Q2 2024 Clean Harbors Inc Earnings Call

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

Operator: Welcome to the formal presentation. As a reminder, this concert is being recorded. It is now my pleasure to turn the floor over to your host, Michael McDonald, General Counsel for Clean Harbors. Sir, the floor is yours.

As a reminder, this concert is being recorded. It is now my pleasure to turn the floor over to your host, Michael McDonald, General Counsel for Clean Harbors. Sir, the floor is yours.

Michael R. McDonald: Thank you, LaTanya. And good morning, everyone. With me on today's call are our Co-Chief Executive Officers, Eric Gerstenberg and Mike Battles, and our EVP and Chief Financial Officer, Eric Dugas, and SVP of Investor Relations, Jim Buckman. 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 Private Securities Litigation Reform Act of 1995.

Michael R. McDonald: Disclose a caution not to place undue reliance on these statements, which reflect management's opinions only as of today, July 31st, 2024. Information on potential factors and risks that could affect our results is included in our SEC file. 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. Today's discussion includes references to non-GAAP

Speaker Change: Participants are cautioned not to place undue reliance on these statements, which reflect management's opinions only as of today, July 31st, 2024. Information on potential factors or risks that could affect our results is included in our RCC files.

Michael R. McDonald: Clean Harbors believes that such information provides an additional measurement in the 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.

Eric W. Gerstenberg: 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. Let me turn the call over to Eric Gerstenberg to start. Eric? Thanks, Michael. Good morning, everyone, and thank you for joining us.

Eric W. Gerstenberg: Thanks, Michael. Good morning, everyone. And thank you for joining us. Because safety is the foundation of our core values at Clean Harbors, I will start by highlighting our total recordable..., which on a year-to-date basis is.70, which is consistent with where we were a year ago at this time. The recent impact on some of our employees by Hurricane Beryl in the Gulf, as well as both the Alberta and California wildfires, is a reminder of how critical it is to be prepared for any kind of crisis situation. Thankfully, all of our employees in these regions are safe.

Eric W. Gerstenberg: Because safety is the foundation of our core values at Clean Harbors, I will start by highlighting our total recordable incident rate.

Eric W. Gerstenberg: The recent impact on some of our employees by Hurricane Beryl in the Gulf, as well as both the Alberta and California wildfires, is a reminder of how critical it is to be prepared for any kind of crisis situation.

Eric W. Gerstenberg: Turning to our Q2 performance on slide 3, we delivered exceptional results that surpassed our guidance, driven by record volumes of containerized waste. 2016 Pricing Movement, revenue, and adjusted EBITDA were the highest in our history, with adjusted EBITDA margin improving 50 basis points year-over-year. Environmental Services continues to operate.

Eric W. Gerstenberg: Thankfully all of our employees in these regions are safe.

Eric W. Gerstenberg: Turning to our Q2 performance on slide 3, we delivered exceptional results that surpassed our guidance, driven by record volumes of containerized waste and sustained pricing momentum.

Eric W. Gerstenberg: Revenue and adjusted EBITDA were the highest in our history, with adjusted EBITDA margin improving 50 basis points year-over-year.

Eric W. Gerstenberg: ES results are attributable, in part, to a robust demand for our facilities network and several service providers in Specialty Fields. This business benefited from its first full quarter of HEPA code, which we acquired in March. Our SKSF segment posted a substantial sequential increase from Q1, fueled by the start of the summer driving season and improved lubricant prices. Corporate costs were higher in the quarter due to incremental headcount from acquisitions, greater incentive compensation, and a handful of discrete expenses related to legal and environmental liability matters.

Environmental Services continues to outperform. ES results are attributable, in part, to a robust demand for our facilities network and several service businesses.

Eric W. Gerstenberg: Specialty Field Services

Eric W. Gerstenberg: Corporate costs were higher in the quarter due to incremental headcount from acquisitions, greater incentive compensation, and a handful of discrete expenses related to legal and environmental liability matters.

Unknown Executive: Turning to slide four, environmental services enjoyed another fantastic quarter by turning increased revenue into even larger profit growth. Epico accounted for more than half of the segment's 12% revenue, with a remainder coming from organic gains attributed to volume and price. This top-line growth drove an 18% increase in segment adjusted EBITDA, translating to 140 basis points of margin expansion. The adjusted EBITDA in Environmental Services has now increased year-over-year for 11 consecutive quarter

Eric W. Gerstenberg: with a remainder coming from organic gains attributed to volume and pricing. This top line growth drove an 18% increase in segment adjusted EBITDA, translating to 140 basis points of margin expansion.

Eric W. Gerstenberg: Adjusted EBITDA on Environmental Services has now increased year-over-year for 11 consecutive quarters.

Unknown Executive: Our technical services business was a key contributor to the segment's performance, with a revenue increase of 14%. We again collected record levels of drum volumes through the network, which is reflected in a continued increase in deferred revenue on our balance sheet. Even with completing a major turnaround at our Deer Park facility early in the quarter, our incinerators achieved utilization of 88%. Average incineration pricing rose 3% in the quarter, and we continue to expect our incinerators will deliver utilization... Unknown Executive, Clean Harbors Inc.

Eric W. Gerstenberg: Our technical services business was a key contributor to the segment's performance, with a revenue increase of 14%. We again collected record levels of drum volumes through the network, which is reflected in continued increase in deferred revenue on our balance sheet.

Eric W. Gerstenberg: Even with completing a major turnaround at our Deer Park facility early in the quarter, our incinerators achieved utilization of 88%.

Eric W. Gerstenberg: in the mid to high 80% range for the full year. We also remain on track to open our new state-of-the-art incinerator in Kimmel, Nebraska in Q4. The team has done an outstanding job keeping that construction on schedule, and the plant is coming together nicely.

Unknown Executive: Landfills also had a strong performance in Q2, with both volume and average price up as we saw healthy drum volumes and bass business supported by Project. We continue to expect landfills to deliver a very good 2024 with a broad mix of waste streams at Project Uppercut. Field service generated the largest increase in the quarter, up 64%. While this was primarily driven by HEPCO, our legacy business posted low teens percentage growth. The acquisition has been a great fit with our existing field service operations. During the quarter, we responded to several larger emergency response events where both teams worked side-by-side.

Eric W. Gerstenberg: Landfills also had a strong performance in Q2, with both volume and average price up as we saw healthy drum volumes and bass business supported by project work. We continue to expect landfills to deliver a very good 2024 with a broad mix of waste streams and project opportunities.

Eric W. Gerstenberg: Field services generated the largest increase in the quarter, up 64%. While this was primarily driven by HEPCO, our legacy business posted low teens percentage growth. The acquisition has been a great fit with our existing field service operations.

Eric W. Gerstenberg: During the quarter, we responded to several larger emergency response events where both teams worked side-by-side. These large events in total accounted for roughly $24 million of revenue in Q2.

Eric W. Gerstenberg: These large events in total accounted for roughly $24 million in revenue. We expect field services to continue to perform well as we fully integrate and internalize HEPCO's National Health Center operations and collaborate on future emergency response events. In Q2, Safety, Clean, and Environmental Services extended its multi-year momentum with revenue growth of 11% as its core offerings, particularly containerized waste, remain in high demand. However, industrial services revenue declined 10% due to reduced turnaround activity compared to last year.

Eric W. Gerstenberg: We expect field services to continue to perform well as we fully integrate and internalize HEPCO's National Health Center operations and collaborate on future emergency response events.

Eric W. Gerstenberg: In Q2, Safety, Clean, Environmental Services extended its multi-year momentum with revenue growth of 11% as its core offerings, particularly containerized waste, remain in high demand.

Eric W. Gerstenberg: Industrial services revenue declined 10% due to reduced turnaround activity compared to last year.

Michael L. Battles: We anticipate a strong turnaround schedule this fall, and we expect to see a return to IS revenue growth in Q3. Overall, just another great quarter for our ES segment. With that, let me turn things over to Mike.

Eric W. Gerstenberg: We anticipate a strong turnaround schedule this fall, and we expect to see a return to IS revenue growth in Q3. Overall, just another great quarter for our ES segment. With that, let me turn things over to Mike. Mike?

Michael L. Battles: Thanks, Eric, and good morning. Turning to slide five, FKSS rebounded from a challenging Q1 by achieving more than 51 million in adjusted EBITDA, up nearly $22 million sequentially. Our plans ran smoothly in the quarter, resulting in a 3% increase in base oil and lubricant volumes sold from a year ago, which, along with the acquisition of Noble Oil, drove an 8% increase in revenue. Although the quarter opened with several announced posted base price increases, the market never fully incorporated those.

Mike: Thanks Eric and good morning. Turning to slide 5, SKSS rebounded from a challenging Q1 by achieving more than $51 million in adjusted dividends, up nearly $22 million sequentially.

Speaker Change: Our plans ran smoothly in the quarter, resulting in a 3% increase in base oil and lubricant volumes sold from a year ago, which, along with the acquisition of Noble Oil, drove an 8% increase in revenue.

Michael L. Battles: Overall demand led to a weaker spot market for non-contracted volumes and resulted in a small year-over-year decline in segment profitability. With the addition of NOBLE, our waste oil collection achieved a record level at 67 million gallons in Q2, up 5% from a year ago. Average collection cost was at a low pay-for-oil level in the quarter.

Speaker Change: Overall demand led to a weaker spot market for non-contracted volumes and resulted in a small year-over-year decline in segment profitability.

Speaker Change: With the addition of NOBLE, our waste oil collection has achieved a record level at 67 million gallons in Q2, up 5% from a year ago.

Speaker Change: Average collection cost was at a small pay-for-oil level in the quarter. When you exclude Noble, our legacy collections average a slight charge for oil. We're continuing to procure the feedstock we need for our nine re-refineries at the best possible price.

