-Term Marketable Securities at Quarter End were $551 million, up more than $130 million from September. Our balance sheet remains in great shape. We ended 2023 with total debt of $2.3 billion, a net debt to EBITDA ratio of 1.9 times, and having no significant debt amounts coming due until 2027. Our overall weighted average pre-tax cost of debt at year-end was 5.3%.

Eric: For full year 2023, our EPS was $6 95 per share.

Eric: Turning to the balance sheet highlights on slide 10 cash.

Eric: Cash and short term marketable securities at quarter end were $551 million.

Eric: Up more than $130 million from September.

Eric: Our balance sheet remains in great shape.

Eric: We ended 2023 with total debt of $2 3 billion.

Eric: Our net debt to EBITDA ratio of one nine times and having no significant debt amounts coming due until 2027.

Eric: Our overall weighted average pretax cost of debt at year end was five 3%.

Eric Dugas: In December, we successfully completed an amendment to our term loan that lowered our borrowing rate by 25 basis points, representing annualized interest rate savings of nearly $2.5 million. In connection with the HEPA code transaction, we plan to add incremental borrowings to this term loan as part of our deal financing. Clean Harbors will continue to responsibly manage our leveraged position and overall capital structure with an eye toward creating the highest overall return for shareholders over the long term and maintaining flexibility to ensure that we can respond when acquisition opportunities arise. Turning to cash flows, on slide 11, cash provided from operations in Q4 was $278.90.

Eric: In December we successfully completed an amendment to our term loan that lowered our borrowing rate by 25 basis points and representing annualized interest rate savings of nearly $2 5 million.

Eric: You can actually want to have a full transaction, we plan to add incremental borrowings to this term loan as part of our deal financing.

Eric: Clean harbors will continue to responsibly manage our leverage position.

Eric: Overall capital structure with an eye toward creating the highest overall return for shareholders over the long term.

Eric: And maintaining flexibility to ensure that we can respond when acquisition opportunities arise.

Turning to cash flows on slide 11 cash.

Eric: Cash provided from operations in Q4 was $278 9 million.

Eric Dugas: CapEx net of disposals was $105.9 million, up from the prior year due to the investments in our incineration network, including Kimball, that accounted for $25.4 million of our Q4 CapEx. Border adjusted free cash flow was a record at 173 million dollars for the full year 2020. Net Cap X totaled $412.7 million, in line with our expectations. The Kimbell Incinerator accounted for $82.6 million of the full year

Eric: Capex net of disposals was $105 9 million up from the prior year due to the investments in our incineration network, including Kimball that accounted for $25 4 million our Q4 Capex.

Eric: In the quarter adjusted free cash flow was a record at $173 million.

Eric: For the full year 2023, net capex totaled $412 7 million.

Eric: In line with our expectations.

Eric: Kimball incinerator accounted for $82 6 million in the full year spend.

Eric Dugas: For the year, adjusted free cash flow was $321.9 million, up 11% in 2023. If you add back the Kimbell spend, excuse me, up 11% from 2022. If you add back the Kimbell spend to that total, we would have exceeded $400 million of adjusted free cash. For 2024, we expect our net capex to be in the range of $390 to $420. This level of spend includes approximately $65 million to complete the Kimbell construction, including the planned enhancements, and approximately $20 million for the expansion of the Baltimore facility, which Mike discussed earlier. During Q4, we bought back approximately 211,000 shares of stock at a total cost of $33.2 million, or an average price of $157 a share. For the full year, we bought back approximately 328,000 shares, or $51 million, of Clean Harbors stock.

Eric: For the year adjusted free cash flow was $321 99.

Eric: Up 11% from 2023.

Eric: If you add back the Kimball spend.

Eric: Gives me up 11% from 2022.

Eric: If you add back that Kimball spend to that total we would've exceeded $400 million of adjusted free cash flow.

Eric: For 2024, we expect our net capex to be in the range of $390 million to $420 million.

Eric: This level of spend includes approximately 65 million to complete the Kimball constructions.

Eric: Including the planned enhancements and approximately $20 million for the expansion of the Baltimore facility, which Mike discussed earlier.

Eric: During Q4, we bought back approximately 211000 shares of stock at a total cost of $33 2 million or an average price of $157 a share.

Eric: For the full year, we bought back approximately 328000 shares for $51 million in the Harbor shop.

Eric Dugas: In December, our board authorized a $500 million expansion of our repurchase program. We currently have $554 million of authorized and available repurchases under this program. Moving to slide 12, based on our Q4 and 2023 results, along with current market conditions for both of our operating... We expect 2024 adjusted EBITDA in the range of $1.05 billion to $1.11 billion, with a midpoint of 1.08 billion. This assumes no contribution from

Eric: In December our board authorized a $500 million expansion of our repurchase plan.

Eric: Currently have $554 million of authorized and available repurchases under this program.

Eric: Moving to slide 12.

Eric: Based on our Q4 and 2023 results along with current market conditions for both of our operating segments. We expect 2024 adjusted EBITDA in the range of $1 5 billion for $1, one 1 billion with a midpoint of $1 8 billion.

Eric: This guidance assumes no contribution from Africa.

Eric Dugas: Once we conclude the regulatory process and close on this transaction, we will update our guidance accordingly. Looking at our annual guidance from a quarterly perspective, we're expecting Q1 adjusted EBITDA growth of 2-3%, with our ES segment performance offsetting current market conditions in SKSS and higher corporate costs. Similar to 2023, some severe weather in January this year impacted our disposal networks, some branch locations, and cuts.

Eric: Once we conclude the regulatory process and close on this transaction, we will update our guidance accordingly.

Eric: Looking at our annual guidance from a quarterly perspective, we're expecting Q1, adjusted EBITDA growth of 2% to 3% with our Es segment performance offsetting current market conditions and S. K S S and higher corporate costs.

Eric: Similar to 2023, some severe weather in January this year impacted our disposal networks, some branch locations and customers.

Eric Dugas: Despite these challenges, we still expect to deliver a strong quarter of profitable growth in the ES segment in Q1. For full year 2024, adjusted EBITDA guidance will translate to our reporting segments as follows: and Environmental Services. We expect adjusted EBITDA at the midpoint of our guidance to increase approximately 5-7% from full year 2023. Demand for all of our service businesses remains consistently strong.

Eric: Despite these challenges we still expect to deliver a strong quarter of profitable growth in the Es segment in Q1.

Eric: Our full year 2024, adjusted EBITDA guidance will translate to our reporting segments as follows.

Eric: In environmental services, we expect adjusted EBITDA at the midpoint of our guidance to increase approximately 5% to 7% from full year 2023.

Eric: Demand for all of our service business has remained consistently strong.

Eric Dugas: In addition, demand for our disposal and recycling facilities continues to enable us to execute on our pricing strategy, capture more volume, and drive a more favorable mix into our network. For FKSS, we expect full year 2024 adjusted EBITDA at the midpoint of our guide to increase 6-8% from 2023, with a challenging year we had in 2023 and the continued uncertainty around global commodity markets. We are assuming some pricing pressures continue in our forecasting of this segment. Given some of the promising initiatives we have underway, such as our Group 3 project and increasing blended sales, we expect a year of substantial progress in this sector and toward greater long-term stability. In our corporate segment, at the midpoint of our guide, we expect negative adjusted EBITDA to be up 3-5% this year from 2023. This reflects a full year of Thompson Industrial Costs and rising expenses in areas such as insurance, and Wages and Benefits, partly offset by our wide range of cost-savings initiatives.

Eric: In addition demand for our disposal and recycling facilities continues to enable us to execute on our pricing strategies capture more volumes and drive a more favorable mix into our network.

Eric: For <unk>, we expect full year 2024, adjusted EBITDA at the midpoint of our guide to increase 6% to 8% from 2023.

Eric: With a challenging year, we had in 2023 and the continued uncertainty around global commodity markets. We are assuming some pricing pressures continue and are forecasting this segment.

Eric: Given some of the promising initiatives, we have underway such as our crew three project and increasing blended sales, we expect to hear a substantial progress in this segment and towards greater long term stability.

Eric: In our corporate segment at the midpoint of our guide we expect negative adjusted EBITDA to be up 3% to 5% this year from 2023.

Eric: This reflects a full year Thomson industrial costs.

And rising expenses in areas, such as insurance and wages and benefits.

Eric: Partly offset by a wide range of cost savings initiatives.

Eric Dugas: For adjusted free cash flow, our expectations for 2024 are for a range of $340 to $400 million, or a midpoint of 370, as mentioned earlier around CapEx plans. We have some internal growth investments we are planning this year, starting with approximately $65 million to complete the Kimbell construction, as well as $20 million for the Baltimore expansion. If you add back the Kimball and Baltimore Spend, the midpoint of our adjusted free cash flow guidance needs more than $450 million, or over 40% of our current adjusted EBITDA midpoint expectations. Quotient was a great finish to a record year in our ES segment.

Eric: For adjusted free cash flow our expectations for 2024 is for a range of $340 million to $400 million.

Eric: Or a midpoint of $370 million.

Eric: As mentioned earlier around Capex plans, we have some internal growth investments. We are planning this year, starting with the approximately $65 million to complete the Kimball construction as well as the $20 million for the Baltimore expansion.

Eric: If you add back the Kimball and Baltimore spend the midpoint of our adjusted free cash flow guidance would be more than $450 million or over 40% of our current adjusted EBITDA midpoint expectation.

In conclusion, Q4 was a great finish to a record year in our Es segment.

