Q1 2025 Clean Harbors Inc Earnings Call

Unknown Executive: Greetings and welcome to the Clean Harbors First Quarter 2025 Financial Results Conference.

Greetings and welcome to the clean harbors first quarter 2025 financial results Conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal presentation.

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

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

Unknown Executive: As a reminder, this conference is being recorded.

Speaker Change: As a reminder, this conference is being recorded its now my pleasure to introduce your host Jim Buckley Senior Vice President of Investor Relations for clean harbors. Mr. Buckley. Please go ahead.

Jim Buckley: It's now my pleasure to introduce your host, Jim Buckley, Senior Vice President of Investor Relations for Clean Harbors.

Jim Buckley: Mr. Buckley, please go ahead. Thank you, Melissa, and good morning, everyone.

Jim Buckley: Thank you Melissa and good morning, everyone.

Jim Buckley: With me on today's call are our Co-Chief Executive Officers, Eric Gerstenberg, and Mike Powell.

Speaker Change: With me on today's call are co chief Executive officers are for some work.

Mike Battles: Mike battles.

Jim Buckley: and our EVP and Chief Financial Officer, Eric Dugas.

Eric Dugas: And our EVP and Chief Financial Officer, Eric Dugas.

Jim Buckley: Slides for today's call are posted on our Investor Relations website.

Mike Battles: Slides for today's call are posted on our Investor Relations website.

Jim Buckley: and we invite you to follow along.

Mike Battles: And we invite you to follow.

Jim Buckley: Matters we are discussing today that are not historical facts are considered forward-looking statements within the meaning Private Securities Litigation Reform Act. Participants are cautioned not to place undue reliance on these statements. which reflect manager's opinions only as of today, April 30th, 2020.

Mike Battles: Matters, we are discussing today that are not historical facts are considered forward.

Mike Battles: Looking statements within the meaning.

Mike Battles: Securities Litigation Reform Act.

Mike Battles: Participants are cautioned not to place undue reliance on these statements.

Mike Battles: Which reflect management's opinions only as of today April 32020.

Jim Buckley: Information on potential factors at risk.

Information on potential factors and risks.

Jim Buckley: that could affect our results is included in our SEC filing.

Mike Battles: Could affect our results is included in our SEC filings.

Jim Buckley: The company undertakes no obligation to revise or publicly release the results of any revision to the statements made today, other than to filings made concerning this reporting period.

Mike Battles: The company undertakes no obligation to revise or.

Mike Battles: Or publicly release the results of any revision to the <unk>.

Mike Battles: Payments made today other than through filings made concerning this reporting period.

Jim Buckley: Today's discussion includes references to non-GAP measures.

Mike Battles: Today's discussion includes references to non-GAAP measures clean harbors believes such information provides an additional measurement and consistent historical comparison of itself.

Jim Buckley: Clean Harbors believes such information provides an additional measurement and consistent historical comparison of its performance.

Jim Buckley: Reconciliation of these measures to the most directly comparable gap measures are available.

Mike Battles: Reconciliation of these measures to the.

Mike Battles: Most directly comparable GAAP measures available.

Jim Buckley: In today's news release, on our IR website and in the appendix of today's presentation.

Mike Battles: In today's news release on.

Mike Battles: On our IR website.

Mike Battles: In the appendix of today's presentation.

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

Eric Dugas: Let me turn the call over to Eric first purchase stock.

Eric Dugas: Thanks, Jim Good morning, everyone and thank you for joining us.

Eric Gerstenberg: To start, I want to highlight our safety results for Q1. They are not a financial metric, but as we often say, they are our most important metric. Our total recordable incident rate, or TRIR, was an outstanding 0.46 in the quarter. That represents not just our best Q1, but the best quarter in the company's history.

Eric Dugas: I want to highlight our safety results for Q1.

Eric Dugas: They are not financial metric, but as we often say they are our most important metric.

Eric Dugas: Our total recordable incident rate or <unk> was an outstanding 0.46 in the quarter that.

Eric Dugas: That represents not just our best Q1 of the best quarter in the company's history.

Eric Gerstenberg: Hats off to our entire team for the energy and effort they put into having our safety programs, for fostering a strong safety culture, and for protecting themselves and each other.

Eric Dugas: It's off to our entire team for the energy and effort they put into having a safety program for <unk>.

Eric Dugas: Fostering a strong safety culture.

Eric Dugas: Hang themselves and each other.

Eric Gerstenberg: Turning to our financial performance on slide three, our overall Q1 results finished ahead of expectation. Our ES segment began the year with an encouraging first quarter that included a strong contribution in March after a period of unfavorable weather in January. Our SKSS segment outperformed our guidance due to better pricing of our used oil collection service.

Eric Dugas: Turning to our financial performance on slide three our overall Q1 results finished ahead of expectations. Our EES segment began the year with an encouraging first quarter that included a strong contribution in March after a period of unfavorable weather in January.

Eric Dugas: <unk>, yes.

Eric Dugas: Segment outperformed our guidance due to better pricing of our used oil collection services that Mike will discuss.

Eric Gerstenberg: that Mike will discuss. Overall, company revenue was up 4% Q1. Demand trends for our disposal and recycling assets were positive. We exited the quarter with momentum in most of our ES segment businesses and are optimistic about SKSS's ability to achieve its annual target. Our adjusted free cash flow and corporate segment results were also in line with expectations we provided in February.

Eric Dugas: Overall company revenue was up 4% Q1 demand trends for our disposal and recycling assets were positive.

Eric Dugas: We exited the quarter with momentum in most of our Es segment businesses and are optimistic about <unk> ability to achieve its annual target.

Eric Dugas: Our adjusted free cash flow and corporate segment results were also in line with expectations. We provided in February.

Eric Gerstenberg: All in all, a solid start to 2025 for the company. Turning to our segment review, beginning on slide 4 with ES, adjusted EBITDA increased 4% with a 3% increase in revenue, resulting in a 10 basis point margin. Our top line growth increased due to the 2024 acquisition of HEPACO, as well as growth from pricing and higher incineration utilization, which offset a year over year decline in industrial services driven by the refinery. Looking at our revenue by segment components, field services grew 32%, driven mostly by HEPA code, supported by organic growth in our legacy business. In total, we responded to more than 5,000 emergency response events in Q1, in line with In technical services, higher incineration volumes and pricing drew over 5% revenue.

Eric Dugas: In all a solid start to 2025 for the company.

Eric Dugas: Turning to our segment review beginning on slide four with EES adjusted EBITDA increased 4% with a 3% increase in revenue, resulting in a 10 basis point margin improvement our topline growth increased due to the 2020 for acquisition of ethical as well as growth from pricing and higher incineration utilization.

Eric Dugas: Which offset a year over year decline in industrial services, driven by the refinery sector.

Eric Dugas: Looking at our revenue by segment components field services grew 32% driven mostly by half ago supported by organic growth in our legacy business in total.

Eric Dugas: We responded to more than 5000 emergency response events in Q1 in line with recent quarters and.

Eric Dugas: In technical services Hydro incineration volumes and pricing drove a 5% revenue increase.

Eric Gerstenberg: Incineration Pricing Drove Incineration price rose more than 5% in Q1 on a mixed adjusted basis. Consideration Utilization was an impressive 88% for 79% Q1-24. For comparison purposes, This quarter's utilization number excludes the Newtown and Kendall as we ramp up. As we have stated publicly, our goal for the new kiln this year is to process 28,000 more tons of With growth in 2026 as we complete our shakedown process. In Q1, the new incinerator processed 5,000 tons, running well despite challenging weather conditions in January. Overall incineration demand was high all quarter long and shows no signs of slowing as reshoring and other market dynamics play out.

Eric Dugas: Generation pricing drop.

Eric Dugas: Incineration price rose more than 5% in Q1 on a mix adjusted basis.

Eric Dugas: Incineration utilization was an impressive 88% for 79% in Q1 24.

Eric Dugas: For comparison purposes, this quarters utilization number excludes the new Calvin Kendall as we wrap up.

Eric Dugas: As we have stated publicly our golf with a new talent. This year is to process 28000 more tons of more with broke in 2026 as we complete our shakedown process.

Eric Dugas: Q1, the new incinerator processed 5000 tons running well despite challenging weather conditions in January.

Eric Dugas: We're all incineration demand was high off court of law and shows no signs of slowing as re shoring and other market dynamics play out.

Eric Gerstenberg: We are continuing to realize the benefits of investments we have made in our disposal and recycling network to enable more efficient processing and movement of waste. Safety Clean Environmental Services continued its consistent and steady performance, notching another quarter of profitable growth by increasing revenues by 5% from a year ago. We performed 245,000 parts wash services in the quarter, down slightly from a year ago, reflecting the service interruptions from bad weather. Our pricing initiatives, record containerized waste services, and new products including some innovative aqueous parts washers, drove the growth in this country. We face some challenges in Q1 with our industrial services.

Eric Dugas: We are continuing to realize the benefits of investments we've made in our disposal and recycling network will enable more efficient processing and movement of waste.

Eric Dugas: Safety Kleen environmental services continued its consistent steady performance.

Eric Dugas: Not saying another quarter of profitable growth by increasing revenues by 5% from a year ago.