Michael L. Battles: When you exclude Noble, our legacy collections averaged a slight charge for oil. We're continuing to procure the feedstock we need for our nine re-refineries at the best possible price. Part of our strategy to minimize the volatility in SKSS is to intensify our focus on value-added products. For example, Q2 blood enzymes were up from the prior year, representing 19% of total gallons sold.

Speaker Change: Part of our strategy to minimize the volatility in SKSS is to intensify our focus on value-added products. Q2 blooded volumes were up from the prior year, representing 19% of total gallons sold.

Michael L. Battles: Our group three initiative is also part of the stabilization strategy. We dedicated one of our refineries to full-time group three production, and it ran well. We are encouraged about our ability to produce more groups. We will be running a pilot at another re-refinery to expand this program in the quarters ahead. Last quarter, we discussed our multi-year partnership with Castro and its more circular program. Jasper will officially launch the program in late May at a key transportation industry trade show.

Speaker Change: Our Group 3 initiative is also part of the stabilization strategy. We dedicated one of our refineries to full-time Group 3 production, and it ran well in Q2.

Eric W. Gerstenberg: We are encouraged about our ability to produce more Group 3. We will be running a pilot at another re-refinery to expand this program in the quarters ahead.

Eric W. Gerstenberg: Last quarter we discussed our multi-year partnership with Castro and it's more circular program. Castro officially launched the program in late May at a key transportation industry trade show.

Michael L. Battles: They have been employing considerable marketing efforts since the program was announced, with two dozen media playgroups and key publications. However, we can't share specifics about their sales progress. We can confirm that they have been building a pipeline of interest across many large fleet operations. Our multi-year agreement with CASTRO as a sustainability partner is a strong validation of our high-quality, re-refined base. Purchases of base oil by Castro have been strong, and we're excited about the long-term potential of this partnership.

Eric W. Gerstenberg: Our multi-year agreement with Castrol as a sustainability partner is a strong validation of our high-quality, re-refined base oil.

Eric W. Gerstenberg: Purchases of base oil by Castrol have been strong, and we're excited about the long-term potential of this partnership. While we don't expect immediate significant gains from this program due to its long sales cycle, we remain optimistic about its future impact.

Michael L. Battles: While we don't expect immediate significant gains from this program due to its long sales cycle, we remain optimistic about its future impact. Turn to capital allocation on slide 6. Given our strong cash flow expectations in the second half, our current cash balance, and low leverage, we are in an excellent position today to execute the capital allocation strategies we outlined as part of Vision 2027. Halfway through 2024, we have demonstrated the key elements of our strategy, continuing to grow the core business through investments like the Kimbell Incinerator and our expansion plan in Baltimore, and making smart acquisitions where we can extract considerable value, such as Hepico and Noble

Eric W. Gerstenberg: Turn to Capital Allocation on slide 6. Given our strong cash flow expectations in the second half, our current cash balance, and low leverage, we are in excellent position today to execute the capital allocation strategy we outlined as part of Vision 2027.

Speaker Change: Halfway through 2024, we have demonstrated the key elements of our plan, continuing to grow the core business through investments like the Kimbell Incinerator and our expansion plans in Baltimore, and making smart acquisitions where we can extract considerable value, such as HEPACO and Noble.

Michael L. Battles: Looking ahead, we will continue to pursue similar, both internal and external, that enable us to capture economies of scale, improve margins, increase cash flow conversion, and ultimately generate the best returns for our shareholders. We continue to see a healthy pipeline of potential M&A, as well as additional opportunities to invest internally. Coming off a strong Q2, we enter the back half of the year with good momentum. Within ES, our fullest outlook is supported by our record backlog, a growing project pipeline, and demand for our broad suite of services. We are also excited about the prospects of our legacy field service being combined with HEPA-CO to further bolster our ER capabilities while providing numerous synergies opportunities.

Speaker Change: Looking ahead, we will continue to pursue similar opportunities, both internal and external, that enable us to capture economies of scale, improve margins, increase cash flow conversion, and ultimately generate the best returns for our shareholders.

Speaker Change: We continue to see a healthy pipeline of potential M&A, as well as additional opportunity to invest internally.

Eric W. Gerstenberg: Coming off a strong Q2, we enter the back half of the year with good momentum. Within ES, our fullest outlook is supported by our record backlog, a growing project pipeline, and demand for our broad suite of services.

Eric W. Gerstenberg: We are also excited about the prospects of our legacy field service business combined with HEPACO to further bolster our ER capabilities while providing numerous energy opportunities.

Michael L. Battles: Within SKSS, we expect to see a stable performance in the quarters ahead, despite the current market demand environment for basal. We will continue to capitalize on initiatives like Group 3, blended sales, and our capital partnership. Overall, our outlook for the balance of 2024 remains favorable. We expect to deliver an outstanding financial performance this year and remain on track to achieve our Vision 2027 goals. With that, I will turn it over to our CFO, Eric. Thank you, Mike. Good morning.

Eric W. Gerstenberg: Within SKSS we expect to see a stable performance in the quarters ahead despite the current market and demand environment for base oil. We will continue to capitalize on initiatives like Group 3, blended sales, and our cash flow partnership.

Eric W. Gerstenberg: Overall, our outlook for the balance of 2024 remains favorable. We expect to deliver an outstanding financial performance this year and remain on track to achieve our Vision 2027 goals. With that, let me turn it over to our CFO , Eric Dugas.

Eric J. Dugas: Turning to the income statement on slide 8, we delivered strong results this quarter, achieving record levels of revenue and adjusted EBITDA, along with continued margin expansion. Throughout the first half of 2024, our ES segment has showcased its ability to grow profitably by leveraging our extensive disposal and recycling network, coupled with our service. We're also encouraged to see FKSS have a nice bounce back in Q2 after an uneven start to the year.

Eric J. Dugas: Thank you, Mike. Good morning, everyone.

Eric J. Dugas: Turning to the income statement on slide 8, we delivered strong results this quarter, achieving record levels of revenue and adjusted EBITDA, along with continued margin expansion.

Eric J. Dugas: Throughout the first half of 2024, our ES segment has showcased its ability to grow profitably by leveraging our extensive disposal and recycling network, coupled with our service businesses.

Eric J. Dugas: We're also encouraged to see SKSS have a nice bounce back in Q2 after an uneven start to the year.

Eric J. Dugas: On the top line, as Eric highlighted, we delivered a good mix of organic and acquisition-related growth as we grew total revenues by more than $150 million year-over-year. Adjusted EBIDAP of $328 million came in above our expectations and was up over $40 million from a year ago. Our adjusted EBITDA margin in the quarter was 21.1%.

Eric J. Dugas: On the top line, as Eric highlighted, we delivered a good mix of organic and acquisition-related growth as we grew total revenues by more than $150 million year over year.

Eric W. Gerstenberg: Adjusted EBITDA of $328 million came in above our expectations and was up over $40 million from a year ago.

Eric J. Dugas: Up 50 basis points year-on-year and driven by strength in the ES segment, gross margin in the quarter was an impressive 33.3%, a 110 basis point increase from a year ago. This improvement speaks to the demand for our services and incremental volumes resulting in productivity gains. Realized Operational Efficiencies Across the Network. SG&A expense and the percentage of revenue was 12.7% higher than the prior year period.

Speaker Change: Our adjusted EBITDA margin in the quarter was 21.1%, up 50 basis points year-on-year and driven by strength in the ES segment.

Speaker Change: Gross margin in the quarter was an impressive 33.3%, a 110 basis point increase from a year ago.

Eric W. Gerstenberg: This improvement speaks to the demand for our services and incremental volumes resulting in productivity gains and realized operational efficiencies across the network.

Eric W. Gerstenberg: SG&A expense and the percentage of revenue was 12.7% in Q2.

Eric J. Dugas: The primary drivers were increased costs from the acquired businesses, non-recurring expenses related to legal and environmental liability, and Incentive Compensation, given the strong financial results. For the full year 2024, we now anticipate our SG&A expense to be slightly ahead of last year, but decreasing longer term. Consistent with our expectations, depreciation and amortization in Q2 came in at just over $100 million.

Eric W. Gerstenberg: Higher than the prior year period.

Eric W. Gerstenberg: The primary drivers were increased costs from the acquired businesses.

Eric W. Gerstenberg: Non-recurring expenses related to legal and environmental liabilities, and incentive compensation, given the strong financial results we are seeing.

Eric W. Gerstenberg: For the full year 2024, we now anticipate our SG&A expense as a percentage of revenue to be in the mid to high 12% range.

Eric W. Gerstenberg: Slightly ahead of last year, but decreasing longer term.

Eric W. Gerstenberg: Consistent with our expectations, depreciation and amortization in Q2 came in at just over $100 million.

Eric J. Dugas: This is up from a year ago, primarily due to acquisitions. For 2024, we now expect appreciation and amortization in the range of $395 to $405 million. Income from operations in Q2 was $215.59, up 14% from the prior year.

Eric W. Gerstenberg: This is up from a year ago, primarily due to acquisitions.

Eric W. Gerstenberg: For 2024, we now expect appreciation and amortization in the range of $395 to $405 million.

Eric W. Gerstenberg: Income from operations in Q2 was $215.5 million, up 14% from prior year.

Eric J. Dugas: Due to net income of $133.3 million, resulting in earnings per share of $2.46. All figures up 15% from the prior year. Turning to slide 9, the balance sheet. Cash and short-term marketable securities at quarter end were $493 million.

Eric W. Gerstenberg: Q2 Net Income was $133.3 million, resulting in earnings per share of $2.46, both figures up 15% from prior year.

Eric W. Gerstenberg: Turning to slide 9, the balance sheet.