Operator: Trends coming into 2024 in this segment remain favorable. We continue to see substantial demand across our network, not just within our incinerators but our TSDFs, landfills, and recycling operations as well. We ended the year with steady volumes and healthy backlogs. Our positive facilities outlook is further supported by an encouraging level of interest across all of our services. Within SKSS, the market appears to be stabilizing as we approach the summer driving season. Overall, we expect to generate profitable growth in both operating segments and continue to execute against our Vision 2027 goals. With that operator, please open the call for questions. Operator. I'm sorry, gentlemen; my mouse was stuck.

Eric: Trends coming into 2024 in this segment remain favorable.

Eric: We continue to see substantial demand across our network not just within our incinerators, but our T Sds landfills and recycling operations as well.

Eric: We ended the year with steady volumes and healthy backlog.

Eric: Our positive facilities outlook is further supported by an encouraging level of interest across all of our services businesses.

Eric: Within SaaS as the market appears to be stabilizing as we approach the summer driving season.

Eric: Overall, we expect to generate profitable growth in both operating segments in 2024.

Eric: Turning to execute against our vision 2027 goals.

Eric: With that operator, please open the call for questions.

Eric: Yeah.

Operator.

Eric: Yeah.

Speaker Change: I'm, sorry, gentlemen, my mouse with Scott if you would like to ask a question. Please press star one on your telephone keypad.

Operator: If you would like to ask a question, please press star one on your telephone keypad. Confirmation Tome will indicate your line in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: A confirmation tone will indicate your line from the question queue.

Speaker Change: Press Star two if he would like to remove your question from the queue.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. One moment, please, while we poll for questions. Thank you. The first question comes from the line of Noah Kaye with Oppenheimer.

Speaker Change: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys, one moment, please while we poll for questions.

Speaker Change: Thank you. Our first question comes from the line of Noah Kaye with Oppenheimer. Please proceed with your question.

Noah Kaye: Please proceed with your question. Alright, good morning. Thanks for taking the questions. You know, looking at 1Q24 specifically, I would love to understand a little bit better the segment expectations. I know historically, you know, the company doesn't guide, but given the comments around weather and, of course, the swing that we saw in SKSS this past quarter, I would just love to understand a little bit more and put any finer point on what your expectations are for each of those segments. Sure Noah, Eric Dugas here, I'll take that one, and as we just communicated, we see Q1 2-3% greater than last year, when We continue to kind of expect that in 2024.

Alright, good morning, Thanks for taking the questions.

Speaker Change: Yeah.

Noah Kaye: Looking at <unk> 24, specifically I would love to understand a little bit better the segment expectations. I know historically, you know the company doesn't guide, but given the comments around weather.

Noah Kaye: Of course, the swing that we saw in this cat.

Noah Kaye: This past quarter.

Noah Kaye: Love to understand a little bit more and put any finer point on what your expectations are for each of those segments.

Speaker Change: Sure Eric.

Speaker Change: Eric Dugas here I'll I'll take that one and now it hasn't that'd be just communicated now we see Q1.

Eric Dugas: 2% to 3% greater than last year, when you break that down by.

Eric Dugas: By segment, obviously has the momentum we're seeing in the environmental services segment. We continue to kind of expect that in 2024 as I mentioned in my prepared comments, we did still have some weather challenges.

Eric Dugas: As I mentioned in my prepared comments, you know, we did still have some weather challenges in the quarter, as we did last year. But I think with, you know, our pricing initiatives and other things, we still saw in that quarter, particularly, a high single-digit growth rate kind of quarter over quarter, approaching 10%. With SKSS, you know, we entered 2023 last year still on the strong tailwinds of 2022. So Q1, you know, as we look at SKSS for Q1 of 2024, you know, down below last year, you know, but you know, should pick up as we move throughout. Yeah, I'm leery of doing math on the call, but yeah, that gets me to a pretty steep drop in SKSS year over year, as you're suggesting.

Eric Dugas: In the quarter as we did last year, but I think with our pricing initiatives and other things, we still see in that quarter, particularly.

Eric Dugas: A high single digit growth rate kind of quarter over quarter approaching that 10%.

Eric Dugas: That's K SaaS, we entered we entered 2023 last year still adding a strong <unk>.

Eric Dugas: <unk> 2022, so our.

Eric Dugas: Q1.

Eric Dugas: As we look at Essakane stats for Q1 of 2024, it down below last year.

Eric Dugas: It should pick up as we move throughout the year.

Eric Dugas: Yeah.

Speaker Change: Leery of doing math on the call, but yeah that gets me to a pretty steep drop in S. K S. That's year over year as you're as you're suggesting.

Eric Dugas: And so the thought is that as we get into the balance of the year on SKSS, you know, maybe you can talk through the group three initiative, the blended bonds, and kind of what the self-help looks like this year for SKSS. As I recall, you also had some production issues in the third quarter, and lapping those should support as well. But maybe just help us understand some of the drivers to get to that six to 8% EBITDA growth. Sure, Noah, I'll start again, and Mike, please pick up on some of the prepared comments you shared. Yeah, Noah, obviously, a little bit of a steep decline in Q1, as I mentioned.

Speaker Change: And so the thought is that as we get into the balance of the year.

Speaker Change: Maybe you could talk through the group three initiatives the blended volumes and kind of what the self help looks like this year for SK as best as I recall you also had.

Speaker Change: Some production.

Speaker Change: In the third quarter and lapping those should support as well, but maybe just help us understand some of the drivers to get to that 6% to 8% EBITDA growth.

Speaker Change: Sure. So I'll start again, and then Mike please pick up.

Michael L. Battles: On the prepared comments you sure, but yes, no obviously, a little bit of a steep decline in Q1 as I mentioned as the year Rolls out as we said you know that the group III project does come in kind of in the in the summer timeframe.

Eric Dugas: As the year rolls out, as we said, the Group 3 project does come in kind of in the summer time frame. When you kind of look at the cadence for the full year, we kind of see Q2 and the FKSS business getting towards that slottish point on a year-over-year basis, and then as we move into Q3, Q3 last year in FKSS was really where we saw that big drop, and so as we feel as we move into Q3, assuming prices remain where they are today, we should have a good year-over-year The last point I'd make before I let Mike add on is just from a blended sales perspective, great momentum kind of in Q4. We'll continue to drive those initiatives in 2024, and I think that will really help as we move into the summer driving season and the latter half of that season. Good morning, Noah.

Michael L. Battles: When you kind of look at the cadence for the full year, we kind of see Q2, and you asked a SaaS business.

Michael L. Battles: Getting towards that flattish point on a year over year basis, and then as we move into Q3.

Michael L. Battles: Q3 last year and I guess this is really where we saw that a drop and so as we feel as we move into Q3, assuming prices remain where they are today, we should have a good year over year comp there the last point I'd make before I, let Matt Mike add on it just from a from a blended sales perspective, a great momentum kind of in Q4 from a blended sales perspective.

Michael L. Battles: I will continue to drive those initiatives in 2024, and I think that'll really help as we move into the summer driving season, and latter half of that season, Mike anything to add yeah. Yeah. Good morning, Noah. So one thing I would say on this is that you know what.

Michael L. Battles: So one thing I'd say on this is that, you know, what was a surprise to us in Q4 and really kind of all year, and we put this in the guide, is a bit of a, you know, kind of a discount, spot discount to Motiva posted prices, Group 2 posted prices. And that discount is always there, but it was seen very, very wide in Q4. And so the growth rates as we go into 2020, the growth rate is just, we're not assuming that kind of recovers anytime soon. And so when you look at kind of Q1, year over year, you know, it is, as Eric said, you know, high teens, low 20 type of decline, and so that kind of puts us a little behind the curve as far as getting to some growth for the year.

Michael L. Battles: Was it a surprise to us in Q4, and and really kind of all year.

Michael L. Battles: When we put this in the guide is a bit of a kind of a discount spine discount to Motiva posted group two posted pricing and that Theres got to always it's always there, but it would seem very very wide in Q4, and so the growth rates as we go into 2020.

Michael L. Battles: For the brokerages, which we're not assuming that kind of covers anytime soon and so when you look at kind of Q1 year over year. You know it is a it is Eric said you know what.

Michael L. Battles: High teens low 20 type of decline so that kind of puts it puts a little behind the curve as far as getting to some growth for the year, but we still want to grow as as I said in my remarks, you know mid to high single digits for the year, but that Q1 is still going to be a drag until we see it picking up recently and that's great, but we just.

Michael L. Battles: We still want to grow, as I said in my remarks, mid to high single digits for the year, but that Q1 is still going to be a drag. And so, you know, we see it picking up recently, and that's great, but, you know, we're just going to have to start with a bit of a, some headwinds going into the year. And on Group 3, you know, that has been, that's been great. The pilot's been running, and we're setting the plants up to run. That's a $3 to $4 million winner in 2024. That's not a big deal over some time horizon, but, you know, in 2024, it's pretty modest. The plants are running well.

Michael L. Battles: We just going to have start with a bit of a boost of headwinds going into the year and on the group free.

Michael L. Battles: That's been that's been great. The pilot has been my neighborhood preceding the plant up to run that's a that's a $3 million to $4 million winter in 2024, that's not a that's going to be great over some time horizon, but 'twenty 'twenty four it it's pretty modest the plants are running well and they have recovered quite a bit but you know January was still a tough tough on those plans as they were for the incentives.

Michael L. Battles: This is Eric Hirshberg said in his remarks.

Speaker Change: Great if I could sneak in one more question about the 80% of the business that's growing high single digits entering <unk>.