Eric Dugas: We performed 245000 parts wash services in the quarter down slightly from a year ago, reflecting the service interruptions from bad weather.

Eric Dugas: Pricing initiatives record containerized waste services, and new products, including some innovative aqueous parts washers drove the growth in this business.

Eric Dugas: We faced some challenges in Q1 with our industrial services business, where revenue was down 10% from a year ago. As we continue to see some refinery customers delay spending and deferred maintenance amend the current environment.

Eric Gerstenberg: where revenue was down 10% from a year ago, as we continue to see some refinery customers delay spending and defer maintenance in the current environment.

Eric Gerstenberg: Lastly, I'm sure someone will ask questions about tariffs. While we suspect that a tariff and trade uncertainty may be behind some of the industrial services weakness this quarter, refinery customers have been under pressure for some time due to local cracks. We haven't seen a material impact from tariff uncertainty on our waste volumes in TS or an SK branch or on the number of ERs we've conducted in field service.

Eric Dugas: Lastly, I'm sure someone will ask questions about tariffs, while we suspect that the tariff and trade uncertainty may be behind some of the industrial services weakness this quarter refinery customers have.

Eric Dugas: Been under pressure for some time due to local crack spreads we.

Eric Dugas: We haven't seen a material impact from tariff uncertainty on our waste volumes at TFS, our SK branch or on the number of Vrs. We've conducted in field services. Our stated goal of the current administration is to generate more U S manufacturing and industrial production, which should ultimately benefit plain Harris.

Eric Gerstenberg: The stated goal of the current administration is to generate more U.S. manufacturing and industrial production, which should ultimately benefit Clean Harbors. We do not expect any of the core environmental regulations that have been the foundation of our business and have protected human health and the environment across the U.S. for decades to change under the current administration. As it relates to tariffs and our supply chain, most of our purchasing is domestically sourced, so we don't anticipate any disruptions to our growth. That said, we have recently enacted a nominal price increase to offset the higher costs we expect for our vehicle fleet, the chemicals we use, and other supplies.

Eric Dugas: We do not expect any of the core environmental regulations that have been the foundation of our business in a protected human health and the environment across the U S for decades to change under the current administration.

Eric Dugas: As it relates to tariffs tariffs in our supply chain most of our purchasing is domestically sourced. So we don't anticipate any disruptions to our growth plans.

Eric Dugas: We have recently enacted a nominal price increase to offset the higher cost we expect for our vehicle fleet. The chemicals that we use and other supplies to protect our margins. We remain committed to further adjusting our pricing and reducing our cost structure to offset any additional inflation that may come as a result of tariffs with.

Eric Gerstenberg: To protect our margins, we remain committed to further adjusting our pricing and reducing our cost structure to offset any additional inflation that may come as a result of tariffs.

Mike Powell: With that, let me turn things over to Mike to discuss SKSS and capital allocation. Thank you, Eric, and good morning, everyone. Turning to our SKSS segment results on slide 5, revenue increased year over year reflecting greater volumes, including the addition of NOBLE, as well as a shift to a sustainably higher charge for oil or CFO. Those items more than offset the continued lower pricing we saw for base oil caused by a weak demand environment. While our Q1 adjusted dividend decreased slightly from a year ago, the $28 million we achieved exceeded our guidance we provided in February.

Eric Dugas: Let me turn things over to Mike to discuss S. K S S in capital allocation Mike.

Mike Battles: Thank you, Eric and good morning, everyone.

Mike Battles: Turning to our segment results on slide five revenue increased year over year, reflecting greater volumes, including the addition of noble as well as a shift to a sustainably higher charge foot well our CFO.

Mike Battles: Those items more than offset the continued lower pricing we saw for base oil caused by a weak demand environment.

Mike Battles: While our Q1 adjusted EBITDA decreased slightly from a year ago, and 28 million, we achieved or exceeded our guidance provided in February.

Mike Powell: Adjusted dividend margin was down year over year due to base hold pricing, but again, ahead of our initial expectation. This performance is a direct result of the team's hard work in responding to the ongoing challenges in the base oil and lubricants market. We announce in mid-November that we are shifting to a charge-for-oil position for all customers. And in fact, since year-end, we have successfully doubled the average price per gallon we are charging for the collection of used oil, while also maintaining the volumes needed to meet our production goals. In the quarter, we gather 58 million gallons of waste oil to feed our...

Mike Battles: EBITDA margin was down year over year due to base oil pricing, but again antibody initial expectations.

Mike Battles: For them. It is a direct result of the team's hard work and responding to the ongoing challenges in the base oil and lubricants market.

Mike Battles: We announced did you remember that we were shifting to a charge for oil position for all customers and in fact since yearend. We have successfully doubled the average price per gallon. We are charging for the collection of used oil while also maintaining the volumes needed to meet our production goals.

Mike Battles: In the quarter, we gathered 58 million gallons of wastewater feed our plants compared with 55 million gallons a year ago.

Mike Powell: compared with 55 million gallons a year. As we highlighted in our last call, we have idled our California re-refinery, not just to pause our highest cost location, but to support our CFO initiative by requiring fewer overall gallons to feed our network. We believe these actions, including executing a range of cost-cutting initiatives, enable us to exceed our profitability expectations in Q1. We remain committed to earning a fair price on our used motor oil collection services in order to drive consistent profitability in this sector. We advanced two other important programs. We are working closely with BP Castrol to support our partnership around Castrol's more circular offer.

Mike Battles: As we highlighted in our last call, we have idled that California refinery, not yet to pause or highest cost location, but to support our CFO initiative by requiring fewer overall gallons to feed our network.

Mike Battles: We believe these actions, including executing a range of cost cutting initiatives enabled us to exceed our profitability expectations in Q1.

Mike Battles: We remain committed to earning a fair price on our used motor oil collection services in order to drive consistent profitability in this segment.

Mike Battles: We advanced two other important programs in the quarter, we are working closely with BP Castrol to support our partnership around cash was more circular offering which enables corporate fleets lower their carbon footprint without sacrificing quality in their lubricants.

Mike Powell: which enables corporate fleets to lower their carbon footprint without sacrificing quality in their lives. We believe they are generating strong interest in the marketplace and building a healthy pipeline of potential customers with two large fleets signed up and more to come. Another initiative that should support greater stability and profitability in this segment is our Group 3 program, which we've outlined on prior calls.

Mike Battles: We believe they are generating strong interest in the marketplace and building a healthy pipeline of potential customers with two large lease signed up and more to come.

Mike Battles: Another initiative, we should.

Mike Battles: They should support greater stability and profitability in this segment is that group III program, which we've outlined on prior calls we expect to produce $2 million to $3 million additional gallons of group three this year versus 2024.

Mike Powell: We expect to produce 2 to 3 million additional gallons of group three this year versus 2024.

Mike Powell: Turn to capital allocation on slide six. We continue to look for internal and external opportunities to generate the best returns on our shareholders capital. And importantly, we ended the quarter with a large cash balance and low leverage to execute both those facets of our growth strategy. On the M&A front, we have been actively reviewing multiple deals and being selective about what we move forward. We did a look at deals of varying sizes with an emphasis on where we can capture synergies in cost and cross-selling while capitalizing on our expansive network of assets.

Mike Battles: Turning to capital allocation on slide six we continue to look for internal and external opportunities to generate the best returns on our shareholders' capital and.

Mike Battles: And importantly, we ended the quarter with a large cash balance and low leverage execute both of those facets of our growth strategy.

Mike Battles: On the M&A front, we have been actively reviewing multiple deals and being selective about what we move forward.

We continue to look at deals of varying sizes with an emphasis on where we can capture the synergies and cost and cross selling while capitalizing on our expansive network of assets.

Mike Powell: Internally, we see opportunities to invest across several areas. Kimball is now open and running well. Our Baltimore expansion continues. In April, we close on our new site in Phoenix where we'll replicate that hub concept again. Within EES, we opened 10 additional field service branches in Q1 while adding more processing and recycling capabilities to current locations as we capitalize on market opportunities. We're also evaluating potential methods to further process some of our byproducts we produce in our re-refining business, as we believe there is value to be harvested.

Mike Battles: Internally, we see opportunity to invest across several areas Kimball has now opened and running well our Baltimore expansion continues in April we closed on our new site in Phoenix will replicate that concept again.

Speaker Change: Yes, we opened 10 additional field service branches in Q1, well, adding more processing and recycling capabilities current locations as we capitalize on market opportunities.

Speaker Change: We're also evaluating potential message to further processing pipeline actually produce in our re refining business as we believe there is value to be harvested here.

Mike Powell: Eric Dugas will cover our BIVAC activity in Q1, but we intend to be opportunistic with large purchases when conditions warrant. We are optimistic about our prospect for 2025. We ended Q1 slightly ahead of plan overall, with FKSS outperforming our expectations. Furthermore, we believe that there are many tailwinds supporting our business to achieve our guidance, despite the potential impact of tariffs. Demand for our services remains strong, particularly on the disposal side for TES and SKE customers. Kimball is ramping up as expected. Interest in our total PFAS solution and its offerings remain high. We expect our EPA and DOD-supported incineration study to be published in the coming months.

Speaker Change: Eric Dugas will cover our buyback activity in Q1, but we intend to be opportunistic with large purchases when condition tomorrow.