Eric W. Gerstenberg: Cash and short-term marketable securities at quarter end are $493 million, up about $50 million from the end of Q1.

Eric J. Dugas: Up about $50 million from the end of Q1. Our increased receivables balance at Q2 is largely driven by acquisitions. We expect to collect that cash in the coming months. We ended the quarter with just under $2.8 billion in debt, which reflects the $500 million incremental term loan that we issued to finance the HEPACO and NOBL transactions in Q1 of this year. Our balance sheet remains in terrific shape. Our net debt to EBITDA ratio was 2.3 times at quarter end. No significant debt amounts are coming due until 2027. Our overall interest rate at quarter end was 5.7%.

Eric W. Gerstenberg: Our increased receivables balance at Q2 is largely driven by acquisitions, and we expect to collect that cash in the coming months.

Eric W. Gerstenberg: Our balance sheet remains in terrific shape.

Eric W. Gerstenberg: Our overall interest rate at Quarter End was 5.7%.

Eric J. Dugas: Turning to cash flows on slide 10, cash provided from operations in Q2 was $216 million, up from prior years. FX, Net of Disposals, was $132 million, which is down from Q1. But up more than $10 million from the prior year due to investments in our network, including $20 million in Q2 spend on the new Kimball incinerator, where our total life-to-date spend now sits at $175 million. For the quarter, adjusted free cash flow was $84 million, which was slightly below the prior year.

Eric W. Gerstenberg: Turning to cash flows on slide 10.

Eric W. Gerstenberg: CapEx net of disposals was $132 million.

Eric W. Gerstenberg: For the quarter, adjusted free cash flow was $84 million.

Eric J. Dugas: For 2024, we expect our net capex to be in the range of $400 to $430 million. This range includes 65 million related to Kimball and $20 million for the purchase and expansion of the Baltimore facility this year. During Q2, we bought back 23,000 shares of stock at an average price of $214 a share. That's up from June 30th. We have approximately $545 million remaining under our authorized repurchase program.

Eric W. Gerstenberg: which was slightly below prior year.

Eric W. Gerstenberg: During Q2, we bought back 23,000 shares of stock at an average price of $214 a share.

Eric W. Gerstenberg: As of June 30th, we had approximately $545 million remaining under our Authorized Repurchase Program.

Eric J. Dugas: Moving to slide 11, based on our Q2 results and market conditions, we are raising our 2024 Adjusted EBITDA Guidance to a range of $1.125 billion to $1.165 billion, with a midpoint of $1.145 billion and representing a 13% increase from 2023 at this midpoint. This guidance assumes a $35 million contribution from HEPA code this year and approximately $5 million from Noble Oil.

Eric W. Gerstenberg: to $1.165 billion.

Eric J. Dugas: Looking at our annual guidance from a quarterly perspective, we are expecting Q3 adjusted EBITDA growth of 20 to 24% versus the prior year. We now expect our Higher Full Year 2024 Adjusted EBITDA Guidance to translate to our segments as follows. For Environmental Services, we expect the adjusted EBITDA in 2024 at the midpoint of our guidance to increase 13% to 16% from 2023. Given the very strong first half performance already complete, we are anticipating a similar performance in the second half.

Eric J. Dugas: We expect to generate continued year-over-year volume growth in our core lines of business, while also continuing to capture synergies and benefit from the addition of peplum. SKSS, based on the current base oil and lubricant market conditions.

Eric W. Gerstenberg: We expect to generate continued year-over-year volume growth in our core lines of business while also continuing to capture synergies and benefit from the addition of PEPCO.

Speaker Change: For SKSS, based on the current base oil and lubricant market conditions, we expect full year 2024 adjusted EBITDA at the midpoint of our guidance to increase 3-5% for 2023.

Eric J. Dugas: We expect full year 2024 adjusted EBITDA at the midpoint of our guidance to increase 3-5% for 2023. For our corporate segment, at the midpoint of our guidance, we expect negative adjusted EBITDA results to be up 14 to 15% compared to 2023. The increase here relates to costs from our acquisitions, including some one-time severance and integration expenses.

Speaker Change: In our corporate segment, at the midpoint of our guide, we expect negative adjusted EBITDA results to be up 14-15% compared to 2023.

Speaker Change: The increase here relates to costs from our acquisitions, including some one-time severance and integration expenses.

Eric J. Dugas: Higher Incentive Compensation, given our strong results this year, and the expenses related to discrete legal and environmental liabilities, which we're incurring in Q2. As it leads to the acquisition-related increases, some of these are synergy opportunities that we will realize in future periods. On a percentage of revenue basis, we expect the corporate segment results to be essentially flat with the prior year. For 2024, we currently expect adjusted free cash flow to be in the range of $350 to $390 million. The midpoint of 370 is.

Speaker Change: Higher Incentive Compensation, given our strong results this year, and the expenses related to discrete legal and environmental liabilities, which we're incurring in Q2.

Speaker Change: As it leads to the acquisition-related increases, some of these are synergy opportunities that we will realize in future periods.

Speaker Change: On a percentage of revenue basis, we expect the corporate segment results to be essentially flat with the prior year.

Speaker Change: For 2024, we currently expect adjusted free cash flow to be in the range of $350 to $390 million.

Eric J. Dugas: As I pointed out previously... If you take that midpoint and add back the Kimball and Baltimore spend, you arrive at an adjusted free cash flow of $455 million, which translates to approximately 40% of our adjusted EBITDA midpoint expectations. In closing, Q2 was a continuation of the favorable business trends we experienced in Q1. We see positive signs and believe this momentum will carry through the remainder of the year, and I share Eric and Mike's enthusiasm about our growth prospects for 2024 and beyond in the EF segment. We are excited about our backlog of waste in Project Up, completing the full integration of HEPA Co. and bringing Kimball online. For SKSS, we believe the business is stable in terms of collection, production, and volume.

Speaker Change: with a midpoint of 379.

Speaker Change: As I pointed out previously...

Speaker Change: If you take that midpoint and add back the Kimball and Baltimore spend, you arrive at an adjusted free cash flow of $455 million, which translates to approximately 40% of our adjusted EBITDA midpoint expectation.

Speaker Change: In closing, Q2 was a continuation of the favorable business trends we experienced in Q1.

Speaker Change: We see positive signs and believe this momentum will carry through the remainder of the year and I share Eric and Mike's enthusiasm about our growth prospects for 2024 and beyond.

Speaker Change: We are excited about our backlog of waste and project opportunities.

Speaker Change: Completing the full integration of HEPA Co. and bringing Campbell online.

Speaker Change: For SKSS, we believe the business is stabilized in terms of collection, production, and volumes.

Speaker Change: And we're excited about the initiatives we have underway.

Operator: We're excited about the initiatives we have underway. Overall, a great year is in store for us in 2024, both for the company and our shareholders. And with that, LaTanya, please open the call for questions. Thank you. At this time, we'll conduct a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue.

Speaker Change: And with that, LaTanya, please open the call for questions.

Operator: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment while we poll for our first question. Our first question comes from Tyler Brown with Raymond James. Please proceed. Hey, good morning.

Patrick Tyler Brown: Hey guys, a big picture question. So obviously, this quarter was great. Very solid growth along with record backlogs. But as we watch industrial production, you know, the story in the industrial economy doesn't seem all together that great. So I was hoping you guys could kind of bridge that gap. Is it just that there was a lot of tightness in the hazardous waste markets, maybe back in 21, 22? Are you still feeling some of the reverberations of that?

Speaker Change: Seymour

Eric W. Gerstenberg: Has there been a steady stream of deferred cleanup work? Are you guys just winning market share? Just what do you think is driving the solid momentum? Is there really any reason to believe that that momentum can't continue into 25? Yeah, Tyler. This is Eric. I'll begin here.

Eric W. Gerstenberg: So I think you made a lot of great points right there, and they're all in line with how our business has been doing. There continues to be tightness across the whole hazardous waste industry, tightness, and incineration. Our team, though, has just done an awesome job of executing on many different strategies, though, that we've had to grow all of our lines of business with our customers, get more penetrated into those customers. So when you think about our drum growth, as an example, we've seen drum growth and continue to see all of our facilities really handle a tremendous amount of volumes through them. From incineration, to wastewater treatment, to landfill, to our TSDFs, they've all done a great job handling this volume.

Speaker Change: Yeah Tyler, this is Eric. I'll begin here. So I think you made a lot of great points right there and they're all in line with how our business has been doing. There continues to be tightness across the whole hazardous waste industry, tightness incineration.

Speaker Change: Our team, though, has just done an awesome job on executing on many different strategies, though, that we've had to grow all of our lines of business with our customers, get more penetrated into those customers. So, when you think about our drum growth as an example, we've seen drum growth in

Speaker Change: and growing our market share in the environmental business, the technical service area, the safety clean environmental. We've also seen strong project growth across the board.

Speaker Change: We continue to see all of our facilities really handle a tremendous amount of volumes through them, from incineration to wastewater treatment.

Speaker Change: to Landfill.

Eric W. Gerstenberg: So all in all, yes, all of those factors that you just mentioned have played into how we've done as a company and really grown our volumes and leveraging our facilities network that is really unparalleled. So great job to the team. Yeah, and you know, Eric Dugas, I know that the segments have moved around a bit over the years, but isn't 27.5 a record margin in the EFs?

Speaker Change: to our TSDS, they've all done a great job handling this volume. So

Speaker Change: All in all, yes, all of those factors that you just mentioned have played into how we've done as a company in really growing our volumes and leveraging our facilities network that is really unparalleled. So, great job to the team.

Eric J. Dugas: Yeah, and you know, Eric Dugas, so I know that the segments have moved around a bit over the years, but isn't 27 and a half a record margin in the EFs?