Eric Gerstenberg: They have recovered quite a bit. But, you know, January was still tough for those plants, as it was for the incinerators, as Eric Christenberg said in his remarks. Great, if I could speak to one more question about, you know, the 80% of the business that's growing in high single digits entering 1Q You mentioned PFAS. Thank you for the precision. The commentary on the call mentioned PFAS, the total PFAS solution, and I think it was even in the release as well. Can you maybe just mention for us what the PFAS-related revenues were in 2023 and what you're thinking 2024 could be and how contingent that is on EPA action? Yeah, Noah. This is Eric Gerstenberg.

Eric Hirshberg: You mentioned.

Eric Hirshberg: Exactly.

Eric Hirshberg: Page.

Speaker Change: Okay. Thank you for the precision.

Speaker Change: The the the commentary in the call mentioned you know P. Pause the total P. Five solution and I think it was even in the release as well can you maybe just dimension for us what the PFS related revenues were in 2023, and whats Youre thinking 2024 could be and.

Speaker Change: How contingent is that is an EPA actions.

Speaker Change: Yeah. No. This is Eric Hirshberg, I'll I'll take that one our overall revenues in 2023 was in the range of $50 million to $70 million.

Eric Gerstenberg: I'll take that one. Our overall revenues in 2023 will be in the range of $50 to $70 million. And our pipeline, it went out that our pipeline continues to grow across our business with opportunities from customers, trying to leverage everything that we can offer. And as we've said in the past, offering our total PFAS solution is really around how we can provide sampling services, analysis of PFAS in groundwater as well as contaminated soils, how we can leverage our remediation team, how we can do drinking water and industrial water, and then provide, really, that overall So it's really the pipeline has grown probably about 20 to 25 percent year over year and continues to grow as we get our solutions out into the market and as word continues out there.

Eric Hirshberg: And our pipeline went out that our pipeline continues to grow across our business with opportunities from customers trying to leverage everything that we can offer and as we've said in the past.

Eric Hirshberg: <unk>, our total Pete Pos solutions is really around how we can provide sampling services analysis of <unk> and <unk>.

Eric Hirshberg: Around the water as well as contaminated soils, how we can leverage our remediation team how.

Eric Hirshberg: How we can do drinking water and industrial water and then provide really that overall commercially.

Eric Hirshberg: Offering disposal through our landfills or incinerators. So it's really the pipeline has grown probably about 20% to 25% year over year and continues to grow as we get our solutions out into the market and as things as talk continues out there so a little a lot of.

Eric Gerstenberg: So there is a lot of continued opportunity for our network. We've talked a lot about PFAS over the past few years, and obviously, people have been waiting for it, and we're actually starting to see it now, and Eric's observations about trying to provide a full PFAS solution, which is as far as end disposal, which is scalable and ready today, we're really excited about that, and as Eric said, that pipeline is very strong going into 2024, so more to come on that I am looking forward to that. I'll turn it over to you.

Eric Hirshberg: Good opportunity there for our network.

Eric Hirshberg: Yes.

Eric Hirshberg: We've talked a lot of volatility.

Eric Hirshberg: But one last thing, though we've talked a lot about <unk> over the past few years, and obviously people have been waiting for it.

Eric Hirshberg: And we're actually starting to see it now and Eric Eric observations about trying to provide a full piece that solution, which is as far as you know and disposal, which is scalable and ready today, we're really excited about that and as Eric said that pipeline is very strong going into 2020 for himself.

Eric Hirshberg: To come on that I think that there's but there's a lot of good things you've been talking about for number you were just trying to materialize clearly.

Speaker Change: Looking forward to that I will turn it over thank you.

Speaker Change: Thanks, Tom Our next our next question comes from the line of Tyler Brown with Raymond James. Please proceed with your question.

Noah Kaye: Hey, good morning, guys. I got it. Hey, first off, just congratulations on the TRIR numbers. I know those are very important to you and obviously your employees. And I get that a Safe to Work place is most important for a variety of reasons, but are there any financial implications of a more consistent, call it, safety record? Is there any kind of impact of go forward accrual at all?

Patrick Tyler Brown: Hey, good morning, guys.

Patrick Tyler Brown: Hi, guys good morning.

Patrick Tyler Brown: Hey, first off just congratulations on the tier I or numbers.

Patrick Tyler Brown: Very important to you and obviously your employees and I get it.

Patrick Tyler Brown: It's safer workplaces is very important for a variety of reasons, but Eric like is there any financial implications of our more consistent call. It safety record is there any.

Patrick Tyler Brown: Impact on Gulf War in accruals at all.

Eric Gerstenberg: Yeah, no, certainly as we continue to lower our TRIR and perform safely across the organization, reducing risk and our insurance costs are evident as well. We focus a lot as well on our transportation compliance and how we reduce incidents across our network. So overall, as time continues to progress and we continue to drive our safety and transportation compliance across the network, there is financial improvement that comes along with it. The only thing I'd add to that is Eric's absolutely right, but the challenge is that those costs have gone up. So although we've had fewer incidents and fewer injuries, the cost per incident is growing at a pretty healthy clip. And so that's been a cost kind of in our financial statements for the past few years, and it will be in 2024 as well.

Eric: That's not the case.

Yeah, No certainly as we continue to lower our tier I or performed safely across the organization reducing risk in.

Eric: Our insurance costs are are evident as well.

Eric: We focus a lot as well on our transportation compliance and how we reduce incidents across our network. So overall there is as time continues to progress and we continue to drive our safety of transportation clients across our network. There is financial improvement that comes along with that.

Speaker Change: Yeah, the only thing I'd add to that Eric absolutely right, but the challenges those costs have gone up so although we've had like lessons learned from less injuries. The cost curve is growing at a pretty healthy clip and so that's been a that's been a cost that you know kind of in our in our financial statements for the past few years and it will be in 2024 as well.

Eric Gerstenberg: We've seen a lot of inflation insurance on the transportation side; we can talk about that at another time, but Eric, just a question on the EBITDA bridge. Please see the complete disclaimer at https://sites.google.com or at https://sites.google.com, But won't just simply the Q3 incinerator and refinery issues not recurring be something like $25 million of that 65, plus you I know we had really, really tough weather back in 23. I know there's some here in 24.

Speaker Change: Yeah.

Speaker Change: A lot of insurance on them.

Speaker Change: The transportation side.

Speaker Change: Talk about that at another time, but Eric.

Eric: Yeah, a little.

Eric: Question on the EBITDA bridge for 24, so can we just talk about some of the puts and takes because there's a little bit back to Noah's question too, but I think at the midpoint, you're looking for 65 to 70.

Speaker Change: $70 million increase.

Speaker Change: It won't just simply be Q3 incinerator in refinery issues not recurring something like 25 million of that 65, plus you've got the big three initiatives I know, we had really really tough weather back in 'twenty three I know, there's some here in 'twenty four.

Eric Dugas: Please see the complete disclaimer at https://sites.google.com or at https://www.google.com/policies. Thanks, Tyler. Good questions. You know, you're spot on with some of the things you noted last year. You know, I do think as we lay the guidance out, there is a little bit of caution baked in. You know, we're seeing very strong demand. We're continuing to see that. But we are recognizing that there's a little uncertainty out there from an overall macroeconomic perspective, and we're trying to be a little bit more conservative and reflect that in our guidance.

Speaker Change: You talk about the puts and takes it sounds like maybe some things working against you, but I'm not totally seen or are you just being conservative.

Speaker Change: Thanks, Tyler good questions.

Patrick Tyler Brown: You're spot on with some of the things you noted last year.

Speaker Change: Do you think as we lay the guidance out there there is a little bit extra separative baked in.

Patrick Tyler Brown: We're seeing very strong demand, we are continuing to see that but we we are recognizing that theres a little uncertainty out there from a from an overall macroeconomic perspective, and we're trying to be a little bit conservative and recognize that in our guidance I think when you talk about Q3 in particular and some of the challenges we saw last year from the plant.

Eric Dugas: You know, I think when you talk about Q3 in particular and some of the challenges we saw last year from the plant disruptions, first, I would say that, you know, the plants are up and running well. But we do have in the coming year here, and we're going to continue to make some investments, some winterization type projects that we did last year as well and that are paying off for us right now. There are also some other incremental projects, kind of some one in five year type turnarounds that we have planned for next year. And so we do have to kind of build that in, and that helps to kind of offset some of the uptick from the things that you mentioned.

Patrick Tyler Brown: Disruptions first I would say that the plants are up and running well.

Patrick Tyler Brown: But we do have in the coming year here, we're going to continue to make some investments some winter innovation type projects that we did last year as well and that are paying off for US right. Now Theres also some other incremental projects.

Patrick Tyler Brown: Kind of some one to five year type turnarounds that we have planned for next year.

Patrick Tyler Brown: And so we do have to kind of build that in and that that helps to kind of offset some of the uptick from the things that you mentioned, but you know when you look at the Es segment next year, we're going to continue I think to have strong organic growth I think that's a big piece of the guidance going forward, that's going to be on the tails of continued strong pricing initiatives and some of the efficiencies and things on it.

Eric Dugas: But, you know, when you look at the ES segment next year, we're going to continue, I think, to have strong organic growth. I think that's a big piece of the guidance going forward. That's going to be on the tails of continued strong pricing initiatives and, you know, some of the efficiencies and things on the cost side that we're driving that I mentioned in my comments. You'll have a few more months of Thompson.

Patrick Tyler Brown: Cost side that were driving that I mentioned in my comments you.

Patrick Tyler Brown: You'll have a few more months of Thompson.