Speaker Change: We are optimistic about our prospects for 2025, we ended Q1 slightly ahead of plan overall with spss outperforming expectations.

Speaker Change: While we believe that there are many tailwind supporting that business to achieve our guidance despite the potential impact of tariffs.

Speaker Change: Demand for our services remained strong, particularly at disposal side for Ts NASCAR heat customers.

Speaker Change: Kimball is ramping up as expected.

Speaker Change: And our total <unk> solutions offerings remained high we expect our EPA Deogee supported incineration study published in the coming months.

Mike Powell: Restoring and expansion of customer sites is ongoing. We see a robust pipeline of remediation and waste projects. The potential for captive closures in the coming year is real, as we continue to have healthy discussions with some of those operators. And our growth network, growth outlet for field service is strong with the addition of HEPACO and its national call center. While the recovery and industrial services we anticipate this year may be somewhat muted, we still like the long-term process of this business given the necessity of the services we provide.

Speaker Change: Drawing and expansion of customer site is ongoing and we see a robust pipeline of remediation and waste projects.

Speaker Change: The potential for captive closures in coming years wheel as we continue to have healthy discussions with some of those operators.

Speaker Change: And our growth network growth outlets for field service is strong with the addition of Pascal National Call Center.

Speaker Change: Well the recovery in industrial services, we anticipate this year may be somewhat muted, we still like the long term prospects of this debt just given the necessity of the services we provide.

Mike Powell: and S.K. is doing well executing within the areas it can control, especially collection columns.

Speaker Change: And S. K is doing well executing within the areas it can control, especially collection costs.

Mike Powell: In short, there's a lot of positive factors to support our planned growth as we celebrate our 45th anniversary in 2025.

Speaker Change: Yes, you're right. There's a lot of positive factors to support our planned growth as we celebrate our 45th anniversary in 2025.

Eric Dugas: With that, let me turn the call over to our CFO, Eric. Thank you, Mike, and good morning, everyone. Turning to the income statement on slide 8, our Q1 results top the guidance we provided on our Q4 earnings call. Solid results were achieved with continued year-over-year growth and profitability in our EF segment and better than expected results in SKSS. Overall, we grew total company revenues in the quarter by $55 million, or 4%, with the ES segment accounting for two-thirds of that growth. Q1 adjusted EBITDA of $235,000. is driven by higher earnings in our ES segment. which offset a slight decline in SKFS.

Speaker Change: With that let me turn the call over to our CFO Eric Dugas.

Eric Dugas: Thank you, Mike and good morning, everyone.

Speaker Change: Turning to the income statement on slide eight.

Speaker Change: Q1 results top of the guidance, we provided on our Q4 earnings call the.

Speaker Change: The solid results were achieved with continued year over year growth and profitability.

Speaker Change: Segment and better than expected results and S. K S S.

Speaker Change: Overall, we grew total company revenues in the quarter, I $55 million or 4% with the Es segment accounting for two thirds of that growth.

Speaker Change: Q1, adjusted EBITDA of $235 million was driven by higher earnings in our EES segment, which offset a slight decline in SaaS and slightly higher corporate costs.

Eric Dugas: slightly higher corporate costs as compared to Q1 of last year. Our adjusted EBITDA margin of 16.4% in Q1 was down year over year, but in line with our expectations. Even with the tough start to the quarter due to extreme weather. Team Achieved Expected Margin Performance in Q1 by delivering a good mix of high margin work and controlling spending. SG&A expense as a percentage of revenue was 12.8%.

Speaker Change: Compared to Q1 of last year.

Speaker Change: Our adjusted EBITDA margin of 16, 4% in Q1 was down year over year, but in line with our expectations.

Speaker Change: Even with the tough start to the quarter due to extreme weather.

Speaker Change: Team achieved expected margin performance in Q1.

Speaker Change: They bring a good mix of high margin work and controlling spending.

Speaker Change: SG&A expense as a percentage of revenue was 12, 8% in Q1.

Eric Dugas: for the full year 2025. Continue to anticipate SG&A expense as a percentage of revenue will be in the mid 12% range. Appreciation and Amortization in Q1 came in as expected at $112 million.

Speaker Change: For the full year 2025.

Speaker Change: We anticipate SG&A expense as a percentage of revenue will be in the mid 12% range.

Speaker Change: Depreciation and amortization in Q1 came in as expected at $112 million.

Eric Dugas: Student Acquisitions, and our first full quarter of Kimball. For 2025, we continue to expect depreciation and amortization in the range of $440 to $450 million. Income from operations in Q1 was $111.60. down from the same period a year ago when we had less depreciation and amortization. Q1 then income was also down as expected versus the same period a year ago as we delivered earnings per share of $1.09.

Speaker Change: Due to acquisitions.

Speaker Change: And our first full quarter of Kimball.

Speaker Change: For 2025, we continue to expect depreciation and amortization in the range of 440 and $450 million.

Speaker Change: Income from operations in Q1 was $111 6 million down from the same period, a year ago, when we had less depreciation and amortization.

Speaker Change: Q1, net income was also down as expected versus the same period, a year ago as we delivered earnings per share of $1 <unk>.

Eric Dugas: Turning to slide 9, the balance sheet. Cash, and Short-Term Marketable Securities at Quarter End Approach $600 Million. given that high cash balance.

Speaker Change: Turning to slide nine the balance sheet.

Speaker Change: Cash and short term marketable securities at quarter end approached $600 million.

Speaker Change: Given that high cash balance we continue to view our balance sheet, it's a competitive advantage, particularly given the uncertainty in the credit markets.

Eric Dugas: We continue to view our balance sheet as a competitive advantage. particularly given the uncertainty and regret. Our net debt to EBITDA ratio at quarter end remained at approximately 2.1 times, with no material debt amounts due until 2027. Our overall interest rate at quarter end was 5.3%.

Speaker Change: Our net debt to EBITDA ratio at quarter end remained at approximately two one times with no material debt amounts due till 2027.

Speaker Change: Our overall interest rate at quarter end was five 3%.

Eric Dugas: During the quarter, we received a credit rating upgrade by Moody's based upon our recent financial performance, overall growth, and our strong capital policy. This upgrade puts our overall debt rating just one notch below investment grade and our secured debt at an investment grade rating.

Speaker Change: During the quarter, we received a credit rating upgrade by Moody's based upon our recent financial performance overall growth.

Speaker Change: Our strong capital policies.

Speaker Change: This upgrade puts our overall debt rating just one notch below investment grade and our secured debt at an investment grade rating.

Eric Dugas: Turning to our cash flows on slide 10. Net cash from operating activities in Q1 was $1.6 million, which was as expected. CapEx, Native Disposals, was just over 117. down from the prior year as we have completed our Kimball CapEx spent. We expect the majority of the $15 million associated with our Phoenix project that we called out on our Q4 call to occur here in Q2 as the site was purchased in early April. For the quarter, adjustment free cash flow was a negative $116 million. Assistant with Q1 a year ago. In addition to CapEx spend, the negative free cash flow in both periods reflects the timing of incentive comp payments, interest payments, and seasonal working capital.

Speaker Change: Turning to our cash flows on slide 10.

Speaker Change: Net cash from operating activities in Q1 was $1 6 million, which was as expected.

Speaker Change: Capex net of disposals was just over $117 million.

Speaker Change: Down from the prior year, because we have completed our Kimball capex spend.

Speaker Change: We expect the majority of the $15 million associated with our Phoenix project that we called out on our Q4 call to occur here in Q2 as the site was purchased in early April.

Speaker Change: For the quarter adjusted free cash flow was a negative $116 million and consistent with Q1 a year ago.

Speaker Change: In addition to Capex spend the negative free cash flow in both periods reflects the timing of incentive comp payments interest payments and seasonal working capital increases.

Eric Dugas: For 2025, we continue to expect our net capex, excluding the Phoenix Growth Project, to be in the range of $345 to $375 million. During Q1, we bought back nearly 260,000 shares of stock, with a total spend of $55 million. We currently have more than $430 million remaining under our repurchase program authorization. and we continue to view our shares, particularly in light of the recent pullback, as undervalued.

Speaker Change: For 2025, we continue to expect our net capex, excluding the Phoenix growth project to be in the range of $345 million to $375 million.

Speaker Change: During Q1, we bought back nearly 260000 shares of stock at a total spend of $55 million.

Speaker Change: We currently have more than $430 million remaining under our repurchase program authorization and we continue to view our shares particularly in light of the recent pullback is undervalued.

Eric Dugas: Moving to guidance on slide 11. Based on our Q1 results. along with current market conditions for both of our operating...

Speaker Change: Moving to guidance on slide 11.

Speaker Change: Based on our Q1 results.

Speaker Change: Along with current market conditions for both of our operating segments.

Eric Dugas: We are reiterating our 2025 Adjusted EBITDA Guidance. of $1.15 billion. 1.21 billion or a midpoint of 1.18 billion. which represents 6% annual growth.

Speaker Change: We are reiterating our 2025 adjusted EBITDA guidance range of 1.15 billion to $1, two 1 billion or a midpoint of 1.18 billion, which represents 6% annual growth.