Eric J. Dugas: And I get that Q2 is typically your seasonally strongest margin quarter, but if you look at margins, they're up over 300 basis points on a three-year stack. I know that 30% is an aspirational goal in EFs, but maybe how aspirational really is it at this point? Is it something that could be achievable by 27, particularly as Kimball ramps up?

Speaker Change: And I get that Q2 is typically your seasonally strongest margin quarter, but if you look at margins, they're up over 300 basis points on a three-year stack. I know that 30% is an aspirational goal in ES.

Speaker Change: But maybe how aspirational really is it at this point? Is it something that could be achievable by 27, particularly as Kimball ramps up?

Eric J. Dugas: Yeah, we certainly think it's achievable, Tyler. It's, you know, when you look at that growth, it is, to your point, a record Q2 for margin, even with industrial services having fewer turnarounds year over year. The team did a great, great job of leveraging the network and leveraging our fixed costs and taking out and managing efficiencies throughout the network. So a lot of great work that we put into getting to where we are today.

Speaker Change: Yeah, we certainly think it's achievable, Tyler. You know, when you look at that growth, it is, to your point, a record Q2 for margin, even with industrial services having less turnarounds year over year.

Speaker Change: The team did a great job of leveraging the network and leveraging our fixed costs and taking out and managing efficiencies throughout the network. So a lot of great work that we put into getting to where we are today. And yes, we do believe that

Eric J. Dugas: And yes, we do believe that we will continue to be able to have margin expansion in the environmental business and shoot for that 30% goal in the 2027 area. I think the only thing I'd add to that, Todd, is that that has been happening for the past few years. I mean, if you look back to 2018 and 19, that's over 500 basis points from where we are now. So I think that train kind of continues for all the reasons that Eric is just a ticket.

Speaker Change: We will continue to be able to have margin expansion in the environmental business and shoot for that 30% goal to that 2027 area.

George: I think, George, I'd add on that, Tyler, that's been happening for the past two years. I mean, if you look back to 2018 and 19, that's over 500 basis points from that. So, I think that train kind of continues for all the reasons that Eric has just articulated.

Eric W. Gerstenberg: Yeah, absolutely. And then just a little bit more color on the 24 million patients on large scale ER. Um, what exactly was that? And does that revenue linger into the second half? Now, it was a couple of large events that we had one in the Midwest and one in the Pacific Northwest. We had a couple other sizable events as well that all went into that 24 million that we point out. Some of that's going to continue to carry over into Q3. But for the most part, they're starting to wind down. We just wanted to call them out, Tyler, because they were so large.

Speaker Change: Yeah, absolutely. And then just a little bit more color on the $24 million of large-scale ER. What exactly was that, and does that revenue linger into the second half?

Speaker Change: It was a couple of large events that we had, one in the Midwest and one in the Pacific Northwest. We had a couple other sizable events as well that all went into that $24 million that we point out.

Speaker Change: Some of that's going to continue to carry over into Q3, but for the most part they're starting to wind down.

Eric W. Gerstenberg: It did, you know, field service had a great quarter, and, you know, it's an emergency response business at its core. So it's not surprising. There just were some very large ones that really drove kind of the beat in Q2, health care drivers.

Speaker Change: We just wanted to call them out to either because they were so large it does it did you know field service had a great border and

Speaker Change: It's an emergency response business at its core, so it's not surprising. There just were some very large ones that really drove the beat in Q2. And just to add to it, as we pointed out in our script,

Eric W. Gerstenberg: And just to add to it, you know, as we pointed out in our script, our teams between HEPA Co acquisition and our field service team did a really solid job of responding to the needs of those ERs, supporting them together, taking care of them quickly, and managing and minimizing the effect of the environment. So, great job. Perfect. And just my last one, squeeze it in here.

Speaker Change: Our teams between HEFACO Acquisition and our field service teams, I think they did a really solid job of responding to the needs of those ERs, supporting them together, taking care of them quickly, and managing and minimizing the effect of the environment. So, great job to the team there.

Michael L. Battles: Obviously, cash flow is solid, likely to get better into 2025, and the balance sheet's in good shape. Mike, you talked a little bit about the M&A pipeline, but can you give us a little bit more color there? There's a lot of interest in hazard waste, and non-traditional solid waste assets out there. Just seeing a little more color on the pipeline, either smaller tuck-ins or possibly even something larger. Can you just talk about the prospects, maybe this year and into next? Thanks, guys. Sure, Tyler.

Speaker Change: Perfect. And just my last one, squeeze it in here. Obviously, cash flow is solid, likely to get better into 25, balance sheet's in good shape.

Speaker Change: Mike, you talked a little bit about the M&A pipeline, but can you give us a little bit more color there? There's a lot of interest in haz waste, non-traditional solid waste assets out there.

Speaker Change: Just seeing a little more color on the pipeline, either smaller tuck-ins or possibly even something larger. Can you just talk about the prospects maybe this year and into next? Thanks, guys.

Michael L. Battles: So, you know, I say that, you know, as you've noticed, the multiples are going up. I mean, the multiples for, [inaudible] and the leverage we have on the balance sheet, we're kind of in a great space to do it because I think that the leverage is actually going to continue to kick down here in Q3 without M&A and get below 2 by the end of the year, given the forecasting guide we've given. All right, thank you very much.

Mike: Sure, Tyler. So, you know, I say that, you know, as you as you've noticed, you know, the multiples are going up. I mean, the multiples for

Speaker Change: Environmental type service businesses I'd say have been drifting up even even though you think they'd be drifting down given interest rates But I think that you know given recent transactions in the marketplace you can see in public company transactions

Speaker Change: You can see the multiples that are being paid by others. And so we're going to have to pay up. We think there's value there. As I've always said to them, we want to be disciplined in our assessment. We want to make sure that these assets make strategic sense and financial sense. And we've walked away from some things.

Speaker Change: that although it may have fit strategically, don't fit financially. You need to be very disciplined. I'd say the pipeline's pretty strong on both business, both on the environmental service business and other online businesses, and it's all based on returns.

Tyler: This is not the new year, Tyler, but the pipeline is strong. We're very active. I would say, as Eric said, I think HEPA code is going to turn out, and NOBLE, are going to turn out to be great actors. We already see the benefits of them already after three or four months.

Speaker Change: So, I think that there's kind of more to come here, and you look at the cash flow generation and the leverage we have on the balance sheet, we're kind of in a great space to do it, because I think that the leverage is actually going to continue to tick down in Q3 without M&A and get below 2 by the end of the year, given kind of the forecasting guide we've given today.

Adam Mullin: Thanks, guys. Thanks, Chuck. The next question comes from Jerry Revich with Goldman Sachs. Please proceed. Hi, this is Adam Mullin on behalf of Jerry today. Good morning.

Adam Mullin: I think incinerator pricing was 3% in the quarter. Just wondering how that breaks down between core price and mix, and then can you talk to us about your pipeline for your hazardous waste landfill and incinerator business? How do you expect product mix to trend in the back half of the year versus last year? Thanks. Yeah, Jerry.

Speaker Change: All right, thank you very much.

Speaker Change: The next question comes from Jerry Revich with Goldman Sachs. Please proceed.

Speaker Change: Hi, this is Adam Mohn for Jerry today. Good morning.

Speaker Change: What do you have to do?

Adam Mohn: I think incinerator pricing was 3% in the quarter, just wondering how that breaks down between core price and mix, and then can you talk to us about your pipeline for your hazardous waste landfill and incinerator business? How do you expect product mix to trend in the back half of year versus last year? Thanks.

Unknown Executive: So for the second quarter, as we've talked about before, we had a really large shutdown at our Deer Park incinerator. That unit is one of the largest consumers of our direct burn bulk waste streams, so that certainly had an effect on the mix of that overall incineration pricing. Year to date, we're on five to 6%. It's a little bit down from last year, as things have changed a little bit.

Speaker Change: Yeah Jerry, so for the second quarter as we've talked about before we had a really large shutdown at our Deer Park incinerator. That unit is one of the largest consumers of our

Speaker Change: Direct Burn Bulk Waste Streams. So that certainly had an effect in the mix of that overall incineration pricing.

Jerry: Year-to-date, we're on a five to six percent. It's a little bit down from last year, but as things change

Unknown Executive: But overall, just again, continued strong performance will continue to outpace inflation on the incineration pricing scale, and we have ways to continue to work on that. On the landfill and incineration pipeline area, they're strong, as we showed from our second quarter performance and year-to-date, both in projects and base business and drum volumes into our landfill. All those pipelines are up into those units, and a great job too on some of the really large projects that we've been able to leverage into those sites.

Speaker Change: A little bit, but...

Speaker Change: Overall, just a great year. I hope you enjoyed it. And I'll see you next time.

Speaker Change: Again, continued strong and performance will continue to outpace inflation on the incineration pricing size, and we have ways to continue to work on that.

Speaker Change: I'm a landfill and incineration pipeline area. They're strong as we showed from our second quarter performance and year-to-date

Speaker Change: Open Projects and Base Business and Drum Volumes into our Landfill, all those pipelines are up into those units.

Speaker Change: And a great job, too, on some of the really large projects that we've been able to leverage into those sites.

Unknown Executive: On the incineration side, when we just met recently for our quarterly operating review, not just in incineration but across the business, all the pipelines were really growing when we looked at how we segment our business, look at lines of business, the different business units, really solid pipeline growth quarter over quarter and year over year in the second quarter. So they're solid.

Speaker Change: On the incineration side, when we just met recently on our quarterly operating review,

Speaker Change: Not just in incineration, but across the business, all the pipelines were really growing when we look at how we segment our business, look at lines of business, the different business units, real solid pipeline growth, quarter over quarter, and year over year, and second quarter, so they're solid.