Eric Dugas: And really, I think, you'll see some improvements from more time in the incinerators and facilities overall. I guess the last thing I'd mention, just on the EF side, is going back to the volumes. We're continuing to see really good volumes that don't necessarily need to go through our incineration network, right? So the safety clean branch business has tremendous revenue growth this year, you'll see it in our financials. But a lot of that waste we can handle outside the incinerators through our TSDFs or other means.

Patrick Tyler Brown: And really I think you will see some improvements from more time in the incinerators facilities overall I guess the last thing I'd mentioned just on the Es side is going back to the volumes you know work and we're continuing to see really good volumes that don't necessarily need to go through our incineration network right. So the safety Kleen branch business.

Patrick Tyler Brown: <unk> revenue growth there this year and you'll see it in our financials, but a lot of that waste, we can handle outside the incinerators through our T Sds or other means so plenty of room for for growth. There. So those are some of the big areas in E. S. S. K S. S. You know obviously, if you do the math of a rather modest gross buyer profile next year six seven <unk>.

Eric Dugas: So plenty of room for growth there. So those are some of the big areas in ES. SKFS, you know, obviously, if you do the math, a rather modest growth profile next year, 6-7%. Really, that's, you know, growing based upon increased blended volumes. We do have group 3.

Patrick Tyler Brown: <unk>.

Patrick Tyler Brown: Really that's.

Patrick Tyler Brown: Growing based upon increased blended volumes, we do have the groups right.

Eric Dugas: And then some better running in some of the facilities, especially in the back half of the year. So those are the two segments. And they incorporate really kind of inflationary pressures as the business grows. So hopefully that provides a little more color for you, Tyler.

Patrick Tyler Brown: And then some some better running in some of the facilities, especially in the back half of the year. So those are the two segments and incorporate really kind of inflationary pressures as the business grows. So hopefully that that provides a little more color for you Tyler.

Eric Dugas: Yeah, no, that's very helpful. Lots of pieces there. Um, just my last one here on the HEPA code deal. Can you just talk a little more about the $20 million in synergies? I guess? Did they direct much waste into your technical assets? Or is that an opportunity?

Patrick Tyler Brown: Yeah, No. That's that's very helpful. Buffalo lots of pieces. There I'm just my last one here on the Apple co deal can you just talk a little more about the $20 million of synergies and I guess the day direct much waste into your technical assets or is that an opportunity again, just kind of any more color on the 20 million how quickly that comes.

Eric Gerstenberg: Again, just kind of any more color on the 20 million and how quickly that comes? Sure, Tyler. This is Eric Erstenberg.

Patrick Tyler Brown: Sure Tyler this is Eric Hirshberg, I'll I'll help to answer that.

Eric Gerstenberg: I'll help to answer that. One of the big opportunities that we see with HEPA Co. is that they have provided a national emergency response call center, and they have leveraged their branches on the East Coast, but it also provides us with an opportunity to leverage Clean Harbors branches on the West Coast of the U.S. So that is a large opportunity that we can penetrate our existing field service branches through the customers that they manage emergency responses for. So that's a big opportunity. There are also areas that we haven't had a lot of growth in, like rail, some of the rail customers that they have and the transportation that they have. So, large opportunities to grow our businesses there and be able to leverage our people and equipment, and their people and equipment, and branches that they have that are in locations and geographical locations that we are not. So really, a great team there; just an excellent fit.

Eric Hirshberg: One of the bigger opportunities that we see with hyper codes that they provided.

Eric Hirshberg: National Emergency response call center that they leverage their branches on the East coast, but also provides us for an opportunity to leverage clean harbors branches on the west coast of the U S. So that is a large opportunity that we can penetrate our existing field service branches.

Eric Hirshberg: Through the customers that they manage emergency responses for so that's a big opportunity.

Eric Hirshberg: They're also in areas that we haven't had a lot of growth in like rail.

Eric Hirshberg: Some of the rail customers that they have in transportation that they have so large opportunities to grow our businesses, there and be able to leverage our people and equipment and our people and equipment and branches that are that they have that are in locations geographical locations that we are not so really a great team there.

Eric Hirshberg: <unk> just an excellent fit.

Eric Gerstenberg: Really excited about a few meetings that we've had with their team and really excited about the complementary synergies that they will bring to our network. Perfect. Sounds like a really good talk-in.

Eric Hirshberg: We're really excited about a few meetings that we've had with their team and really excited about the complement of synergies that they will have to our network.

Speaker Change: Okay, perfect sounds like a really good tuck in thank you.

Michael L. Battles: Thank you. Thank you. Our next question comes from the line of Tobey Sommer with Truist. Please proceed with your question. Hey, good morning, guys. This is Jasper Vivant with Tobey.

Speaker Change: Thanks, Patrick.

Speaker Change: Our next question comes from the line of Tobey Sommer with Truest. Please proceed with your question.

Speaker Change: Hey, Good morning, guys. This is Jasper bibb on for Tobey, what's like the incinerator in landfill price, both accelerated year over year versus the third quarter.

Operator: Looks like the incinerator and landfill price both accelerated year over year versus the third quarter. Is there anything that drove that beyond mix? And how are you thinking about the ability to hold the disposal price in the 24 as, I guess, inflation more broadly seems to be coming down? I'll take that one, Jasper. Just in terms of the pricing that we saw kind of accelerating from Q3 into Q4, you know, part of that was driven by some of the planned disruptions we had in Q3 and just the utilization, much stronger utilization, probably a better mix in Q4, drove that year over year or quarter to quarter. I think when you look into 2024, as I mentioned earlier, on the pricing front, given the demand, given the discussions we're having with customers, we I think last week you saw some inflation figures come out.

Jasper Bibb: Is there anything that drove that beyond mix and how are you thinking about the ability of the whole disposal price in the 'twenty four.

Jasper Bibb: I guess inflation more broadly it seems to be coming down.

Speaker Change: I'll take that one Jasper just in terms of the pricing that we saw kind of accelerating from Q3 into Q4.

Speaker Change: Part of that was driven by some of the planned disruptions. We had in Q3 and just the utilization much stronger utilization, probably a better mix in Q4 drove that year over year or quarter to quarter. I think when you look into 2020 four as I mentioned earlier on the pricing front given the demand given the discussions we're having with customers.

Speaker Change: We will continue to.

Speaker Change: So the price in a way that we can meet or even exceed a little bit of the inflation I think last week you saw some inflation figures come out.

Eric Dugas: It's tending to be a little bit persistent, more persistent than perhaps we thought, and we'll continue to price accordingly along with cost cutting. Forgive me; I forget the second part of your question there. No, you covered both of them.

Speaker Change: Turning to be a little bit a persistent and more persistent than perhaps we thought and we will continue to price accordingly, along with cost cutting.

Speaker Change: Forgive me I forget the second part of your question there.

Speaker Change: No you covered both of them.

Speaker Change: Just wanted to ask another one on the Peco acquisition.

Eric Dugas: I just want to ask another question on the PAPACO acquisition. It seems like a fairly large asset. Title: Microsoft Office Word Document MSWordDoc Word.

Speaker Change: It seems it seems like a fairly large asset from the field services space could you characterize for us like how fragmented that market today, and how you might be thinking about the potential for revenue synergies there with additional consolidation.

Operator: Document.8, Yeah, Tobey, this is Eric. I'll take that one. So tremendous opportunities there with the revenue base, as we said, they did about $270 million in revenue. A lot of it was with customers that we did not have deep penetration with. They have branch locations that we do not.

Speaker Change: Yeah Tobey this is Eric I'll I'll I'll take that one so tremendous opportunities there with the revenue base as we said they did about seven $270 million of revenue.

Eric: A lot of it was with customers that we did not have deep penetration what they have branch locations that we are not overall.

Eric Gerstenberg: Overall, the field service market is pretty large, a $3 to $4 billion market that we're continuing to grow in. So their footprint overlaying with our footprint creates a lot of opportunity, but it's still a fragmented market that we have an opportunity to grow in. Got it. And just to clarify, the last one is some of the weather items that you talked about. OneCubeGuide for SKSS, or is that more of an environmental service?

Eric: Field service market is pretty large over three years to 4 billion dollar market that we're.

Eric: We're continuing to grow and so their footprint overlaying with our footprint creates a lot of the opportunity, but it's still a fragmented market that we we have an opportunity to grow it.

Speaker Change: Got it.

Speaker Change: Just to clarify last one or some of the weather items that you talked about hitting.

Speaker Change: The <unk> guide for S. K S S or is that more of our environmental services impact.

Eric Dugas: Yeah, I would say that it's more environmental services related. The decrease that we had in January did impact some of our collections as well as our plant operations there. As we've talked about before, we did make a substantial investment in 2023 in winterizing one of our incineration trains down in El Dorado, Arkansas. We still have another one to do this year, so that one was impacted along with some of our deer park facilities, so it's largely environmental services. Okay, I've got it.

Speaker Change: Okay.

Speaker Change: Yeah, I would say that's more environmental services related.

Speaker Change: The deep freeze that we had in January did impact some of our collections as well as our plant operations. There as we've talked about before we did do a substantial investment in 2023.

Speaker Change: And went to rising one of our incineration trains down in El Dorado, Arkansas.

Speaker Change: We still have another one to do this year. So that one was impacted along with some of our Deer Park facility. So we are just larger environmental services.

Speaker Change: Okay got it thanks for taking the questions.

Operator: Thanks for taking the question. Eight jobs. Look for your stories tonight on FX.com right now. Your story is on FX.com.

Speaker Change: Thanks Catherine.

Speaker Change: Our next question comes from the line of Jerry Revich Goldman Sachs. Please proceed with your question.

Operator: Have a great day. See you later. Some show business managers are taking over: Logan Goodwin, Roberto Sabrina LePrickie, Justine Dickinson, and Leo Durston.