Eric Dugas: Looking at our annual guidance from a quarterly perspective. We currently expect adjusted EBITDA for Q2 to grow 1-3% compared with the prior year. with 3-5% growth in the ES segment. and Lower Expense in the Corporate Segment. which will more than offset an expected year-over-year decline in SKSS.

Speaker Change: Looking at our annual guidance from a quarterly perspective.

Speaker Change: We expect adjusted EBITDA for Q2 to grow one 3% compared with the prior year.

Speaker Change: With 3% to 5% growth in Es segment.

Speaker Change: And lower expense in the corporate segment, which were more than offset an expected year over year decline in SaaS apps.

Eric Dugas: As a reminder... We also had a number of good sized ERs in Q2 a year ago in the ES site.

Speaker Change: As a reminder.

Speaker Change: We also had a number of good sized yards in Q2, a year ago in the Es segment.

Eric Dugas: for full year 2025.

Speaker Change: For full year 2025.

Eric Dugas: and Justin Ibarraguay. will translate to our reporting segments as follows. Environmental Services We continue to expect adjusted EBITDA in 2025 at the midpoint of our guidance to increase 5% to 8% in 2024. Demands for disposal, recycling, remediation work, and SK Branch offerings have all continued year to year. The only exception, as previously noted, is industrial services. where customers can defer maintenance or slow spending during times of economic uncertainty. Our Kimbell facility will continue its ramp toward full production as planned. Given the momentum from re-shoring projects. and PFAS, as well as support from our sales. We expect our facilities network to process record volume.

Speaker Change: Adjusted EBITDA guidance will translate to our reporting segments as follows.

Speaker Change: In environmental services, we continue to expect adjusted EBITDA in 2025.

Speaker Change: The midpoint of our guidance to increase 5% to 8% from 2024.

Speaker Change: Demand for disposal recycling remediation work in SK branch offerings.

Speaker Change: All continued year to date.

Speaker Change: Only exception as previously noted this industrial services.

Speaker Change: Where customers can defer maintenance or slow spending during times of economic uncertainty.

Speaker Change: Our Kimball facility will continuous ramp towards full production as planned.

Speaker Change: Given the momentum from re shoring projects.

Speaker Change: E&P fast as well as support from our sales team, we expect our facilities network to process record volumes this year.

Eric Dugas: We also expect to see continued expansion in the FK branch and field services business. For SKSS, we continue to expect full year 2025 adjusted EBITDA, the midpoint of our guidance, to be $140 million. We exceeded our expectations for Q1, given the outstanding work by the team in improving our collection rate. We remain cautious in our assumptions for this segment, given its commodity expenses. Incorporate, The Midpoint of Our Guide. Continue to expect negative adjusted EBITDA to be up 3-7% compared to 2024. The year-over-year increase primarily relates to the company's expected revenue growth Wages and Benefits and Insurance, partly offset by our cost savings initiative.

Speaker Change: We also expect to see continued expansion in the SK branch and field services businesses.

Speaker Change: For <unk>, we continue to expect full year 2025, adjusted EBITDA, the midpoint of our guidance to the $140 million.

Speaker Change: While we exceeded our expectations for Q1, given the outstanding work by the team and improving our collection rates were.

Speaker Change: Remain cautious in our assumptions for this segment given its commodity exposure.

Speaker Change: Within corporate the midpoint of our guide we continue to expect negative adjusted EBITDA to be up 3% to 7% compared to 2024.

Speaker Change: The year over year decrease primarily relates to the company's expected revenue growth.

Speaker Change: Wages and benefits and insurance, partly offset by our cost savings initiatives.

Eric Dugas: For adjusted free cash flow, our 2025 guidance remains in the range of $430 to $490 million, or a midpoint of $460 million. which represents a nearly 30% increase from 2024. As we highlighted last quarter, this range excludes our $15 million growth investment to create a new hub location in Phoenix. We believe the exclusion of long-term growth projects creates a more accurate picture of our free cash flow generation as a company.

Speaker Change: For adjusted free cash flow, our 2025 guidance remains in the range of $430 million to $490 million.

Speaker Change: Or a midpoint of $460 million, which represents a nearly 30% increase from 2024.

Speaker Change: As we highlighted last quarter. This range excludes our $15 million growth investment to create a new hub location in Phoenix.

Speaker Change: We believe the exclusion of long term growth projects creates a more accurate picture of our free cash flow generation as a company.

Eric Dugas: In summary, Q1 was a good start to 2025. Continue to expect the demand environment and our pricing initiatives to support our anticipated profitable growth. The ES segment has a strong back level. A robust pipeline of project opportunities, including PFAS. And most of our services businesses have good momentum. within SKSF. We believe we should stabilize this business this year. We focus our energy on strategies to maximize the value of these assets while minimizing any downside potential. Overall, we are encouraged by the trajectory of the company and look forward to the remainder of this year. continue to execute against our longer-term goals.

Speaker Change: In summary, Q1 was a good start to 2025.

Speaker Change: We continue to expect the demand environment, and our pricing initiatives to support our anticipated profitable growth this year.

Speaker Change: Yes segment has a strong backlog of waste a robust pipeline of project opportunities, including <unk> fast and most of our services businesses have good momentum.

Speaker Change: With an Afghan assess we believe we should stabilize this business. This year as we focus our energy strategies to maximize the value of these assets, while minimizing any downside potential.

Speaker Change: Overall, we are encouraged by the trajectory of the company and look forward to the remainder of this year as we continued to execute against our longer term goals.

Unknown Executive: With that, Melissa, please open the call for questions. Thank you.

Melissa: With that Melissa please open the call for questions.

Speaker Change: Thank you if you'd like to ask a question. Please press star one on your telephone keypad.

Unknown Executive: If you'd like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question.

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Unknown Executive: You may press star 2 if you'd like to remove your question from the.

Speaker Change: You May press star two if you'd like to remove your question from the queue.

Unknown Executive: For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star key. And to allow for as many questions as possible, we ask that you each keep to one question and one follow-up.

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Speaker Change: To allow for as many questions as possible, we ask that you each keep to one question and one follow up thank you.

Tyler Brown: Our first question comes from the line of Tyler Brown with Raymond James. Please proceed with your question. Good morning, guys.

Speaker Change: Our first question comes from the line of Tyler Brown with Raymond James. Please proceed with your question.

Tyler Brown: Hey, good morning, guys.

Tyler Brown: Hey, Todd. Morning, Todd. Hey. Hey, morning. You guys mentioned, I think, that ES was up 4% in the quarter. It did sound like weather had an impact.

Speaker Change: Hey, Todd Good morning, Hey.

Speaker Change: And just are you guys mentioned I think that yes, it was up 4% in the quarter.

Speaker Change: Did sound like weather had an impact I mean, I think it snowed in Houston for example, but.

Tyler Brown: I mean, I think it snowed in Houston, for example, but any way you could quantify what that drag was and will those volumes effectively be made up or are they kind of lost?

Speaker Change: Any way you could quantify what that drag was and where those volumes effectively be made up or are they kind of lost.

Eric Dugas: Hey, Tyler, Eric Dugas here. I'll start off with that. Yeah, you're absolutely right. Weather was very difficult in January, and we had incorporated, you know, much of that into our guidance that we gave in February. You know, but if, you know, it's difficult to perfectly quantify it, but we had talked about maybe 10 to $12 million of lost EBITDA due to weather. You know, I think as we moved through the quarter, what we saw is when weather improved, you know, the strong march that Eric mentioned, we were really excited about what we saw there. Helped to make up for some of the drag on weather, but really gives us kind of good positive momentum as we go into Q2.

Eric Dugas: Hey, Tyler Eric Dugas here, I'll I'll start off with that Eric.

Speaker Change: You're absolutely right whether it was.

Eric Dugas: It was very difficult in January and we had incorporated.

Speaker Change: How much of that into our guidance that we gave in February.

Eric Dugas: Yes.

Eric Dugas: It's difficult to perfectly quantify it but we had talked about maybe $10 million to $12 million of lost EBITDA due to weather.

Eric Dugas: You know I think as we move through the quarter and what we saw is when weather improved the strong March that that Eric mentioned, we were really excited about what we saw there helps to make up for some of the drag on weather, but really gives us kind of a good positive momentum as we go into Q2 and so far what we've seen in early April is consistent with what we saw.

Eric Dugas: And so far, what we've seen in early April is, you know, consistent with what we saw in March. So excited about ES and continued strong demand there as we move into Q2.

Mark: Mark So excited.

Mark: Excited about <unk> continued strong demand as we move into Q2.

Tyler Brown: Okay, that sounds good.

Speaker Change: Okay that sounds good and then just to be clear on the Q2 guide.

Tyler Brown: And then just to be clear on the Q2 guide. So one, last year, I think HEPACO had some large scale ER work, I think you mentioned it. So just to be clear, the three to 5% incorporates lapping that work, it does not include any outsized work.

Speaker Change: So one last year I think <unk> had some large scale you are working I think you mentioned it so just to be clear the 3% to 5% incorporates lapping that work. It does not include any outsized working too.

Tyler Brown: And two, What are the expectations for refinery turnarounds in industrial services? Is that expected to start ramping in Q2, or is that more of a back half thing, or is that really just upside the guidance altogether?