Unknown Executive: And you can also see from our deferred revenue, our deferred revenue ticked up to $108 million, so we're really excited to really leverage that Kimball incinerator that we're bringing online in Q4, so some solid momentum there. And then I was wondering if you could just talk about how you see the recent Chevron spill affecting, you know, the PFAS opportunity, if at all, and more broadly, hazardous waste regulations set by the EPA.

Speaker Change: And you can see also from our deferred revenue, our deferred revenue ticked up to $108 million. So we're really excited to really leverage that Kimball incinerator that we're bringing online in Q4. So some solid momentum there.

Speaker Change: And then I was wondering if you could just talk about how you see the recent Chevron rolling affecting, you know, the PFAS opportunity, if at all, and more broadly hazardous waste regulations set by the EPA.

Unknown Executive: Yeah, our interpretation, Adam, at Chevron is that it is not going to have really any effect on the regulatory environment for us, and particularly PFAS. You know, the regulations that are in play today when you think about record waste codes around how waste is managed to the right disposal option, those aren't going to be changed. They've been in place for a long time. They're a very, very rigid foundation and record regulations. We don't think Chevron at all affects that.

Speaker Change: Yeah, our interpretation, Adam, of Chevron is that it is not going to have really any effect on the regulatory environment for us, and particularly PFAS.

Speaker Change: You know, the regulations that are in play today, when you think about record waste codes around how waste is managed to the right disposal option.

Speaker Change: Those aren't going to be changed. They've been in place for a long time. They're a very rigid foundation.

Unknown Executive: And on the PFAS side, there's so much data and so much analysis over the years of how PFAS has really affected the environment. Hard to ever think that a Chevron spill is going to affect how those regulations are going to continue to play out for the industry. Great, thanks so much.

Speaker Change: required regulations. We don't think Chevron at all affects that. And on the PFAT side.

Speaker Change: There's so much data and so much analytical over the years of how PFAS has really affected the environment. It's hard to ever think that a Chevron rolling is going to affect how those regulations are going to continue to play out for the industry.

Adam Mullin: The next question comes from David Manthey with Baird. Please proceed. Hey, good morning, guys. Unknown Attendee.

Speaker Change: Great, thanks so much.

Speaker Change: The next question comes from David Manthey with Baird. Please proceed.

David John Manthey: Hey, good morning, guys.

David John Manthey: Yeah, first question on Kimball. So it adds, I think, approximately 18% to your incineration capacity and, assuming it can take, [inaudible] landfills, wastewater, TSCS, all kinds of things. When we think about that incremental capacity, does it just impact that incineration piece, which is maybe a third of the tech services subsegment, or do you assume that it's going to require some of those other services? You've given us the EBITDA run rate you think you can get to. I'm just trying to get a finer point on revenues, if you could. Sure Dave, I'll begin, and I'm sure these guys will also add in. When you think about Kimball bringing it online...

Speaker Change: Good day, everyone.

David John Manthey: Yeah, first question on Kimball. So it adds, I think, approximately 18% to your incineration capacity and assuming it can take

Speaker Change: higher value waste streams. It could be even more than that as it relates to the dollars. But I'm trying to circle in here on the tech services subsegment revenue contribution from Kimball.

Speaker Change: I think in the past, back in many years ago, you gave us a breakdown of tech services between incineration, skilled labor, transportation, landfills, wastewater, TSCFs, all kinds of things.

Speaker Change: When we think about that incremental capacity, does it just...

Speaker Change: impact that incineration piece which is maybe a third of tech services sub-segment or

Speaker Change: do you assume that it's going to require some of those other services? So I'm just you've given us the EBITDA run rate you think you can get to. I'm just trying to get a finer point on revenues if you could.

Speaker Change: Sure, Dave. I'll begin, and I'm sure these guys will also add in. When you think about Kimball bringing it online,

Unknown Executive: The 18%, we've talked about 70,000 tons of capacity that'll last, and next year we're really looking to exceed 30,000 tons through that unit. When you look at the revenue at a higher level and the collection from our customers, we don't just collect incineration. When we're out there collecting waste streams from our customers, there's a broad range for which we're able to leverage our network of incineration and landfill, wastewater treatment, and recycling. So, we're serving customers based on all of their waste stream needs. Obviously, the network, and the industry have been backed up on incineration.

Speaker Change: The 18% we've talked about 70,000 tons of capacity that'll add

Speaker Change: and next year we're really looking to exceed 30,000 tons through that unit. When you look at the revenue at a higher level and the collection from our customers, we don't just collect incineration waste.

Speaker Change: When we're out there collecting waste streams from our customers, there's a broad range which we're able to leverage our network of incineration and landfill and wastewater treatment and recycling. So we're servicing customers based on all of their waste stream needs.

Unknown Executive: We're excited to get that capacity online. But to your question about revenue, it's a compilation of all those different waste streams that will benefit the technical services network. The only thing I'd add to that is that, when you think about the new incinerator, Dave, it's 12%, not 18%, so it is a lot more capacity, but not the 18.

Speaker Change: Obviously the network, the industry, has been backed up on incineration. We're excited to get that capacity online, but to your question about revenue, it's a compilation of all those different waste streams that will benefit the technical services network.

Speaker Change: You know, the only thing I'd add to that is that, so when you think about the new incinerator, David,

David John Manthey: 12%, not 18%, so it is a lot more capacity, but not.

Unknown Executive: I'd also say, when you look at tech service and you look at our financials, as Eric said, it's not just incineration; we have, you know, 32 TSDS, we have wastewater treatment facilities, we have solvent recycling facilities, you know, it really is over 100 permanent facilities across North America, and so, all those, all those facilities, Transient Disposal. So I think that's a very important thing to think about And it's really hard for us to kind of pin down how much came from the facilities versus transient disposal.

David John Manthey: Not the 18. I'd also say when you look at when you look at tech service and you look at

David John Manthey: Our financials, as Eric said, it's not just incineration, we have 32 GSDFs, we have wastewater treatment facilities, we have solvent recycling facilities, it really is over 100 permanent facilities across North America, and so all those facilities

Speaker Change: You know handle waste different types of waste streams And so it's really hard to kind of do we talk about incineration because it's the biggest part of it I get that and landfills are a big part of it But it's a it's a very big business TS is a very technical services very large business

David John Manthey: And so I think that it's really important to think about it broadly.

Unknown Executive: The answer is that those businesses drove a lot, and you see it in the tech services results. Tech services were up 14% year over year. Which is, you know, a lot of that is, I think that's probably two-thirds volume and one-third price. And I think that's really testament to what Eric just said about all the volumes we're getting in, not just in incineration, which ran well in the quarter, which was great, but all over the entire network.

Speaker Change: And so, and it's really hard for us to kind of pin down, like, how much came from the facilities versus transit disposal. The answer is that, you know, those businesses drove, and you see it in the tech services results in Q2. Tech services was up 14% year over year, which is, you know, a lot of that is, I think that's probably two-thirds volume and one-third price.

Eric J. Dugas: And I think that's really testament to what Eric just said around all the volumes we're getting in. Not just in incineration, which ran well in the quarter, which is great, but all over the entire net.

Unknown Executive: Got it. That's helpful. Thank you very much. And then second, just trying to scale the ER work that you referenced here this quarter to 24 million. It's not the highest you've seen, but it's not nothing either.

Speaker Change: Got it, that's helpful, thank you very much. And then second, just trying to scale the ER work that you referenced here this quarter, 24 million. It's not the highest you've seen, but it's not nothing either. I'm just trying to understand.

David John Manthey: I'm just trying to understand, Is that because of the addition of HEPACO and that's kind of a normal rate you'd expect to see going forward and related, is that something that you'll continue to report going forward given that that's such a large portion of HEPACO? Hey Dave. So this is Mike. I guess we thought it was important because there were a fair number of really large items. And as you know, you've followed us for many, many years. When we've had these large events, we've called you out. And I don't think they're, I don't think they're going to last for quarters and quarters.

Speaker Change: Is that because of the addition of HEPA Co. and that's kind of a normal rate you'd expect to see going forward and related, is that something that you'll continue to report going forward given that that's such a large portion of HEPA Co.'s business?

Michael L. Battles: Most of them are probably done kind of early Q3. And so these are just, we just felt it was important given that really strong growth in the field service business in the quarter, just so that as you think of a comparison to next year, you know, we're going to say, look, there are some of the large events that we were the beneficiary of at pretty good margins, just as we think of that.

Speaker Change: Hey Dave, so this is Mike. I guess we thought it was important because there were a fair amount of really large items, and as you know, you've followed us for many, many years.

Dave: When we've had these large events, we've called them out, and I don't think they're going to last for quarters and quarters, I think most of them are probably done kind of early Q3, and so these are just, we just felt it was important, given the

Speaker Change: We have seen just a really strong growth in field service business this quarter. Courier

Speaker Change: We're going to say, look, there are some of the large events that we were the beneficiary of at pretty good margins, just as we think about that. Again, we have some cutoffs.

Michael L. Battles: So it's just again, we have some cutoffs. There are some pretty large events. I'm not sure, you know. You tell me if there are going to be large events in the back half of the year. You know, it's tough for us to tell.

Speaker Change: … pretty large events. I'm not sure … you know, you tell me that there's going to be large events in the back half of the year.

Michael L. Battles: As you know, we've gone quarters without them. So, well, as we see fit, given the size and scale of events, we'll call them out. But it was really more about from a comparison standpoint, given the great results and the beat we had in the quarter, to kind of, we thought it was appropriate to call out these material items. And Dave, just one other point.

Speaker Change: It's tough for us to tell, as you know, we've gone quarters without them, so as we see fit, given the size and scale of events, we'll call them out. But it was really more from a comparison standpoint, given the great results and the beat we had in the quarter, we thought it was appropriate to call out these material items.