Jerry Revich: Yes, hi, good morning, everyone.

Jerry Revich: Hi, good morning, good morning.

Jerry Revich: And nobody ever sort of say I'm wondering if you could just expand on the margin outlook.

Operator: Our next question comes from the line of Jerry Revich, Goldman Sachs. Please proceed with your question. Yes, sir. Good morning, everyone.

Jerry Revich: For this year.

Jerry Revich: Margin expansion that you're targeting can you just talk about what proportion of that is driven by improved contract terms versus under underlying pricing.

Jerry Revich: I'm wondering if you could just expand on the margin outlook for this year and the margin expansion that you're targeting. Can you just talk about what proportion of that is driven by improved contract terms versus underlying pricing and the other moving pieces? If you wouldn't mind fleshing that out, Jerry, this is Eric. I'll start.

Jerry Revich: The other moving pieces, if you wouldn't mind fleshing that out please.

Sherri This is Eric I'll start our margin expansion is really driven by a number of things.

Eric Dugas: Our margin expansion is really driven by a number of things. Obviously, we've driven pricing to make sure that we're offsetting inflation. We also have driven a number of efficiency projects, cost controls, internalizing transportation and maintenance and rentals across that network, really in long-haul transportation. Most of our long-haul transportation is currently internalized.

Jerry Revich: Obviously, we drove pricing to make sure that we're offsetting inflation.

Eric: We also have driven a number of efficiency product projects cost controls internalizing transportation and maintenance and rentals across that network really long haul transportation most of our long haul transportation is all an internalized currently so that's been.

Eric Dugas: So that's had a big impact on our margin improvements for routing waste and managing it through our network. When you look at the overall improvement in margins year-over-year, we continue to have a longer-term aspirational goal of getting to that 30% DBITDA margin in that business. And we think that we continue to have a path to get there, and that's between cost efficiencies, routing, management of our facilities, and how to leverage our relationships with our customers even better to manage all of their collective waste streams. We think we can get there. I got it.

Eric: A big impact to our margin improvements for routing waste and managing it through our network. So the when you look at the overall improvement in margins year over year. We continue to have a longer term aspirational goal of getting to that that 30% EBITDA margins in that business.

Eric: And we think that we continue to have a path to get there.

Eric: And that's.

Eric: Between cost efficiencies routing management of our facilities, how to leverage our relationships with our customers even better to manage all of their collective waste streams. We think we can get there.

Eric: Got it and then.

Michael L. Battles: And then, can I ask you on the safety queen business? Obviously, we had some softer pricing over the course of the quarter, but you still put up really attractive margins this year at the trough of the cycle. Can you just talk about, taking a step back, in addition to IMO 2020, just a competitive structure improvement that you've seen in this market that's driving such attractive economics at a point in the cycle where, obviously, basal pricing is not terribly attractive? Yeah, Jerry, this is Mike.

Speaker Change: Can I ask you on the safety Kleen business you know.

Speaker Change: Obviously, we had some softer pricing over the course of the quarter, but you still put up you know really attractive.

Speaker Change: Margins this year at the trough of the cycle can you just talk about taking a step back. In addition to our IMO 2020, just the competitive structure improvement that you've seen in this market that's driving such attractive economics are at a point in the cycle, where obviously.

Speaker Change: Obviously based on price is not terribly attractive.

Speaker Change: Yeah, Gary This is Mike I think that the I'm glad you brought that point up I think that you know a one.

Michael L. Battles: You know, I think that the, I'm glad you brought that point up. I think that, you know, a billion dollar business or a $900 million business that is at, you know, 21% margins is a pretty good, pretty good business that throws off a fair amount of cash flows. And I think it's very, very attractive to our business. So, you know, although we're down a bit from where we thought we were going to be, I still think it's very attractive. And I think I really want to make sure the team understands that they did an excellent job of managing everything that they could control. There was, as I said earlier, a huge, you know, disconnect between the pricing of Group 2 base oil and the spot market that's out there.

Michael L. Battles: A billion dollar business, our $900 million business that is at 21% margins is it pretty good pretty good business that throws off a fair amount of cash flows and I think it's very very accretive to our to our business. So so although we were down a bit from where we thought we were going to be I still think it's a very active and I think I really want to make sure. The team understands that they did an excellent job of managing.

Michael L. Battles: Everything that they could control there was as I said earlier a huge.

Michael L. Battles: Disconnect between the pricing of group two base oil in the spot market. That's out there. So I do think that the team did a nice job and imagine what they could manage get get go hard on charge for oil drive gallons into our three refineries in the refineries produce high quality base and blended oil I think if you look at 2024.

Michael L. Battles: So I do think that the team did a nice job of kind of managing what they could manage, get, you know, go hard on charge for oil, drive gallons into our re-refineries, and the re-refineries produced high quality base and blended oil. I think if you look at 2024, you know, that the blended oil has been a much bigger story. And we continue to drive that. We're up 60%.

Michael L. Battles: Blended oil has been a much we spent a good story and we will continue to drive that were up 6%. These are pretty small numbers from 17% to 24% that's still a meaningful difference as far as their profitability and I think as you go into 2024, we continue to grow that blended oil business I do think that's going to be a good growth driver for us as well as the group three as we've talked about before as well.

Michael L. Battles: These are pretty small numbers, from 17 to 24%, but still a meaningful difference as far as our profitability is concerned. And I think as we go into 2024, we will continue to grow that blended oil business. I do think that's going to be a good growth driver for us, as well as Group 3, as we talked about before, as well as, you know, solving some of our production problems that we had. And it sounds like the industry's acting appropriately in terms of charging for collections, based on your prior comments. Is that right, Mike? Yes, it's always a battle.

Michael L. Battles: As you know solving some of our production problems that we added 2023.

Michael L. Battles: And it sounds like the industry's acting appropriately in terms of charging for collections, but based on your prior comments about right Mike.

Michael L. Battles: Yes, it's always a battle and it's always a battle to go in and fight for that business to try to win that business, but we do think we've been able to drive that paper right from <unk> to CFO is hard to do I think the team does a good job doing just that and without losing without losing material amount of accounts.

Michael L. Battles: You know, it's always a battle to go and fight for that business, to try to win that business. But we do think we've been able to drive that type of drive from a PFO to a CFO. It's hard to do.

Michael L. Battles: I think the team did a good job doing just that and without losing material money. Thank you. Our next question comes from the line of Jim Ricchuti with Needham. Please proceed with your question. I thank you. Good morning.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of Jim Ricchiuti with Needham. Please proceed with your question.

James Ricchiuti: Thank you good.

James Ricchiuti: Good morning, Mike.

James Ricchiuti: Mike, maybe just to follow up on that last point, do you have a target in mind that you'd like to see blended represent? Canal. 24.

James Ricchiuti: Mike maybe just to follow up on that last point do you have a target in mind that you'd like to see blended it represent of the business looking out.

Michael L. Battles: Yeah, I think that's a good question, Jim. I think that, and we talked a long time ago about, you know, switching the business around. It's going to be a grind.

James Ricchiuti: I mean, you know through 'twenty four.

Michael L. Battles: Yeah, I think that's a good question, Jim I think that you know we talked a long time ago about switching their business around it it's going to be a grind I don't think in our guide we had improving modestly we don't have it going to 50 50 email at 24% in Q4, we havent growing modestly through the course of the year I don't know does that target in mind I do think the things we're trying to do.

Michael L. Battles: I don't think in our guide we have it improving modestly. We don't have it going to 50-50, you know; it's 24% in Q4. We have it growing modestly through the course of the year. I don't know if it's that target of mine.

Michael L. Battles: I do think the two things we're trying to do are get more blended oil and get more oil under contract versus spot price. And both of those things will help drive the stability of that business going forward because it doesn't move as fast as base oil. I don't have a set goal over a time horizon, but certainly, growth in that will help stabilize that business and drive more profitability into S&P. How much conservatism is built in, do you think, in group three? I mean, it sounds like...

Michael L. Battles: It get more of a blended oil get more oil under contract versus spot price in both of those things that help will help drive the stability of that business going forward because it doesn't move as fast.

Michael L. Battles: That base oil because I don't have I don't have a set goal over over time horizon, but certainly growth and that will help stabilize that business and drive more profitability into spss.

Got it and how much conservatism is built in do you think on the group three I mean, it sounds like you're assuming some modest contribution in 'twenty four presumably that starts to scale going into 'twenty five.

Michael L. Battles: Presumably, that starts to scale going into 20. I think that's a reasonable number. I think, you know, three to four million, which I talked about earlier, I don't think that's a crazy answer.

Michael L. Battles: Yeah, I think that's a reasonable number I think $3 million to $4 million I talked about earlier I don't think that that's a crazy answer I do think it takes to do a lot of routing and a lot of routing software to ensure we're getting the right gallons and making sure we're filling our plants without causing a ton of transportation cost to make the math work and so I do think that's a reasonable expectation for 2020, well I don't think it's.

Michael L. Battles: I do think it takes, you know, we have to do a lot of routing, a lot of routing software to ensure we're getting the right gallons and making sure we're filling our plants without causing a ton of transportation costs to make the math work. And so I do think that's a reasonable expectation. Well, I don't think it's overly conservative or overly... And just one follow-up, just on Hibakko. I realize the acquisition hasn't closed yet, but I wonder, when you talk about additional markets, excuse me, that this gets you into deeper into customers that you don't get into as actively as the rest of the business, or is it geographic and how predictable? Colorado.

Michael L. Battles: Overly conservative or aggressive.