Speaker Change: What are the expectations for refinery turnarounds in industrial services is that expected to start ramping in Q2 or is that more of a back half thing or is that really just upside the guidance altogether.

Eric Dugas: Yeah, Tyler, this is the other Eric answering. First, I'd say that, yes, our Q2 guide does not include any expected emergency, large scale emergency response events. So we're being a little bit conservative there. As far as the industrial network, we'd say that our turnaround strength of what we have booked at this point is still very strong. In fact, over 150 turnarounds, we still have planned, which is pretty substantial from a year ago at this time. So we're expecting a better second half. Obviously, those refineries are continuing to try to watch their costs as they go into this year.

Speaker Change: Yes, Tyler this is the other Eric answering first I'd say that yes.

Speaker Change: Yes, our Q2 guidance does not include any expected the merchants at large scale emergency response events, so we're being a little bit conservative there.

Speaker Change: As far as the industrial network, we'd say that our turnaround strengths of what we have booked at this point is still very strong in fact over 150 turnarounds, we still have plan, which is a pretty substantial from a year ago. At this time, so we're expecting a better second half.

Speaker Change: Obviously, those refineries are continuing to try to watch their watch their costs as they go into this year, but we all know that at some point those refineries need to be taken down and maintenance needs to be done might be a little bit more conservative on some of the investment in capital projects and so forth, but overall we have.

Eric Dugas: But we all know that at some point, those refineries need to be taken down and maintenance needs to be done. Might be a little bit more conservative on some of the investment and among capital projects and so forth. But overall, we have a we have a real solid pipeline in the US and Canada around turnarounds for the second half of this year. And not much change over the past 90 days that we've seen since last time we talked about it.

Speaker Change: We have a real solid pipeline in the USA and Canada around.

Speaker Change: Turnarounds for the second half of this year and not much has changed over the past 90 days that we've seen since last time, we talked about it.

Tyler Brown: Okay, perfect.

Speaker Change: Okay, perfect and just my last one Eric.

Tyler Brown: And just my last one, Eric, just, I continue to get a lot of questions just from investors around the cycle, the cyclicality of your business. So obviously, you guys have bucked the industrial production trend over the last couple of years, you offer a very high necessity, non-deferrable service. And Mike, I think, frankly, you laid out a number of idiosyncratic drivers, but can you just at a very high level, just talk about the cyclicality specifically of the ES segment, and maybe just how cyclical the various lines of business are, again, in ES? Just any color there, I think, would be helpful.

Speaker Change: I continue to get a lot of questions just from investors around the cycle. The cyclicality of your business. So obviously you guys have booked the industrial production trends over the last couple of years, you offer very high necessity not affordable service and.

Speaker Change: Mike I think frankly, you laid out a number of idiosyncratic drivers, but can you just had a very high level just talk about the cyclicality specifically of the Es segment, and maybe just how cyclical the various lines of business are again and yes, just any color. There I think would be helpful. I appreciate it guys.

Mike Powell: Appreciate it, guys. Yeah, I think we'd say, Tyler, that, you know, our business on the environmental side is, is really recession resistant. We really see continued strong growth in the second and third quarters around our TS, our SKE business, our FS business continues to be strong. IS, as we mentioned a little bit, that's going to flow up and down year to year based on the size and scope of the turnarounds. And we all know that maintenance work needs to be, needs to be done. But really, our, our, the cyclicality, we don't, we're not really seeing any, any early recession trends or any recession trends at all in any of our business.

Speaker Change: Yes, I think we'd say Tyler that.

Speaker Change: Our business on the environmental side is.

Speaker Change: Just really.

Speaker Change: Recession resistant we rarely see continued strong growth in the second and third quarters around our TFS, our SK business RFS business continues to be strong.

Speaker Change: As we mentioned a little bit that's going to flow up and down year to year based on the size and scope of the turnarounds and we all know that maintenance work needs to be needs to be done but really.

Speaker Change: Or are the cyclicality, we don't we're not really seeing any any early recession trends or any recession trends at all in any of our businesses as Eric just talked to our pipeline across the board in our businesses.

Mike Powell: As Eric just talked to, our pipeline across the board in our businesses, our waste projects, our drum count, and how we look at that coming out of March and into the second quarter already, really, really strong. So we see some real positive momentum here. Yeah, Tyler, I would say that what Eric said is that you see in a majority of the ES business, you see a continued, this is year three of year-over-year monitoring expansion in light of the cyclicality and industrial that we saw, as Eric said in his prepared remarks late last year, and now we see it again in Q1.

Speaker Change: Waste projects, our drum count and how we look at that coming out of March and into the second quarter already really really strong. So we see some real positive momentum here, yes, it kind of I would say that on like Eric said is that Ah yes.

Speaker Change: You see it you see it.

Speaker Change: The majority of the Es business you see a continued this is year three.

Speaker Change: I'll kind of year over year margin expansion in light of the cyclicality in industrial that we saw.

Tyler Brown: As Eric said in his prepared remarks late last year and how we see it again in Q1, but if you remember Tyler.

Mike Powell: But if you remember, Tyler, when the refineries were making all their gasoline and with the inflation, this is back in 2022, and then we had a great 2023, because as Eric just said, you can't delay these things forever. And so we're hopeful that that comes, we're not planning it, we have a good pipeline, we don't have an extraordinary pipeline, but we're hopeful that those things come to be, and so the industrial business kind of recovers. And in the interim, we take out costs, we're managing the P&Ls very tightly, and we're managing that business well to still provide a fair margin for it.

Tyler Brown: Yeah that the refineries were making all of that all of their gasoline and then with the inflation is back in 2022, and then and then we had a great 2023, because as Eric you said you can't delay these things forever and so we're hopeful that that comes with that.

Tyler Brown: We have a good pipeline if you don't have it extraordinary pipeline, but we're hopeful that those things come to be and so the industrial business kind of recoveries and in the interim we can take out costs and managing the P&L is very tightly and we manage that business well. It still provides a fair margin for it if it is down year over year and in Q1 like it was in the back half of 2024.

Mike Powell: It is down year-over-year and in Q1, like it was in the back half of 2022.

Tyler Brown: Perfect. Thank you, guys.

Speaker Change: Perfect. Thank you guys.

Unknown Executive: Next up. Thank you.

Pat: Thanks Pat.

Speaker Change: Thank you. Our next question comes from the line of Noah Kaye with Oppenheimer <unk> Company. Please proceed with your question.

Noah Kaye: Our next question comes from the line of Noah Kaye with Oppenheimer and Company. Please proceed with your question. Good morning folks, thanks for taking the questions.

Speaker Change: Hey, good morning folks thanks for taking the questions maybe we start with PFS just give us an update if you can on the pipeline what youre thinking for P. Fast revenue growth this year and maybe get your view on the plan of attack the administration announced on Monday, a it looks like more frequent updates to destruction disposal guidance could be a pause.

Noah Kaye: Maybe we can start with PFAS. Just give us an update if you can on the pipeline, what you're thinking for PFAS revenue growth this year, and maybe get your view on the plan of attack the administration announced on Monday. Looks like more frequent updates to destruction and disposal guidance could be a positive, but just your thoughts there. Yeah, no, a great, great question. So we continue to see a very strong, robust pipeline growing quarter to quarter across our team has done a great job reaching out to all those potential customers and servicing our existing... Yeah, you mentioned on April 28th, the EPA and Lee Zeldin put a great announcement out that really designated creating a PFAS lead, more frequent updates on destruction and disposal, using record authorities to address releases.

Speaker Change: But just your thoughts there.

Speaker Change: Yeah, No a great great question. So we continue to see a very strong robust pipeline growing quarter to quarter across our business team has done a great job, reaching out to all those potential customers and servicing our existing yes, you mentioned on <unk>.

Speaker Change: 28.

Speaker Change: The EPA and lease Eldon, great announcements out that really designated creating a P. Fast leave lead more frequent updates on destruction and disposal using regular authorities too.

Speaker Change: Address releases, so we're continuing to see momentum there on our strengthening regulatory framework that will drive up be fast collection disposal. Our total G fast solution as we've talked about it a number of ways and all of that momentum is real positive for what we've been talking about for a long time.

Noah Kaye: So we're continuing to see momentum there on a strengthening regulatory framework that will drive PFAS collection, disposal, our total PFAS solution as we've talked about it a number of ways. And all that momentum is real positive for what we've been talking about for a long time. The...

Speaker Change: On the.

Noah Kaye: Just an update on the study, we talked about that in the past, that we did our incineration secondary sampling and burn testing. We expect the results of those to be published in Q2, really bullish about how that is demonstrated that high temperature reference incineration is just the really sound way to manage remediation and cleanup of all those nasty materials. So good stuff there.

Speaker Change: Just an update on the study we've talked about that in the past that we did our incineration.

Speaker Change: Secondary sampling in Berlin testing, we expect the results of those to be published in Q2 really bullish about how that has demonstrated that high temperature reference iteration is just.

Speaker Change: The really sound way to manage remediation clean up all those nasty materials. So good stuff there.

Speaker Change: Yeah.

Speaker Change: Okay.