Unknown Executive: It wasn't just HEPA Co. These events weren't just due to HEPA Co. It was really the network. It was really mixed across all of our field service business. I appreciate it. Thanks, guys. Thank you.

Speaker Change: And Dave, just one other point, it was not, these events weren't also just due to HEPA Co. It was really the network. It was really a mix across all of our field service business.

James Andrew Ricchiuti: The next question comes from James Ricchiuti with Needham & Company. Please proceed. Hi, thanks. Good morning.

Dave: I appreciate it. Thanks, guys.

Speaker Change: Thank you.

Speaker Change: The next question comes from James Ricchiuti with Needham & Company. Please proceed.

James Andrew Ricchiuti: And maybe just follow up to what you were just discussing. I think you're targeting about 30 million of EBITDA from HEPA code, and that's now 35 million. Can you talk about what's driving the higher expectations for that business? You only acquired it in March?

James Andrew Ricchiuti: All right, thanks. Good morning. And maybe just a follow-up to what you were just discussing. I think you had been targeting a lot about $30 million.

James Andrew Ricchiuti: of Eva Dahl from HEPACO and that's now 35 million.

Speaker Change: Can you talk about what's driving the higher expectations for that business? You only acquired it, what, in March, so it seems to be tracking ahead of expectations, and I wonder if you could talk a little bit about that.

Eric J. Dugas: So it seems to be tracking ahead of expectations, and I wonder if you could talk a little bit about that. Sure, Jim. This is Eric Dugas here.

Eric J. Dugas: Eric Dugas here. I'll start with that one, and you're absolutely correct. Our expectations from HEPACO for the full year did increase $5 million, partially due to some of the larger ER jobs that we've been talking about for the last few minutes.

Speaker Change: But also, you know, I think the integration of HEPA-Co is probably a little ahead of schedule from what we projected three months back.

Eric J. Dugas: The team has done a great job of integrating the HEPA Co-Field Services Office into the

Eric J. Dugas: I'll start with that one. And you're absolutely correct. We did, our expectations from HEPA Co for the full year did increase by $5 million, partially due to some of the larger ER jobs that we've been talking about for the last few minutes. But also, you know, I think the integration of HEPA Co is probably a little ahead of schedule from what we projected three months back. The team has done a great job of integrating the HEPA Co Field Services Office into the Legacy Clean Harbors network, sharing resources, and sharing labor.

Speaker Change: to the Legacy Clean Harbors Network.

Speaker Change: Sharing Resources, Sharing Labor, and one of the bright spots to the acquisition we talked about was the emergency response line that HEPACO had and our ability to integrate our field services folks into that business.

Speaker Change: What we've done here at Clean Harbors is really put a full-court press on hiring some additional heads. We've been successful with that in field services.

Eric J. Dugas: And one of the bright spots in the acquisition we talked about was the emergency response line that HEPA Co had, and our ability to integrate our field services folks into that business. So what we've done here at Clean Harbors is really put a full-court press on hiring some additional heads. We've been successful with that in field services, and it's allowed us to internalize more of that work. And drive more EBITDA into this year.

Speaker Change: And it's been allowed us to internalize more of that work and drive more EBITDA into this year. So, as we've said a few times now, really excited about that acquisition, and like I said, a little bit ahead of schedule probably in terms of synergies and a little bit better on the business front as well. And those are all the reasons.

Eric J. Dugas: So, as we've said a few times now, really excited about that acquisition. And, like I said, a little bit ahead of schedule probably in terms of synergies and a little bit better on the business front as well. And those are all the reasons we increased that number.

Speaker Change: We increased that number.

Eric J. Dugas: Eric Dugas brought it up is that, you know, our voluntary turnover actually has gone down quite a bit and that's allowed us

Eric J. Dugas: You know, to kind of keep people longer and it's been really good growth, good growth, it's down over 200 basis points year over year, and amazingly over 600 basis points since over two years ago, so the team has done a really good job of retaining and training good employees, and that's really helped us on a variety of fronts.

Eric J. Dugas: Not just on field service, but across the organization, and it gives a good safety and kind of better margins.

Unknown Executive: And you guys talked a little bit about group three and plans for expanding that. I wonder if you could maybe elaborate on what you're seeing and how you're expecting that business to perhaps scale over the next one to two years. Yeah, Jim, you know, we ran a refinery now full time on group three, and it actually ran well in the quarter. We've been using that group three into our blended gallons. I think it's been a success.

Speaker Change: Got it. And you guys talked a little bit about Group 3 and plans for expanding that. I wonder if you could maybe elaborate on what you're seeing and how you're expecting that business to perhaps scale over the next one to two years.

Unknown Executive: And when I think about the pilot we're running now, and for this for another plan to get that running, it's just a different type of different oil refining process. So we got to test that out.

Eric J. Dugas: Yeah, Jim, you know, we had a, we ran a refinery now full-time on group three, actually ran well in the quarter. We've been using that group three into our blended gallons. I think it's been a, I think it's been a success. And when I think about the pilot we're running now...

Eric J. Dugas: for another plan to get that running. It's just different type of oil re-refining process, so we gotta test that out, but there's good growth in this.

Eric J. Dugas: We think there's over 20-25 million gallons of incremental group 3 out there that we can dedicate two or three plants to run and use, and that will be a good cost save and ability to drive more planted gallons into our network at a higher price point.

Unknown Executive: But there's good growth in this. We think there are over 2025 million gallons of incremental group three out there, and we can dedicate two or three plans to run and use. And that will be able to be a good cost saver and ability to drive kind of more blended gallons into our network at a higher price. And last question, just on PFAS.

Eric W. Gerstenberg: I wonder how the conversations you're having with customers in this area are potentially changing versus earlier in the year? Just give us a sense as to how you're seeing that business evolve for you. Yeah, James, and Eric here.

Speaker Change: And last question just on PFAS.

Speaker Change #105: I wonder, the conversations you're having with customers in this area, how are things potentially changing versus earlier in the year? Just give us a sense as to how you're seeing that business evolve for you.

Eric W. Gerstenberg: So, um, when we talked about PFAS, as you know, in the past, we've really looked at providing total solutions from performing analytical to remedial event to incineration, landfill capabilities, and really managing projects from drinking water and industrial water. And to be honest with you, we've really seen growth in all of those areas. Our water treatment that we've seen for PFAS has increased both industrial and drinking.

Eric J. Dugas: Yeah, James, Eric here.

Eric J. Dugas: When we've talked about PFAS, as you know from the past, we've really looked at providing total solutions, from performing analytical, to remedial event, to...

Speaker Change: Incineration and Landfill Capabilities.

Speaker Change #112: and really managing projects from drinking water and industrial water. And to be honest with you, we've really seen growth in all of those areas.

Speaker Change: Our water treatment that we've seen for PFAS has increased industrial land drinking.

Speaker Change: Our project business of remediation of contaminated soils has been increasing.

Eric W. Gerstenberg: Our project business of remediation of contaminated soils has been increasing, as well as some of our analysis that we've started on the front end. So we're really seeing it from all areas. The other key area is AFFF changeouts. So there's been some discussion and, and we've seen it in certain projects where we've had to go in and remove AFFF. And one other last compliment to that is when today you have an emergency response or somebody has an event at their facility, and their phone dumps, that phone is no longer being really discharged on site; it really has to be removed from the site. And so we're seeing those types of activities as well. Okay, thank you.

Speaker Change: As well as some of our analytical that we've started on the front end. So we're really seeing it from all areas. The other key areas is...

Speaker Change: AFFF Changeouts

Speaker Change: So, there's been some discussion and...

Speaker Change: and we've seen it in certain projects where we've had to go in and remove AFFF. And one other last compliment to that is...

Speaker Change: When today you have an emergency response or somebody has an event at their facility and their phone dumps, that phone is no longer being really discharged on site, it really has to be removed from site. And so we're seeing those types of activities as well.

Tobey O'Brien Sommer: Thank you. The next question comes from Tobey Sommer with Truist Securities. Please proceed. Thanks.

Speaker Change: Thank you.

Speaker Change: Thank you. Thank you. The next question comes from Tobey Sommer with Truist Securities. Please proceed.

Unknown Executive: A follow-up on that last question: how do you see the potential for a new presidential administration to potentially change or diminish the PFAS opportunity through a different sort of lens as far as environmental rules and regulations are concerned? Yeah, so we really don't think that a change in administration would have any effect on what is happening with the record regulations or PFAS regulations at all.

Tobey O'Brien Sommer: Thanks. I'll follow up on that last question. How do you see the potential for a new presidential administration?

Speaker Change: to potentially change or diminish the PFAS opportunity through a different sort of lens as far as environmental rules and regulations.

Speaker Change: Yeah, so we really don't think that a change in administration would have any effect on what is happening with the...

Unknown Executive: It'll be, continue to, we think it's going to continue to be business as usual. The company's been growing for 40 years, Toby, 45 years next year, and through Democrats, Republicans, Conservatives, Liberals, I mean, the company, and we're talking about half its wage here, right? So it's important that, I don't think, I don't think that that really changes the overall, Thanks.

Speaker Change: micro-regulations or PFAS regulations at all, we think it's gonna continue to be business as usual. The company's been growing for 40 years Toby, 45 years next year. And through Democrats, Republicans, conservatives, liberals, means the company and we're talking about hazardous waste here.

Speaker Change: So it's important that I don't think I don't think that that really changes the overall kind of view based based on the administration

Unknown Executive: News reports have come out in recent months about potentially large ESM&A opportunities in the market. How would you describe your appetite for transformational deals? We're open to those.

Speaker Change: Thanks. News reports out in recent months about potentially large ESM&A opportunities in the market. How would you describe your appetite for transformational deals?