Speaker Change: Okay, and then just one follow up just on her hip Opco I realize the acquisition hasn't closed yet, but I wonder when you talk about additional markets excuse me that just gets you into.

Speaker Change: Deeper into customers that you don't.

Get into as as actively as the rest of the business or is it geographic and how predictable is this business. You know if you can give us some color on that.

Eric Gerstenberg: Sure, Jim. This is Eric. I'll take that one again. So when we look at the overlay of their branch network, as mentioned earlier, they have about 40 different branch locations, and about 25 of those branch locations are in geographies that we currently don't have field service branches. So, a nice match there.

Sure. Jim This is Eric I'll take that one again so the.

Eric: When we look at the overlay of their branch network has mentioned earlier they have about 40 different branch locations and about 25 of those branch locations are in geographies that we currently don't have field service branches. So.

Eric: A nice match there. Additionally, the one key market that they've been a big part of us providing support services.

Eric Gerstenberg: Additionally, the one key market that they've been a big part of is providing support services, transfer services, and emergency response services for large rail companies. And that's a great market for us to continue to build with the HEPACO team on our platform and provide large-scale emergency response field services, as well as what we've already provided, which is a disposal network there. They also have done an excellent job of penetrating small emergency response work within transportation providers nationally, even in Canada.

Eric: Transfer services Emergency response services for large rail companies.

Speaker Change: That's great.

Speaker Change: A great market for us to continue to build with the help of co team into our platform and provide large scale emergency response field services.

Speaker Change: As well as what we've already provided which is the disposal services. So a nice network. There. They also have done an excellent job of.

Speaker Change: Penetrating small.

Speaker Change: Emergency response work within transportation providers nationally.

Speaker Change: Even up in Canada.

Eric Gerstenberg: They've used a subcontractor network, particularly on the West Coast and up in Canada, which overlays perfectly with the branch opportunities we have. So a number of areas that really help our organization grow and work together. The thing I'd add to that, Jim, is that you think emergency response is pretty lumpy, but it's actually not lumpy. They do, you know, many, many small-scale emergency responses every day, just like we do

Speaker Change: <unk> used a subcontractor network, particularly on the west coast and up in Canada, which overlays perfectly with.

Speaker Change: The branch opportunities, we have some a number of areas that really help our organization grow and work together.

Speaker Change: Yeah, I'd add to that Jim is that you think emergency response pretty lumpy, but it's actually not lumpy. They do you know many many small scale warranty responses everyday just like we did frankly and so that is a pretty stable business. Obviously I can't tell whether <unk> is going to happen, but I know theres going to be a lot to that and so when we gave out the guidance for 'twenty.

Michael L. Battles: And so that is a pretty stable business. Obviously, I can't tell where the next fill is going to happen, but I know there's going to be a lot to happen. And so, you know, when we gave out the guidance for 2024, we didn't assume, you know, kind of a large-scale, you know, a multimillion-dollar type of project. We never do.

Speaker Change: 24, we didn't assume.

Speaker Change: End of a large scale.

Speaker Change: You know multimillion dollar type of project, we never do if those things happen those are upside to the model historically and so whether that be the avian flu for us whether that be the BP oil spill those are kind of upside to any model. We don't we don't budget or guide assuming those types of large scale responses. These are just normal run rate type of work that happened kind of everyday that both of them.

Michael L. Battles: If those things happen, those are upsides to the model, historically. And so whether that be the avian flu for us, whether that be the BP oil spill, those are kind of upsides to any model. We don't budget or guide for assuming those types of large-scale responses. These are just normal, one-rate types of work that happen kind of every day that both the clean harbors business and the ethical business do. So although it sounds a little lumpy, it isn't that lumpy.

Speaker Change: Clean harbors business and the ethical business students.

Speaker Change: Although it sounds a little lumpy it isn't that isn't that lumpy.

James Ricchiuti: Got it, thanks for that. Thank you. Thank you. Our next question comes from the line of David Manthey with Baird. Please proceed with your question. Thank you. Good morning, everyone.

Speaker Change: Got it thanks for that thank you.

Speaker Change: Thank you.

Speaker Change: Our next question comes from the line of David Manthey with Baird. Please proceed with your question.

David J. Manthey: Thank you good morning, everyone.

David J. Manthey: The first question is a general one on... You're in the market. So looking at the verticals over the past several years, chemicals and refining are up, manufacturing is down. Maybe you could talk about current business conditions and what your expectations are for 24. And then, in that important chemicals vertical, is incrementally lower natural gas better? Like is $1.50 better than $2.50?

David J. Manthey: Oh yeah.

David J. Manthey: My question is this is a general one on.

David J. Manthey: Your your end market, so looking at the verticals over the past several years cabins and refining our off manufacturing is down.

David J. Manthey: Maybe you could talk about the current business conditions and what your expectations are for 24, and then in that but important ken's vertical is incrementally natural incrementally lower natural gas Bader.

David J. Manthey: As $1.50 better than 250 or is it just low in general low whatnot.

Eric Gerstenberg: low in general, low Yeah, Dave, I'll start, and I'm sure the others will add in. But certainly, lower natural gas helps. It helps continue to facilitate more onshoring because chemical manufacturing, manufacturing in general, can help reduce their costs.

Speaker Change: Yes, Dave I'll start and I'm sure the others will will add in but certainly no lower natural gas helps it helps continue to facilitate more onshoring because the chemical manufacturer in manufacturing in general can help reduce their costs and it makes it even better for them too.

Eric Gerstenberg: And it makes it even better for them to continue to onshore. We're across all the verticals that we manage, and it's quite extensive, as you know. We have not seen any slowdown, even though we have a little bit of a trepid outlook on the industrial production slowdown.

Speaker Change: Onshore where across all the verticals that.

Speaker Change: We manage and it's quite extensive as you know we have not seen any slowdown.

Even though we have we have a little little bit of a trepid outlook to the industrial production slowing the chemical vertical the refinery business. The manufacturing that we've seen in the onshore and continues pipeline continues to be growing in every one of our business units supported by all of those different verticals. So.

Eric Gerstenberg: The chemical vertical, the refinery business, the manufacturing that we've seen, the onshoring continues. Pipeline continues to be growing in every one of our business units, supported by all those different verticals. So strength across the board that we see, the chemical business, as we mentioned in our script, we've added additional capital investment in Kimball. That's really around the chemical industry and how that's been growing and how it's spurred on additional waste streams. Our relationships with our customers have continued to grow more solid, as they want to make sure that for all of their growth, they have reliable disposal capabilities, disposal assets, and secured capacity. So that's all working together well with what our plan is. Okay, not to belabor this point, but I'm wondering, in terms of natural gas, like in the short term, is there some linearity, or are you just talking in general?

Speaker Change: They're across the board that we see the chemical business.

Speaker Change: We mentioned in our script, we've added additional capital investment in Kimball, that's really around the chemical industry and how that's been growing and how its first off additional waste streams, our relationships with our customers have continued to grow more solid as they want to make.

Sure that for all of their growth that they have.

Reliable disposal capabilities disposal assets in the secured capacity. So that's all working together well with what our plan has been here.

Speaker Change: Okay, and then not to belabor this point, but I'm wondering.

Speaker Change: In terms of the natural gas like in the short term is there. Some linearity are you just talking in general like you know if it's in a range of $1 50 to $3 50, that's low enough to get people to change behaviors on a long term basis I'm just wondering with the with natural gas down here does that give you a tailwind over the next three to six.

Eric Gerstenberg: If it's in a range of $1.50 to $3.50, that's low enough to get people to change behaviors on a long-term basis. I'm just wondering, with natural gas down here, does that give you a tailwind over the next three to six months, or is it not that? Is it more of a secular, long-term relationship?

Speaker Change: Or is it not that is it more of a secular long term relationship.

Eric Gerstenberg: I think we'd view it, Dave, more as a long term solution. Yeah. OK. Okay, and then the second question: I think it was Eric Dugas who said, you've got a couple of once-in-five-year turnarounds coming up, and in light of that and in light of the coming year. Is there any indication you can give us on what your planned downtime schedule might look like, obviously subject to change every year? But if we were to think about when some of these chunkier projects are going to happen, when should we think about them? Yeah, Dave, I'll start, and then Efrin Kirstenberg will probably add a little color as needed. But, you know, I did mention a couple of projects.

Speaker Change: I think we view it more as a long term.

Speaker Change: Okay.

Speaker Change: Okay and then the second question I think it was Eric Dugas.

Speaker Change: Did you kind of couple of one to five year turnarounds coming up and in light of that and just in light of the coming year is there any.

Eric Dugas: Indication you can give us on what your planned downtime schedule might look like obviously subject to change every year, but if we were to think about when some of these chunkier projects are going to happen when should we think about those.

Yeah, Dave I'll I'll start and then Gerstenberger, probably add a little color as needed, but you know I.

Eric Dugas: I did mention a couple of projects overall I think year over year. When you look at our downtime right now we're forecasting are pretty flat.

Eric Dugas: Overall, I think here, over here, when we look at our downtime right now, we're forecasting a pretty flat downtime pattern. In terms of the large projects that I noted, I think right now we're looking at Q2 is when it's scheduled, kind of early in Q2. Eric, I don't know if you want to add to that, but... Yeah, Dave, we have a pretty extensive project that we have to do down at our Houston incinerator.

Eric Dugas: Downtime.

Eric Dugas: Patterns are in.

Eric Dugas: In terms of the large projects that I noted I think right now we're looking at Q2 is when it's scheduled to kind of early on in Q2.

Eric Dugas: Eric I don't know, if you want to add to that but yeah.