Noah Kaye: Thanks. And just to put a finer point on this, is it fair to think about kind of a 15 to 20 percent revenue growth for the year is still the right range, kind of your view towards that? Yeah, we believe that's a continued path that we're seeing. But no, we meet regularly as a team to talk about, you know, kind of ways to go faster on that. And do we have the right resources? Do we have enough resources? You know, where do we go from there? So that's what we're committing to today, but make no mistake, we see this as a great opportunity for long-term growth in companies.

Speaker Change: Thanks, and just to put a finer point on this is fair to think about kind of a 15% to 20% revenue growth for the year is still the right range.

Speaker Change: It kind of your view towards that.

Speaker Change: Yeah, we believe that that's a continued path that we're saying.

Speaker Change: No.

Speaker Change: You mean regulated the team to talk about kind of ways to go faster on how do we get and we have the right resources do we have enough resources, where we go from there. So that's that's what we're committing to today, but make no mistake, but she just had a great opportunity for long term growth the company.

Noah Kaye: Nice.

Speaker Change: Nice.

Noah Kaye: I want to ask about incineration. You know, you get the mix-adjusted incineration ASPE up over 5%. You know, at the same time, you're ramping Kimball. And I think that, you know, this maybe goes to a question that investors have had around, you know, the ability of, you know, this new capacity to, you know, see sufficient demand. Certainly seems like, you know, pricing off to a good start for the year. Is mid-single digits kind of the right growth rate to think about for pricing for the balance of the year? And maybe you can comment on how Kimball might have affected, you know, the the discussions that you've had with some of your customers as you think about offtake for the rest of the year.

Speaker Change: I wanted to ask about incineration you know you get a mixed suggested incineration S P up over 5%.

Speaker Change: At the same time, you're ramping Campbell, our Kimball and and I think that you know.

Speaker Change: Just maybe it goes to a question that investors have had around the ability of our you know this a new capacity to our.

Speaker Change: See sufficient demand certainly seems like you know pricing off to a good start for the year is mid single digit is kind of the right growth rate to think about for pricing for the balance of the year.

Speaker Change: And maybe you can comment on how Kimball might've affected.

Speaker Change: Uh huh.

Speaker Change: The.

Speaker Change: The the discussions that you've had with the you know some of your customers as you think about off take for the rest of the year.

Noah Kaye: Yeah, Noah, we certainly believe that the mid-single digits is a good point to really continue to think about our incineration pricing. Kimball did have an effect overall as we started up that plant. We said in our script that we processed over 5,000 tons, and our goal this year is to process over 28,000 tons. We very much see that in reach. The team's done a great job working through some difficult weather events in January as we ramped up. The momentum coming through March and into April is very strong. Our network of drums is very strong, so the ramp-up, you know, we have a real solid outlook at being able to potentially exceed some of our early looks at what we laid out for a plan there.

Speaker Change: Yes, no. We certainly believe that the mid single digits is a good point too.

Speaker Change: So really continue to think about our incineration pricing Kimball did have did have an effect overall is how we as we started up that plant. We said in our script that we processed over 5000 tons and our goal. This year is to process over 28000 tons, we very much see that and reach.

Speaker Change: The team has done a great job working through some difficult weather events in January as we ramped up the momentum coming through March and into April is very strong.

Speaker Change: Our network of drums is very strong so the the ramp up.

Speaker Change: We have a we have a real solid outlook at being able to potentially exceed some of our early looks at.

Speaker Change: What we laid out for our plan there.

Noah Kaye: Some of the concerns you had, the investment community had around overcapacity is clearly not the case. I mean, we see that the plant's running well, it's got plenty of weight to the network, and as Eric said, you know, March was a great drum month, and April beat that. April is so far, and so we're really excited about the prospects of that plant and incineration pricing in general.

Speaker Change: Some of the concerns you had.

Speaker Change: And that makes it here you had around overcapacity is clearly not the case I mean, we see that the plant is running well.

Speaker Change: <unk> got plenty of waste network and as Eric said March was a great from March and April because April so so far and so we're really excited about the prospects of that plant and its duration pricing in general.

Noah Kaye: Thanks, I'll turn it over. Thanks.

Speaker Change: Alright, Thanks, I'll turn it over.

Speaker Change: Thanks, Brian.

Larry Solow: Thank you. Our next question comes from the line of Larry Solow with CJS Securities. Greg, good morning folks. I guess just following up on the guidance and the outlook, it feels like you haven't really changed guidance much, tweaks here and there, but A little bit industrial, a little bit slower, and then obviously a little bit of direct tariff expenses. But not building in.

Speaker Change: Thank you. Our next question comes from the line of Larry Solow with CJS Securities. Please proceed with your question.

Larry Solow: Oh, great. Good morning folks I guess, just following up on the on the guidance and the outlook. So it feels like the.

Larry Solow: The you know you haven't really change guidance much tweaks here and there but.

Larry Solow: The little bit industrial a little bit slower and then obviously a little bit of a direct tariff expenses, but not building in a I guess my concern is is there any concern as the year goes on obviously most of your your work is domestic but a lot of your customers or our international just so do you do you fear that a recession or.

Larry Solow: I guess my concern is, is there any concern as the year goes on? Obviously, most of your work is domestic, but a lot of your customers are international. So do you fear that our recession or a considerable slowdown in the economy or further slowdown could impact the outlook as we, you know, as the quarters progress? I guess wave volumes are a little bit of a laggard, right? So just any thoughts on that, you know, as we head out.

Larry Solow: A considerable slowdown in the economy or a further slowdown could impact it.

Larry Solow: The outlook as we you know as the quarters progress.

Larry Solow: I guess with volumes are a little bit of a laggard right. So just any thoughts on the on that you know as we head out.

Eric Dugas: Yeah, Larry, I'll take a take a first shot at that one. So what we what we're trying to do right now, and when some of our customers are talking about, you know, tariffs, and what the impacts could have on their businesses, is we're trying to get closer to our key customers and expand our overall wallet with them. And, and grow within those key customers to drive industrial services, field services. So we think there's great opportunity for the company to continue to grow with large customers and continue to work through that based on our presence, our capabilities, our network, our redundancy of our disposal network, all those are positive things of how we can continue to grow with those customers.

Larry Solow: Yes, Larry I'll take <unk>.

Larry Solow: A first shot at that one so what we what we're trying to do right now and when some of our customers are talking about tariffs and what the impacts could have on their businesses.

Larry Solow: We're trying to get closer to our key customers and expand our overall wallet whatsapp and and grow within those key customers to drive industrial services field services. So we think there is great opportunity for the company to continue to grow with large customers and continue to work through.

Larry Solow: That based on our presence our capabilities our network a redundancy of our disposal network all of those are positive things.

Larry Solow: Now we can continue to grow with those customers.

Mike Powell: Hey Larry, you know, one thing that we've talked about quite a bit, this is Mike, one thing we've talked about quite a bit is reshoring, and reshoring is happening, and so I think that is, if there's concerns around tariffs and other things like that, that's a winner for us. We certainly see that kind of in our pipeline, in our network, and as we see, talk to these larger customers, as Eric said, also there's, if there's pressure on them, maybe there's vendor consolidation, and we're the largest player in all the end markets that we operate in, so I think that's a great opportunity for us to, as Eric said, get more share of the stock.

Mike Battles: Hey, Larry one thing that we've talked about quite a bit. This is Mike you talked about quite a bit.

Larry Solow: Sean and reassuring is happening and so I think that is a if there are concerns around tariffs and other things like that.

Larry Solow: That's a winner for US, we certainly see that kind of in our pipeline and our network and as <unk> talked to these larger customers as Eric said also there is a pressure on maybe there is vendor consolidation and when we're the largest player in all the end markets that we operate in so I think that's a great opportunity for uptick as Eric said get more share of wallet.

Mike Powell: You know, the last thing I'd say around it is that when you look at, you know, recessions, and if there is a recession, I don't think there is one coming, but if there is one coming, and you look at the stock performance of the company over any recession, and one of our sell side analysts did a really interesting analysis around this going back 20 years, looking at performance of the stock in these recessionary times, they all did, we all did great, it came out, we came, us and the industry came out the other side terrific, and so that's really just a testament to the fact that, you know, we are, as Eric said earlier, recession Right.

Larry Solow: And the last thing I'd say around it is that when you look at recessions and if there's a recession I don't think there is one coming but if there is one coming when you look at the stock performance of the company over the over any recession in one of our sell side analysts really interesting analysis around this going back 40 years looking at performance of the stock in these recessionary times. They all did we all did great.

Larry Solow: Came out we came up with the industry came out the other side terrific and so that's really just a testament to the fact that we are as Jack said earlier recession resistant and so I feel I really believe that and I think that we're very nimble and we're very aggressive in cost control is not as if we need to get down go down there.

Larry Solow: That's all fair. And I appreciate all that, Colin.

Larry Solow: Right now that's all fair.

Appreciate all that color and just on environmental just I know you don't break exact price volume down in guidance, but.

Eric Dugas: And just on environmental, just, I know you don't break exact price volume down in guidance, but incinerator pricing sounds like it's going on mid-single. Is it fair to say sort of the mid-single digital overall growth in environmental is may be a little bit more favorite pricing and a little bit of volume growth is that kind of a good way to break that out on an overall basis. Yeah, Larry, it's Eric Dugas here. I think that's fair. Certainly in Q1, because of some of the tough weather at the beginning of the quarter, certainly prices playing a little bit greater peace in that logarithm.