Unknown Executive: They have to meet, you know, kind of our strategic sense and meet our strategic hurdles and our financial hurdles. But we're certainly open to those. We talked about Vision 2027, of spending a lot of capital to grow that business, and double the size of the business within five years. You know, we're on that track. We're kind of, I think we're right on track, kind of what we said back in the day, back in 2013.

Speaker Change: We're open to those.

Speaker Change: We're open to those types. They got to meet, you know, kind of our strategic sense and meet our strategic hurdles and our financial hurdles. But we're certainly open to those. We talked about Vision 2027.

Speaker Change: of spending a lot of capital to grow that business, double the size of the business.

Speaker Change: For the next five years, you know, we're, we're, we're on that track, we're kind of I think we're right on track and what we said back in the day, back in, back in 2013. And I'm excited about those opportunities, big and small, big and small. You know, it's like, sometimes the hard, the small deals are the hardest ones to do, because they take so much work to kind of get done. And so we're open to those, you just got to make sense.

Unknown Executive: And I'm excited about those opportunities, big and small, big and small. You know, sometimes the hard, small deals are the hardest ones to do because they take so much work to kind of get done.

Unknown Executive: And so we're open to those; you just have to make them. And then, if I could ask you to elaborate a little bit on the incinerator capacity and utilization topic. As a new capacity ramp, Historically, has there been an influence or a change in the pricing trend in the quarters where that capacity is entering the market? No, there hasn't.

Speaker Change: And then if I could ask you to elaborate a little bit on the incinerator capacity and utilization topic. As new capacity ramps...

Speaker Change: Historically, has there been an influence or a change in the pricing trend in the quarters where that capacity is entering the market?

Unknown Executive: So we really do not anticipate any pricing changes. In fact, we're going to continue to drive price improvement across the network. So the capacity will ramp up, as we talked about earlier; we look to do about 30,000 tons next year and grow sequentially after that. We don't, and the backlog again of drums and how our team has been doing and collecting drum volumes from all of our different customers will continue to fuel that EBITDA growth. That's a more optimistic answer than some alternatives. Thank you very much.

Speaker Change: No, there hasn't, Toby. We really do not anticipate any pricing change. In fact, we're going to continue to drive price improvement across the network.

Speaker Change: The capacity will ramp up as we talked about earlier, we look to do about 30,000 tons next year and grow sequentially after that.

Speaker Change: We don't and the backlog again of drums and how our team has been doing and collecting Drum volumes from all of our different customers will continue to fuel that EBITDA growth

Speaker Change: That's a more bullish answer than some alternatives. Thank you very much.

Brian Joseph Butler: [inaudible] The next question comes from Brian Butler with Stifo. Please proceed. Good morning.

Speaker Change: The next question comes from Brian Butler with Stifo. Please proceed.

Brian Joseph Butler: Thanks for taking my question. Hi, Brian.

Brian Butler: Good morning, thanks for taking my questions.

Brian Joseph Butler: Okay, first one just on the SKSS business, when you maybe maybe a little bit more color on kind of how the spot price and the charge for oil are kind of trending into the back half and maybe what's built into the 2024 guidance of that three to five percent kind of improvement. Well, the good thing, Brian, is we've gotten into, you know, 45 minutes into this call, and we've got our first question on FKSS, so there you go. Good for you!

Brian Butler: Hi Brian . Hi Brian .

Brian Butler: First one, just on the SKSS business, maybe a little bit more color on kind of how the spot price...

Speaker Change: And the charge for oil is kind of trending into the back half and maybe what's built into the 2024 guidance of that three to five percent kind of improvement.

Speaker Change: Well, the good thing, Brian , is we've gotten into, you know, 45 minutes into this call and we've got our first question on SKSS. So, there you go. Good for you.

Michael L. Battles: I think if you think about the back half of the year, it's only 12% of the business, but I'm happy to answer questions on it. You know, the back half of the year, when you think about our oil pricing, we've actually put a very kind of conservative view on our pricing trend if you think about kind of when you get to the midpoint of the guide we gave this morning. You know, we feel like we're making good traction in group 3. We're making good traction on Castro.

Brian: I think if you think about the back half of the, it's only 12% of the business, so I don't have to answer questions on it.

Brian: You know, in the back half of the year, we think about our oil pricing, and we've actually put a very kind of...

Brian: Conservative view on our pricing trend if you think about kind of what went to get to the midpoint of the guide We gave this morning. You know, we feel like we're making good traction on group 3 We're making good traction on I'm Castro making good traction on blended volumes And so I think all those are going to help us stabilize that business and continue to grow it

Michael L. Battles: We're making good traction on blended volumes. And so I think all those are going to help us stabilize that business and continue to grow it. And so when you look at the kind of growth rates we have for the year, you know, as you see, 3 to 5% is pretty modest, but we don't really have aggressive pricing in the back half of the year to kind of achieve that.

Brian: And so when you look at that kind of the growth rates we have for the year, you know, as you see three to five percent pretty modest and but we don't really have aggressive pricing in the back half of the year to kind of achieve those numbers.

Unknown Executive: Also, we'd probably just build on it, Brian, that the team continues to execute on our blended sales strategy year to date; our blended sales and volume are up year over year. So good job, and how we're trying to stabilize that. And as Mike talked about earlier in the call, our group three efforts are beginning to pay off. So there are some nice things going on there.

Brian Butler: Also, we'd probably just build on it, Brian , that the team continues to execute on our blended sales strategy year-to-date.

Brian Butler: Our blended sales and volume is up year-over-year.

Brian: Good job in how we're trying to stabilize that, and as Mike talked about earlier in the call, our Group 3 efforts are beginning to pay off. So there's some nice things going on there.

Unknown Executive: Yeah. Okay, great. That was my one question for SKSS. I'll go to ES now.

Speaker Change: Okay, great. That was my one question for SKSS and I'll go to ES now.

Unknown Executive: A lot. Just maybe some high-level thoughts on as capacity is getting added to the incineration market with you, Veolia, adding, you know, maybe we could talk about how you view the potential for captive incinerators, maybe coming back and looking at commercial as an option as more capacity, you know, kind of manifests itself on the commercial side. Yeah, Brian.

Speaker Change: a lot

Speaker Change: Just maybe some high-level thoughts on, as capacity is getting added to the incineration market, with you, Veolia, adding, you know, maybe we could talk about how do you view the potential for captive incinerators maybe coming back and looking at commercial as an option as more capacity, you know, kind of manifests in the commercial side?

Unknown Executive: First, as we've mentioned in the past, all of the captives and units out there, those companies are our customers. I think when you think about taking a captive to commercial on any sizable scale, it is really, really difficult.

Speaker Change: Yeah, Brian , first, as we've mentioned in the past,

Brian Butler: All of the captives.

Brian Butler: Units out there, those companies are our customers. We continue to work as partners with them to help to manage their variety of waste streams.

Speaker Change: I think when you think about taking a captive to commercial in any sizable scale, it is really, really difficult.

Unknown Executive: There are individual state and EPA regulations that you have to go through, so it's hard to imagine that any type of captive, knowing that we know them all and we work with them all, is going to really have any material type of change in the market conditions of what's going on. A more likely scenario, Brian, would be that they would close, given the process and the cost and the regulations and compliance, and that would create more opportunity for us and the network.

Brian: There is individual state and EPA regulations that you have to go through.

Brian: So it's hard to imagine that any type of captive, knowing that we know them all and we work with them all, is going to really have any material type of change in the market conditions of what's going on.

Brian: A more likely scenario, Brian , would be that they would close, given the process and the cost and the regulations and compliance, and that creates more opportunity for us and the network, frankly.

Unknown Executive: Yeah, I guess that was the focus of the question was, what's the potential for them closing as more capacity gets added? We continue to believe that there's a few that are prime targets. Their utilization is down over the past few years.

Brian Butler: Yeah, I guess that was the focus of the question was what's that potential of them closing as more capacity gets added?

Speaker Change #113: Well, we continue to believe that there's a few that are prime targets. Their utilization is down over the past few years, so that, and also the products that they're making have changed, and that means that the waste streams that those captives have been consuming affect the utilization of those units.

Unknown Executive: So that, and also the products that they're making have changed, and that means that the waste streams that those captives have been consuming affect the utilization of those units. We also believe that, well, we know that EPA is out there and is gonna be looking to change MAC guidelines again, which is what they're required to do by the statute, and so they're going down that path to evaluate that. So those, if capital has to be invested by those companies to upgrade those units that are having lower utilization, all those types of things are catalysts which could affect a captive coming offline.

Brian Butler: We also believe that, well we know, that EPA is out there and is going to be looking to change MAC guidelines again, which they're required to do by the statute, and so they're going down that path to evaluate that.

Brian Butler: If capital has to be invested by those companies to upgrade those units that are having lower utilization, all those types of things are catalysts which could affect a captive coming offline.

Unknown Executive: Okay, and then one last on PFAS real quick. Can you maybe give an update on the PFAS destruction, you know, from incineration and the OTM-50 testing? Has that progressed? And is there maybe an update on that?

Speaker Change: Okay, and then one last on PFAS real quick. Can you maybe give an update on the PFAS destruction, you know, from an incineration and the OTM-50 testing? Has that progressed and is there maybe an update there?

Unknown Executive: Yes, we are. It's progressing well. We'll be doing that OTM 50 testing this fall, working jointly with the EPA on achieving and proving once again that RECRA high-temperature thermal destruction is really the preferred method.

Speaker Change #108: Yes, we are. It's progressing well. We'll be doing that OTM 50 test thing this fall. I'll work in jointly with the EPA on achieving and proving out once again that

Brian: RECRA high-temperature thermal destruction is really the preferred method and so we're proceeding very well on that.

Unknown Executive: And so we're proceeding very well on that. Great, thank you for taking my question. Thank you. The next question comes from Noah Kaye with Oppenheimer.