Yeah, Dave we have a pretty extensive project that we have to do down at our Houston incinerator and that's that project. It actually is going to be eight years that we're gonna be doing it.

Eric: Redoing, our backend wastewater treatment system, which supports both the incineration train so we'd look to do that.

Eric Gerstenberg: And that project, it's actually going to be eight years that we're going to be doing it. It's redoing our back-end wastewater treatment, www.cleanharborsinc.com some additional air pollution control and winterization projects. Thanks, guys. Thank you.

Eric: Starting that project in early Q2 team has done an awesome job of planning it out and we have a good plan in place there and so we'll be we'll be executing on that in second quarter and getting that behind us along with some some additional air pollution control and winter renovation projects.

Speaker Change: Thanks, guys.

Speaker Change: I'd say that's it.

Michael E. Hoffman: Our next question comes from the line of Michael Hoffman with Stiefel. Please proceed with your question. Good morning, everyone.

Speaker Change: Our next question comes from the line of Michael Hoffman with Stifel. Please proceed with your question. Good morning, everyone. Thanks for taking my questions Yeah, Michael Hi, Mike How are you Eric Eric.

Michael L. Battles: Thanks for taking the questions. Hi Mike, how are you?

Eric Gerstenberg: Eric? Good morning, Jim. You're somewhere there in the background. I know you are. Keep your marketing the feasible turnaround business. How do I compare that year over year, that two and a half billion dollars, or two billion dollars, or revenue for four hepico? You know, sort of a billion four is Industrial Maintenance Services. This is a question for you. The United States has a billion-four, and the United States has a billion-six hundred million in its field services. What do I think about that billion-four? What's that actually mean?

Michael E. Hoffman: Martin Jim here somewhere there in the background I know you are.

Michael E. Hoffman: Hey, good morning, the seasonal turnaround business, how do I compare that year over year that two and a half billion dollar or $2 billion of revenues before hepa co you know sort of a 1 billion for us.

Michael E. Hoffman: Industrial maintenance services, and cleaning and 600 million as field services, how do I think about that 1 billion for what's that activity look like.

Michael E. Hoffman: We actually.

Eric Gerstenberg: We actually think, Michael, or look at this year as a stronger industrial turnaround plan up in Canada. A lot of that, their turnarounds didn't happen in 2023. So we have a really strong pipeline up in Canada, and the US overall, pretty well flat, although seeing some early momentum here as we go into March for the staffing that they need to support their turnarounds on the US side. So overall, we would say that the turnaround season or turnarounds in 2024 seem to be incremental in our industrial sectors. And then when I think about field services, correct me if I'm wrong, and about a hundred million is remedi But if the rest of it's this response to lots of little things.

Michael E. Hoffman: I think Michael or look at this year has a stronger industrial turnaround plan up in Canada.

Michael E. Hoffman: A lot of that.

Michael E. Hoffman: There are turnarounds didn't happen in 2023, so we have a really strong pipeline up in Canada U S. Overall pretty well flat, although we're seeing some early momentum here as we go into March of the staffing that they need to support their turnarounds in the U S side. So.

Michael E. Hoffman: Overall, we would say that the turnaround season, our turnaround in 2024 seem to be incremental and our industrial business.

Michael E. Hoffman: Okay, and then when I think about field services correct me, if I'm wrong and about $100 million remediation stuff, but if the rest of it is response to lots of little things.

Eric Gerstenberg: How does the HEPACO business look like? Is that going to be a response to lots of little things? That's sort of the same thing. It's just a lot of small things. $5,000, $10,000 type of cleanup. It happened year in and year out.

Michael E. Hoffman: How does the Hopper car business look like for like is that going to be response to lots of little things. That's sort of the same thing is there's a lot of small little 510 Grand type of cleanups, and then they happen year in and year round.

Eric Gerstenberg: Yeah, Michael, that $600 million is independent of the remediation work that we do. Remediation is above and beyond that $600 million. It's a lot of continuous emergency response, small in scale. We didn't have a large-scale emergency response event, as you know, in 2023, so it's routine services. We support a wealth of utilities throughout the country.

Speaker Change: Yeah, Michael that's $600 million is independent of that remediation work that we do remediation is above and beyond that $600 billion. It is a lot of continuous.

Speaker Change: Emergency response small in scale, we didn't have a large scale emergency response event as you know in 2023. So it's a it's routine services, we support a wealth of its utilities throughout the country are.

Eric Gerstenberg: Utilities can be—the work there can be driven by weather events across the board, but it's happening, it's continuous, it's repeatable, and so continued growth there as things get more and more turbulent with weather across the board. Yeah, the only thing I'd add to that, Michael, is that, you know, HEPCO, very similar. We met, as Eric mentioned, we met with the team a couple of times now, and the business is very similar to our kind of business. They do have, as Eric noted in his prepared remarks, a good focus on rail and transportation, you know, response services. That's an area where we think we can really leverage and drive going forward, but I think that it is a, I think it's very similar as far as the day-to-day, small, still, side of the road, off we go. Switching gears, SKSS, where are you in recovering the spread? Again, if base oil prices are sharp and quick, there's a lag to getting the spread corrected, but where are we in the recovering of the spread where you can adjust the front end so now you've got the spread back?

Speaker Change: Utilities can be work there can be driven by weather events across the board.

Speaker Change: But it is it's happening it's it's continuous it's repeatable and so continued continued growth there as things get more and more turbulent with weather across the country.

Speaker Change: Yeah, the only thing I'd add to that Michael is that you don't have to go very similar.

As Eric mentioned, we met with the team a couple of times now.

The business is very similar to kind of our business. They do have as Eric noted in his prepared remarks, a good focus on rail and transportation and response services. That's an area, where we think we can really leverage and drive going forward, but I think that it is a I think it's very similar as far as the day to day small still on side of the road.

Speaker Change: No.

Speaker Change: Okay switching gears S. K S. S where are you in recovering the spread I get if base oil prices move sharp and quick there's a lag to cutting the spread corrected, but where are we in a recovering of the spread where you can adjust the front end. So now you've got the spread back in line.

Michael L. Battles: We're working to that end. I think that we're guiding in Q1, as we got a question earlier about Q1 guidance for SKSS, that we're in the middle of doing that, kind of as we speak, and I think that gets back to normal as you look at kind of Q2 in the, and then, What's interest expense supposed to be in 2024? 120-ish, give me one second to find that number exactly,

S. K: We're working through that and I think that we had were guiding in Q1 is as you got a question earlier about Q1 Guy for S. K I suggest that we're in the middle of doing that and as we speak and I think that gets back to normal as you look at kind of if you do in the rest of the year.

Okay.

S. K: And then can you just what's interest expense supposed to be in 'twenty 'twenty four.

S. K:

Speaker Change: 100, Twentyish give me one second to find that number exactly Michael.

Eric Dugas: And while that's happening, did I do my math correctly on the run here? Midpoint of guidance, SKSS would be 185, segment, EBITDA, ES. 1-1-1-7-0, and corporate overheads about $275. You're definitely in the ballpark of it. The midpoint is 115 to 120.

Speaker Change: Why that's happening did I do my math correctly on the run here a mid point of guidance S. T. S has to be 185.

Speaker Change: Segment, EBITDA, yes, it'd be 1170, and corporate overheads about $275 million.

Speaker Change: You definitely the ballpark of that.

Speaker Change: Okay.

Speaker Change: The midpoint is 115 to 120 times interest expense there yet.

Speaker Change: Alright, I really just kind of the rollover of some higher interest costs higher interest rates.

Michael L. Battles: Yeah. Really just kind of the rollover of some higher interest rates is net higher. Totally agree with that. Michael, I think that it's just, you know, we always, you know, that struggled all year.

Speaker Change: And then not to belabor this but shouldn't we think about S. K S. That's more about dollars of profit versus a margin because you're it's a spread business.

Speaker Change: So I totally agree with that.

Speaker Change: Michael I think that it's just.

Speaker Change: We always you know that that's struggled all year and I think that that that market is still pretty good. That's why that's why I made the observation. Okay. I just wanted to make sure I'm not trying to chase revenues as much as I'm trying to chase the quality of the operating leverage that's.

Michael L. Battles: And I think that that harm is still pretty good. That's why we made the observation. OK, I just want to make sure I'm not trying to chase revenues as much as I'm trying to chase the quality of the service. That's right. That's right.

Speaker Change: That's right, Okay, all right great. Thank you.

Michael L. Battles: All right, great. Our next question comes from the line of William Griffin with UBS. Please proceed with your question. Good morning.

Speaker Change: Our next question comes from the line of William Gripping with UBS. Please proceed with your question.

William Griffin: I appreciate you squeezing me in here. My first question, sorry if I missed it, but what is your assuming in the guide for 2024 for the new incinerator? And then what do you think that could be at the full run rate, just given the enhancements you've discussed here? Yeah, sure. I'll take that one. This is Eric Dugas.

William Gripping: Good morning, I. Appreciate I appreciate you squeezing me in here My first one sorry, if I missed it but what are you assuming in the guide for 2024 for the New Incinerator and then what do you think that could be at the full run rate just given the enhancements you've discussed here.

William Gripping: Yeah sure I'll take that one this is Erik do get so so in our guide as he said, where we expect to start the plant up in late Q4 in the guide there is really minimal and EBITDA given your expectations. One thing we did talk about.

Eric Dugas: So in our guide, as we said, we expect to start the plants up in late Q4. In the guide, there's really minimal kind of ibadah given the expectations. One thing we did talk about in Mike's prepared comments is the fact that we will have some drag for start-up costs and things of that nature here in Q4, really depending upon the timing of, or excuse me, in 2024, depending on the timing of hiring folks and the ultimate kind of start-up of the plan. So we'll talk about those going forward. Certainly, don't expect them to be more than, you know, $10 million, probably $10 million or less when we talk about those things.