Larry Solow: Yeah incinerator pricing it sounds like it's going up mid single is it is it fair to say sort of the the mid single digit overall growth and environmental is.

Larry Solow: Maybe a little bit more favorite pricing at a little bit of volume growth is that a kind of a good way to break that out on an overall basis.

Eric Dugas: Yeah, Larry It's Eric do gets here I think that's fair certainly in <unk>.

Eric Dugas: Q1, because of some of the tough weather at the beginning of the quarter certainly prices playing a little bit.

Speaker Change: Greater peace and that a logarithm, but I think as we as we move throughout the year kind of built into our guide is almost kind of a 50 50 mix between those two and if I could just squeeze one more kimball ramping it sounds like pretty much in line fair to say that was probably a little bit dilutive or maybe just modestly positive.

Eric Dugas: But I think as we as we move throughout the year, kind of built into our guide is almost kind of a 5050 mix between And if I could just squeeze one more, Kimball, ramping sounds like pretty much in line. Fair to say that was probably a little bit dilutive or maybe just modestly positive on the earning side.

Speaker Change: Earning side and anything you're learning from the ramp of Kimball versus the Eldorado from a few years ago. Thanks.

Eric Dugas: And anything you're learning from the ramp, Kimball versus Eldorado from a few years ago? Thanks. I mean, I'll address the first part of that, Larry, in terms of its contribution in the first quarter. And it did pretty much exactly as we thought. I think we had foreshadowed that it would probably wouldn't contribute much in earnings in Q1 and then ramp up throughout the year. And that's exactly how it's played out.

Speaker Change: I'll address the first part of that Larry in terms of its contribution in the first quarter and it did it did pretty much exactly as we thought I think we had foreshadowed that it probably won't contribute much in earnings in Q1, and then ramp up throughout the year and that's exactly how it's played out.

Mike Powell: I'll let you guys comment on kind of lessons learned, I think. Yeah, Larry, I'll talk to the ramp up compared to El Dorado. You know, this team has done an awesome job at bringing this plant online. And we continue to ramp up faster than what we did with El Dorado when that unit came online. The design has been proven. We worked through a lot of shakedown issues despite the weather and can't talk enough about how great the team did. And we are really excited about how it's run coming out of the gates here for us.

Speaker Change: I'll, let you guys comment on kind of lessons learned I think yeah, Larry I'll talk to the ramp up compared to El Dorado. This team has done an awesome job at bringing this plant online.

Speaker Change: We continue to ramp up faster than what we did with El Dorado when that unit came online design has been proven we worked through a lot of shakedown issues.

Speaker Change: Fight the weather and can't talk enough about how great. The team did and we are really excited about how it's run coming out of the gates here for us.

Unknown Executive: Great.

Unknown Executive: Thank you. I appreciate it all. Thanks, Larry.

Speaker Change: Great. Thank you I appreciate it all.

Larry Solow: Thanks, Larry.

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

David Manthey: Our next question comes from line of David Manthey with Baird. Please proceed with your question. Thank you. Good morning, guys.

David Manthey: Thank you good morning, guys.

David Manthey: In your comment about weather impacting multiple areas of your business, I'm wondering if you could just talk about the key areas of variability and then related to that, do those revenues catch up in subsequent periods or are they just gone forever? I would start, David, by saying that, you know... Whether it's cold every winter, we kind of get that, but January and February were really very poor, and us and other people in similar industries have said that kind of publicly. Some parts of our business, we can recover, but when our customers are shut down, well, we're shut down.

David Manthey: In your comment about weather impacting multiple areas of your business I'm wondering if you could just talk about the key areas of variability and then related to that.

David Manthey: Are those revenues catch up in subsequent periods or are they just gone forever.

David Manthey: I would start David by saying that.

David Manthey: Whether it's cold every winter, we kind of get that but January and February.

David Manthey: February where really great for us and other people in similar industries I've said that publicly.

David Manthey: You know some parts of our business, we can't recover but when our customers are shut down well were shut down they're not producing waste and theres nothing to go pick up and so those are kind of lost forever. So I hope the view that you know.

Mike Powell: If they're not producing waste, then they're nothing to go pick up, and so those are kind of lost forever. But I'm of the view that March, February is better than April, better than January, excuse me, better than March. So I really feel like it was isolated to weather issues. I think that us and others in the industry thought that perhaps this was a concern, but it really was related to weather, and we talked about snow in New Orleans and all kinds of interesting things like that. But I do believe that that was a very temporary thing, and as you look at the back half of the year, we're going to get some of that back, but a lost day is a lost day.

David Manthey: March.

Have you heard that in April as of January excuse me March better than February and April is going to be better than March and so I really feel like it was isolated to weather issues I think that us and others in the industry thought that perhaps this is a concern but it really was whether it'd be talked about snow like New Orleans, and all kinds of interesting things like that but I do believe that.

David Manthey: That was a very temporary thing and as you look at the back half of the year you were going to get some of that back but lost days of lost it.

Eric Dugas: Yeah, Dave, I'll just add a couple of comments to that. Quarter over quarter, our deferred inventory increased. So we built a little bit of backlog of inventory. What's great about our network with starting Kimball up today and how we're running logistics and transportation. So we have the opportunity now to improve and get those services back as we get into the second quarter here and into the third quarter. So the network is moving better than ever to be able to deal with those unforeseen weather events, those extreme weather events that Mike spoke about that we all saw in January and into February.

David Manthey: Yes, Dave I'll, just add a couple of comments to that.

David Manthey: Our quarter over quarter, our deferred inventory increased so we felt a little bit of a backlog of inventory.

David Manthey: Great about our network with certain Kimball up today, and how we're running logistics and transportation. So we have the opportunity now to to improve and get those services back as we get into the second quarter here and into the third quarter. So the network is moving better than ever to be able to deal with those on for <unk>.

David Manthey: <unk>.

Or events, though is as extreme weather events that Mike spoke about that we all saw in January and into February.

David Manthey: Okay, I'm hearing you say that some of it's related to production, some of it might be related to inefficiencies in transportation because of weather. Sounds like that's what you're saying. Yeah, the impacts of being able to service the customer is due to those extreme weather events, but all that waste needs to be moved and has timeframes set against it, and we'll get it caught up. Got it. Okay.

Speaker Change: Okay I'm hearing you say that some of it's related to production and some of it might be related to inefficiencies in transportation because of weather it sounds like that's what you're saying.

Speaker Change: Yeah, the impacts of being able to service the customers due to those extreme weather events, but all all that waste needs to be moved and has timeframe set against it more work will get caught up.

Speaker Change: Got it Okay, and then a quick one on PFS.

David Manthey: And then a quick one on PFAS allowable contaminant levels. If the number goes from four parts per trillion to something higher, even parts per billion, that wouldn't be a significant change in your prospects relative to PFAS, would it? No, we don't think so at all. In fact, what we've really said all along here is that we are seeing customers not really react around a contaminant level, but knowing any contamination of PFAS, that they're acting and they're beginning to work with us as our pipeline has been growing on making sure that they remediate PFAS or deal with treatment of PFAS and drinking water and industrial water, so that really is relatively, we don't see that as an impact at all to how we would service our customers.

Speaker Change: Allowable contaminant levels.

Speaker Change: If the number goes from four parts per trillion to something higher even parts per billion that wouldn't be a significant change in your prospects relative to P fast with it.

Speaker Change: No we don't think so at all.

Speaker Change: In fact, what we've really said all along here is that we are seeing customers.

Speaker Change: Not really react around a contaminant level, but knowing any contamination of <unk> that they're acting and they're beginning to work with us as our pipeline has been growing on making sure that they remediate fazer deal with treatment of deep Boston and drinking water and industrial water. So.

Speaker Change: Yes that really is relatively we don't see that as an impact at all to how we would service our customers.

Mike Powell: You know, Dave, we like the news release that came out by the EPA talking about, you know, updated in guidance every year. I mean, that's been a gate to our, gate to some acceleration of growth and the fact that Zeldin and the administration is very supportive of PFAS remediation and he's, as Eric said, going to put a leader of PFAS waking up every day thinking about how to remediate PFAS is really kind of music to our ears. Yep, definitely sounds positive.

Speaker Change: Dave we like the news release that came out by the EPA talking about.

Speaker Change: Updated guidance every year I mean, that's been a gate to gate to some acceleration of growth and the fact that that Sheldon and the administration is very supportive of Peep ash remediation and as Eric said, you can put a leader of DFAST waking up every day thinking about how to remediate DFAST is really kind of music traders.

Speaker Change: Yeah definitely sounds positive alright, guys. Thank you.

David Manthey: All right, guys, thank you. Thanks, David. Thank you.

David Manthey: Thanks, David.

Speaker Change: Thank you. Our next question comes from the line of James Ricchiuti with Needham <unk> Company. Please proceed with your question.

James Ricchiuti: Our next question comes from the line of James Ricchiuti with Needham and Company. Please proceed with your question. Hi, thanks. Good morning. So I know, you know, from the standpoint of the economy, you guys still feel things are pretty firm. But I'm just wondering if we are going into a slower path. What does that do to the M&A pipeline?