Speaker Change: Great. Thank you for taking my questions.

Noah Duke Kaye: Please proceed. Hey, thanks for taking the questions. It's an election-related question, really about the fund flow under IIJA. Yeah, I think even just looking at Superfund, right, you know, we've got two and a half billion out of the three and a half billion already obligated, but most of that has not been spent yet, I guess. How are we actually seeing some of that spending impact your P&L this year? Is that more of a tailwind for 25-26?

Speaker Change: Thank you. Thank you. Bye. The next question comes from Noah Kaye with Oppenheimer. Please proceed.

Noah Duke Kaye: Thanks for taking the questions. It's an election adjacent question, really about the fund flow under IIJA. Yeah, I think even just looking at Superfund, right, you know, we've got two and a half bill out of the three and a half bill.

Speaker Change: already obligated, but most of that has not been spent yet.

Speaker Change: How are we actually seeing, you know, some of that spending impact your P&L this year?

Speaker Change: Is that more of a tailwind for 25-26? Anything you can do to help quantify that is helpful. And then do you think there's a possibility for kind of an increase in awarding activity as we kind of get into the election season?

Michael L. Battles: Anything you can do to help quantify that is helpful. And then do you think there's a possibility for kind of an increase in awarding activity as we kind of get into the election season? So Noah, it's very difficult for us to, this is Mike. It's very difficult for us to kind of directly correlate, here's the investment that they're making in infrastructure spending, or in the TIPS Act, or wherever, and then how that affects our financial statements and kind of how it all rolls down.

Speaker Change: So Noah, it's very difficult for us to...

Speaker Change: This is Mike. It's very difficult for us to kind of...

Mike: Directly correlate, here's the investment that they're making in infrastructure spend or in the TIPS Act or wherever, and then how that affects our financial statements and kind of how it all rolls down.

Mike: But I will tell you, you know, from a project-level standpoint...

Mike: Q2 is one of the best quarters in the company's history from the level of project work. So it almost, you know, it's like, I can't draw like, well, that came from the, you know, the government spent X amount that drove the type of investment by this company and drove the contractor to go try this stuff that came to us. But I will tell you that, you know, that seems to be...

Michael L. Battles: But I will tell you, you know, from a project level standpoint, Q2 was one of the best quarters in the company's history on the level of project work. So it almost, you know, it's like, I can't draw a line like, well, that came from the government spending X amount that drove the type of investment by this company and drove the contractor to go try these stuff that came to us. But I will tell you that in that, in Superfund, and other areas. And it's a great way to invest.

Mike: be a very strong pipeline of work.

Mike: And that pipeline looks really good into 2025.

Mike: So that, can I give you like, well here's how much has been spent, here's how much it impacts us. No I cannot.

Mike: But what I can tell you is that we are seeing...

Speaker Change: A very strong pipeline of work. Q2 was terrific and there are no signs.

Speaker Change: that we see from our pipeline work and from talking to the leadership team and the sales organization that would change that view. So I love the view that all the spend that you're talking about continues on into 2025. We're cleaning up some nasty messes in Superfund and in other areas, and it's a great way to invest in America.

Michael L. Battles: Thank you, Mike. As you mentioned earlier, you're on track for Vision 2027. I will say, by the way, as far as M&A, transformational M&A goes, or any kind of M&A, if you pay the multiples that you're getting on this first year of the HEPA code, that'll be just fine with investors. But do you feel like you're on track? Do you feel like you're on track for the M&A plus organic version of those targets in Vision 2027, the 600 million EBITDA, you know, 200 million free cash flow incremental is, you know, with HEPA code and Noble, right? You're probably around 50 to 60. Correct my math.

Mike: Thank you, Mike.

Speaker Change #102: You mentioned earlier you're on track for Vision 2027.

Speaker Change #106: I will say, by the way, as far as M&A, transformational M&A goes, or any kind of M&A, if you pay the multiples that you're getting on this first year of HEPA code, that'll be just fine with investors. But...

Speaker Change #109: Do you feel like you're on track?

Speaker Change: Do you feel like you're on track for the M&A?

Speaker Change: plus organic version of those targets in Vision 2027. The $600 million EBITDA, you know, $200 million free cash flow incremental is, you know, with Hapico and Noble, right, you're

Michael L. Battles: So there's a fair way to go. What is the view on whether you're tracking towards those targets? Yeah, no, you know, it's not a straight line. It never was.

Speaker Change #101: You're probably around 50 to 60, correct my math. There's a fair way to go. What is the view on whether you're tracking towards those targets?

Michael L. Battles: And the fact we showed it as, you know, kind of a direct line was just because we had to take something. But the path to success is never that easy. And so I would say that we spent, you know, almost a half a billion dollars in the first half of the year, literally closed it three months ago, and now you're kind of asking when we're going to do more. The answer is that we're going to integrate these strong businesses, we're going to continue to look for opportunities, and we're going to be smart about it to make sure that we're not wasting, you know, shareholder capital to do it. And so, you know, and that doesn't necessarily mean, you know, the M&A world.

Speaker Change #107: Yeah, yeah, no, you know, it's not a straight line.

Speaker Change #103: It never was, and the fact we showed it as, you know, kind of as a direct line was just because we had to take something.

Speaker Change: But, you know, the path to success is...

Mike: is never that easy. And so I would say that we spent almost a half a billion dollars in the first half of the year.

Mike: are here. We literally closed it three months ago. And now you're asking kind of when we're going to do more. The answer is that we're going to integrate these strong businesses.

Mike: We're going to continue to look for opportunities and we're going to be smart about it and make sure that we're not wasting shareholder capital to do it. And that doesn't necessarily mean in the M&A world. I think that the Baltimore Project and the Kimball Project will be unbelievable returns to our shareholders. And I think there's more of them like that out there that we as a leadership team are continuing to evaluate that are going to cost big bucks, that are going to drive our way to get to the answer. So it's not necessarily like buy your way to it. What we won't do is waste your capital to do it. We're going to have things that make sense to us, that fit in our strategic portfolio as well as our financial portfolio and we're going to get there and I think we're on track.

Michael L. Battles: I mean, we did, I think that the Baltimore project and the Kimball project will be unbelievable returns to our shareholders. And I think there are more of them like that out there that we as a leadership team are continuing to evaluate that are going to cost, you know, big, big bucks that are going to drive our way to get to the answer. So it's not necessarily like, "Buy your way to it."

Michael L. Battles: You know, what we won't do is waste your capital doing it; we're going to have things that make sense to us that fit in our strategic strategic portfolio, as well as our financial portfolio. And, and, and we're going to get there. And I think we're on track.

Michael L. Battles: I appreciate it. Thanks all. Alright, thanks. Alright, Noah.

Mike: I appreciate it. Thanks all.

Operator: Once again, to ask a question, please press star 1 on your telephone keypad. Our next question comes from John Windham with UBS. Please proceed. Hey, thanks for taking all the questions and obviously a great result, great result on the quarter. Maybe I want to step back a little bit from the quarter.

Speaker Change: All right, thanks. All right, y'all.

Speaker Change #104: Once again, to ask a question, please press star 1 on your telephone keypad. Our next question comes from John Windham with UBS. Please proceed.

Jonathan Mark Windham: I'd be interested to hear your thoughts on your exposure to growth in the electricity system in the United States. One of the bigger trends going on right now is a resumption of electricity growth, which means more natural gas, and more infrastructure investments in transmission. I'm just wondering if you could talk about, you know, certain parts of your environmental services business that may have exposure.

Jonathan Mark Windham: Hey, thanks for taking all the questions and obviously a great result on the quarter. Maybe I want to step back a little bit from the quarter. I'd be interested to hear your thoughts on your exposure.

Speaker Change #100: to growth in the electricity system in the United States. One of the bigger trends going on right now is the resumption of electricity growth.

Speaker Change #100: which means more natural gas, more infrastructure investments in transmission. I'm just wondering if you could talk about, you know, certain parts of your environmental services business that may have exposure.

Unknown Executive: To that, I appreciate it. Thanks. Yeah, John, this is Eric here.

Speaker Change #110: to that. Appreciate it.

Unknown Executive: So we, through our field service business, we really support some of the nation's largest utilities. I'm helping to maintain those units, and as they see growth, what's going on, we'll continue to support their growth. In our service with those utilities, we've gotten a number of different accolades on how we're doing with them. We really work in conjunction with them as partners, and so as the utility infrastructure is growing, we're going to continue to grow with those clients, so it's a good opportunity for us, particularly around field services.

Eric J. Dugas: Yeah John , this is Eric here. So we, through our field service business, we really support some of the nation's largest utilities.

Eric J. Dugas: From helping to maintain those units and as they see growth with what's going on, we'll continue to support their growth.

Eric J. Dugas: Our service with those utilities, we've gotten a number of different accolades on how we're doing with them. We work really in conjunction with them as partners. And so as the utility infrastructure is growing, we're going to continue to grow with those clients. So good opportunity for us, particularly around field services.

Speaker Change #100: Thanks.

Eric W. Gerstenberg: There are no further questions at this time. I would like to turn the floor back over to Mr. Gerstenberg for closing comments. Thank you, and thanks for joining us today. We hope everyone listening enjoys the remainder of their summer, and we will be seeing some of you as we get back out on the road in the coming months. Please stay safe out there. Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a great day!

Speaker Change #100: Thank you.

Speaker Change: They're coming.

Speaker Change: There are no further questions at this time. I would like to turn the floor back over to Mr. Gerstenberg for closing comments.

Eric W. Gerstenberg: Thank you and thanks for joining us today. We hope everyone listening enjoys the remainder of their summer and we will be seeing some of you as we get back out on the road in the coming months. Please stay safe out there.

Speaker Change: Thank you. This does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation and have a great day.