Erik: Yeah in Mike's prepared comments is the fact that we will have some drag for startup costs and things of that nature here in Q4 really depending upon the timing or excuse me in 2024, depending on the timing of hiring folks and the ultimate kind of startup of the plant. So we will talk about those going forward.

Erik: Certainly don't expect them to be more than 10 million, probably $10 million last one we talk about those things and like I said, we'll talk about it going forward.

Eric Dugas: And like I said, we'll talk about that going forward. As you roll out the new incinerator and think about the long term, you know, we would expect, and I think we stated this before, the plant will be able to generate roughly $40 million without when it's fully turned on, based upon today's rates. Again, this year, kind of minimal.

Erik: As you rollout the new incinerator and you think about long term you know we would expect and I think we stated this before the plant will be able to generate roughly $40 million of EBITDA. When it's fully turned on based upon today's rates.

Erik: Again, this year kind of minimal next year, we expect to ramp up Eric maybe 25 to 30000 tonnes. So probably halfway there and then have the thing be at full capacity kind of in 2025 at that at that run rate I just mentioned.

Eric Dugas: Next year, we expect to ramp up, Eric, maybe 25,000 to 30,000 tons, so probably halfway there. And then have the thing be at full capacity, kind of in 2025, at that run rate I just mentioned, 50,000 to 60,000 tons.

Erik: Tell him the tailwind 'twenty five 'twenty six feet.

Erik: <unk>.

Erik: 50 to 60000 tons.

Eric Dugas: Okay, got it. So the 40 million still holds, just even with the additional investments you discussed. Yeah. Yeah. Got it.

Erik: Okay got it so that's a 40 million still holds.

Erik: Even with the additional investment so you discussed.

Speaker Change: Yeah, Yeah got it at full bore.

William Griffin: On the group three initiative here, how are you thinking about that? Is it a potential margin expansion opportunity or incremental EBITDA?

Speaker Change: Both groups as well.

Speaker Change: On the.

<unk> three initiative here.

Speaker Change: How are you thinking about that is it is it potential margin expansion opportunity or.

Michael L. Battles: And I know you talked about I think three to 4 million here in 2024. But obviously, as that ramps up, just curious what you see as the opportunity there. And then how are you seeing competition for the higher quality UMO that you'll need to feed that plant? Yeah, William. I'll answer that. Group 3, it doesn't take a lot of additional effort to collect higher quality UMO. The plant runs as it always does. There is no incremental investment needed.

Speaker Change: Incremental EBITDA and I know you talked about I think $3 million to $4 million in 2020 for it but obviously as that ramps just curious what you see as the opportunity there and then.

Speaker Change: How are you seeing competition for the higher quality you them over that youll need to feed that plant.

Speaker Change: Yeah, I'll answer that the group three is it doesn't take a lot of additional effort to cost.

Speaker Change: To collect higher quality UFO. The plant is the plant runs as it always does so there's no incremental investment needed, it's really more of a technology and ensuring that we get the right <unk> gallons that's to fill our plant. There. There is some competition for that Theres always competition for high quality, even though I don't think that's gonna be a gain.

Michael L. Battles: It's really more of a technology and ensuring that we get the right UMO gallons to fill our plant. There is some competition for that, but there's always competition for higher quality UMO.

Speaker Change: Two our growth we do think that that that group III does provide anywhere from $1 $2 of income all incremental profit as we look at this business going out how this ramps is really kind of it's really kind of up to us in getting its kind of a some self help using a sell side terminology I heard before that is trying to get those plans kind of segregated.

Michael L. Battles: I don't think that's going to be a gate to our growth. We do think that Group 3 provides anywhere from $1 to $2 of incremental profit as we look at this business going out. How this ramps up is really up to us to get some self-help, using sell-side terminology I've heard before, that is trying to get those plants segregated. Once you start a plant in Group 3, you really can't start going back and forth. It takes a huge amount of cleanup work to get that plant up and running to run Group 3. Once you start Group 3, you really can't stop it.

Speaker Change: Once you start a plant in group three you you really can't started going back and forth. It takes a huge amount of cleanup work to kind of get that plant kind of up and running to run group three and once you started with three really can't stop it. So we want to make sure that systems and processes work well before we start expanding that so that can take some time as it takes some time, but the gallons are there we certainly haven't.

Michael L. Battles: We want to make sure that our systems and processes work well before we start expanding that. That's going to take some time. The gallons are there.

Michael L. Battles: We certainly have the plants that can do it. We know how to do it. We've done some pilots, as we talked about back in the Group 3 call, and they've worked well.

Speaker Change: Plants that can do it we know how to do it we've done some pilots as we talked about back in the Q3 call. They've worked well, we just got to systematize that better because we just can't we just can't do it in a pilot forever. So that's gonna be 2023s exercises fluctuate for the extent excuse me is going to be to really sits in the guidance. So that we can make sure we are consistently putting the right talent.

Michael L. Battles: We've just got to systematize it better because we just can't do it in a pilot forever. That's going to be 2023's exercise. 2024's exercise, excuse me, is going to be to really systematize it so that we can make sure we're consistently collecting the right gallons to keep the plants running, to keep the plant in Hampshire and, as we go forward, other plants to produce Group 3. I think just to add to that, William, just overall this year, we looked to convert anywhere from four to six million gallons of UMO into good quality Group 3.

Speaker Change: The plants running.

Speaker Change: The plant in answering it as we go forward other plants to produce.

Speaker Change: Produce Q3.

Speaker Change: I think just to add to that Williams just overall this year, we look to convert anywhere from four to 6 million gallons that you are modeling to good quality group three over the long term, we really identified about 20 2020 to 25 million gallons of our collection. Our current collections that can be segregated proper.

Michael L. Battles: Over the long term, we really identified about 20 to 25 million gallons of our collection, our current collections that can be segregated properly, managed properly through the right refinery material, and produced at group three. Great. I appreciate all the commentary. Talk to you guys later.

Speaker Change: <unk> managed properly through the right refinery.

Speaker Change: Material and produce a group III.

Speaker Change: Great I appreciate all the commentary.

Speaker Change: Talk to you guys later.

William Griffin: Our final question comes from John Mazzoni with Wells Fargo. Please proceed with your question. I'll save a really quick one. Just in terms of the kind of AI analytics and technology, could you talk about what we're in and kind of... at www.scottlevine.com. It'll all be in Lansing. Yeah, John, I'll start. This is Mike.

Speaker Change: Thanks, a lot.

Speaker Change: Thank you. Our final question comes from the line of John <unk> with Wells Fargo. Please proceed with your question.

John: Good morning, all.

John: CEVA for a really quick one just in terms of the kind of AI analytics and technology could you talk about what inning, we're in and kind of.

John: Our posts from this proprietary say wind systems or other types of like monitoring is there a longer term internet of things opportunity and.

Michael L. Battles: You know, I'm glad you asked the question. I think that, you know, AI is, we've done a lot, over the past few years, we've done a fair amount of robotic process automation, whether it be invoices, whether that be billing, whether that be vendor management, you know, and now we're using it around, around profiling, around programming. I mean, I do see an internet of things coming, but I think we're getting a lot of benefit already today around, you know, RPA, and then ultimately, AI. Have we done, have we done, you know, generative AI and done all that? I think we're still working on that.

John: Again, if this is kind of early days it would be helpful. Just to frame kind of what youre looking at and what the kind of a lumpy landscape could be thank you.

John: Yeah, John I'll start this is Mike I'm glad you asked the question I think that you know.

Michael L. Battles: We've got a lot over the past few years, you've done a fair amount of robotic process automation whether that be.

Michael L. Battles: Invoices, whether that be Billy would that be vendor management.

Michael L. Battles: And now we're using it around around profiling around programming I do see it isn't it are things coming but I think we're getting a lot of fanfare already today around our P. E and then ultimately in AI. How we've done have we got you know generative AI and then all of that I think we're still working on that but I do think that the organization is.

Michael L. Battles: But I do think that the organization is in front of the curve, not behind the curve, in our adoption of RPA and AI. And I'm really excited, given the size of the company, and the scale of the company, and the need to kind of get there. We have to stay in front of that. And we continue to make substantive investments in IT and in AI to drive that type of growth going forward.

Michael L. Battles: It is in front of the curve not behind the curve around around our adoption of IPA in AI and I'm really excited given the size of the company and the scale of the company and the need to kind of get that we have to stay in front of that and we continue to make substantial investments in it and its AI to drive that type of pro growth going forward.

Speaker Change: Great color. Thank you.

John Mazzoni: Thank you. Mr. Gerstenberg, I would now like to turn the floor back over to you for closing comments. Thanks for joining us today. Management will be participating in several upcoming investor relations events this quarter, starting with the J.P. Morgan High Yield Conference next week and then the Raymond James Conference the following week. We look forward to seeing some of you at these and some of the upcoming subsequent events after that. Thanks. Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day!

Speaker Change: Thank you Mr. Gerstenberger I would now like to turn the floor back over to you for closing comments.

Speaker Change: Thanks for joining us today management will be participating in several upcoming IR events. This quarter, starting with the Jpmorgan High yield conference next week and then the Raymond James Conference. The following week, we look forward to seeing some of you at these and some of the upcoming subsequent events after that thank you.

Speaker Change: Ladies and gentlemen, this does conclude today's teleconference. You may disconnect. Your lines at this time. Thank you for your participation and have a wonderful day.