James Ricchiuti: Hi, Thanks, good morning.

Speaker Change: I know.

Speaker Change: From the standpoint of.

Speaker Change:

The economy, you guys still feel things are pretty strong, but I'm. Just wondering if we are going into a slower patch.

Speaker Change: What is that due.

Speaker Change: To the M&A pipeline and maybe if you could just talk to what Youre seeing out there.

James Ricchiuti: And maybe if you could just talk to what you're seeing out there, just in the current Hey, Jim, this is Mike. I'll start and then Eric can chime in. You know, I, the way I see it is that valuations are still pretty high. For these valuable assets, these permanent related facilities, the valuations for assets are still high. As Eric Dugas said in his prepared remarks, you know, we have a very strong balance sheet, and we have, you know, a network of assets. And then we can leverage those assets to drive synergies both from a cost standpoint and a cross-sell initiative to drive value to make these deals work.

Speaker Change: In the current environment.

Speaker Change: Hey, Jim This is Mike I'll start and Eric can chime in.

Speaker Change: The way I see it is that the valuations are still pretty high but these valuable assets permanent related facilities. The valuations for assets are still high.

Speaker Change: Eric Dugas said in his prepared remarks, we have a very strong balance sheet and we have.

Speaker Change: Our network.

Speaker Change: Assets and then we can leverage those assets to drive synergies both from a cost standpoint, and a cross sell initiatives to drive value and to make these deals work. So we're excited about the pipeline of deals havent seen the deals slow up or speed up it's still the same store a lot of assets to look at we've been very busy in that area, we want to be very selective we want it.

Mike Powell: And so we're excited about the pipeline of deals. We haven't seen the deals slow up or speed up. It's still the same story. A lot of assets to look at. We've been very busy in that area. We want to be very selective. We want to be, have to make financial sense, have to make strategic sense, have to make cultural sense. It all has to work. But if we get to those points, and we look at a lot of assets, you know, we'll be aggressive in the marketplace. Because we do feel like, you know, as you know, Jim, you've followed us for many years, you know, when things are tough, that's a great opportunity for us to find value.

Speaker Change: He has to make financial sense and snakes.

Speaker Change: <unk> has in a cultural sense all has to work, but if we get to that point that we look at a lot of assets will be aggressive in the marketplace, because we do feel like.

Speaker Change: As you know <unk>, followed us for many years.

Speaker Change: When things are tough that's a great opportunity for us to find that and we've been able to capitalize on that and do you have a contrarian and that's been the basis of the country.

James Ricchiuti: And we've been able to capitalize on that and be a little contrarian. And that's been the basis of the Got it.

Speaker Change: Got it.

Mike Powell: And just moving another follow-up question as it relates to Kimball. Sounds like you're satisfied with how it's progressing, notwithstanding some weather. What can you say, you guys have talked in the past about the opportunity with captives as it relates to Kimball. What are you seeing there?

Speaker Change: Moving.

Speaker Change: Follow up question as it relates to Kimball sounds like your Satish.

Speaker Change: Satisfied with how it's progressing.

Speaker Change: Scanning some weather.

Speaker Change: What can you say you guys have talked a.

Speaker Change: In the past about the opportunity with captains as it relates to Campbell.

Speaker Change: What are you seeing there any new developments to talk about.

Mike Powell: Any new developments to talk? Yeah, we were we continued active discussions with multiple captives and helping to evaluate their cost structure. As we've said multiple times in the past, every captive every company that owns captive out there is part of our customer base. We service them during shutdowns and other waste streams that their incinerator can't handle. We also do see today a continued opportunity that people are evaluating their cost structure and knowing that we have such a great network of service branches to be able to make sure that their waste volumes are moved on time should they contemplate a captive, we can provide that as a company and that's unique to us in the industry.

Speaker Change: Yeah.

Speaker Change: Where we have continued active discussions with multiple captives.

Speaker Change: Helping to evaluate their cost structure as we've said multiple times in the past every captive every company that owns a captive out there as part of our customer base, we service them during shutdowns and other waste streams that they're incinerator can handle.

Speaker Change: We also do see today, a continued opportunity that people are evaluating their cost structure and knowing that we have such a great network of service branches to be able to.

Speaker Change: To be able to make sure that their waste volumes are moved on time should they contemplate a captive.

Speaker Change: We can provide that as a company and thats unique to us in the industry. So it's.

Mike Powell: So, it continues to be a great opportunity and yes, the pipeline and opportunities look strong.

Speaker Change: Continues to be a great opportunity and yes, the pipeline and opportunities looks strong for us.

Mike Powell: How important is that opportunity? in relation to how you see Kimball scaling. It's not, we did not base our ramp up the growth of the company at all on additional captive closures. So as we've talked about how we'll go from 28,000 tons to ramp up over the next couple three years. Captive closures was not contemplated at all in that volume that we're going to take in and manage as a Yeah, as we talked about in our investor presentation, it's all upside to any models. Good.

Speaker Change: How important is that.

Speaker Change: Opportunity yeah.

Speaker Change: Uh huh.

Speaker Change: Relation to how you see Kimball scale like next year.

Speaker Change: It's not we did not face a ramp up the growth of the company at all on additional captive closures. So as we've talked about how it will go from 28000 tons.

Speaker Change: So a ramp up over the next couple three years.

Speaker Change: <unk> closures was not contemplated at all in that volume that we're gonna typically taken into the managed as a company.

Speaker Change: So you talked about in our Investor presentation, that's all upside to any models.

Speaker Change: Okay.

Speaker Change: Thank you.

Speaker Change: Thank you thanks, Tim.

Speaker Change: Thank you. Our next question comes from the line of James Schumm with TD Cowen. Please proceed with your question.

Tobey Sommer: Our next question comes from the line of James Shum with C.D. Cowan.

Tobey Sommer: Please proceed with your Hey, good morning, guys. Congrats on reiterating guidance in a tough environment. Can you talk a little bit about base oil pricing over the past month or so, given the weakness in oil prices? Yeah, James, this is Mike. I'll take a shot at this. You know, the base oil pricing has been under pressure, lower than our expectations. And so but what really happened was that the team, as I said, in my remarks, he did an excellent job of driving kind of the UMO collection costs and charge for oil versus a pay for oil, where we were earlier this earlier in 2024.

James Schumm: Hey, good morning, guys.

Speaker Change: Congrats on reiterating guidance in a tough environment.

Speaker Change: Can you talk a little bit about.

Speaker Change: Our base oil pricing over the past month or so given the weakness in.

Speaker Change: Oil prices.

Speaker Change: Yeah.

Speaker Change: Jamie This is Mike I'll answer I'll take a shot at this.

Speaker Change: Base oil pricing has been under pressure and lower than our expectations.

Speaker Change: But what really happened was that the teams as I said in my remarks. He did an excellent job of driving kind of you will know collection costs.

Speaker Change: The charge for oil pay for oil, where we were earlier. This earlier in 2024, and so that really that that change and I said in my market double the price that we're charging from where we ended in December to where we ended in March.

Mike Powell: And so that really that that change, as I said, in my remarks, we doubled the price that we were charging from where we ended in December to where we ended in March is just a terrific offset to lower base oil pricing. I think we were very aggressive. We thought we had issued a price lease back in November, if you recall, and really drove that pricing. And, and really, as I said, in my remarks, you know, we closed one of our refineries, not just to close a high cost plant, which it was, but we also to limit the need for the collection of used motor oil to drive our teams to make sure that we're getting a price that we need to, to, to hit our hit our targets.

Speaker Change: It's just a terrific.

Speaker Change: Offset to lower base oil pricing I think we were very aggressively taqueria issue a press release I can remember if you recall.

Speaker Change: And really drove that pricing and it really as I said in my remarks, you know we closed one of our refineries not just to close a high cost plant, which it was but we also to limit the need for the collections of used motor oil.

Speaker Change: To drive our teams to make sure that we're getting the price that we need to two.

Speaker Change: To hit on hit our targets and so you know base oil pricing go up they go down but we are we are we are assuming that net debt that the oil prices.

Eric Dugas: And so, you know, base oil pricing go up, they can go down. But we are we are, we are assuming that that the that oil prices deteriorate a bit in the gut. Okay, so the guidance contemplated some of that.

Speaker Change: Deteriorate a bit in the gap.

Speaker Change: Okay. So the guidance contemplated some of that okay.

Eric Dugas: Okay, you know, I'm just, you know, because I know that there's a lag from when you collect to when you refine it and sell it, and so I was thinking that maybe you'd have a hard time not lowering guidance in this environment, but maybe could you talk about the SKSS inventories? Where were they last quarter? Where are they now? How is that looking?

Speaker Change: Because I.

Speaker Change: I know that there's a lag from when you collect when you refine it and sell it and so I was I was thinking that maybe you'd have a hard time not lowering guidance in this environment, but.

Speaker Change: Maybe could you talk about the S. K S. S inventories are where were they last quarter, where they know how is that how is that looking.

Eric Dugas: Yeah, Jim, Eric Dugas here. So when you think about kind of inventory values, you know, your comment a moment ago around the lag, you know, there is probably a quarter, quarter and a half a lag between, you know, when we're talking about what we used to pay for oil, and now we're charging for oil. What that creates is as we close out Q1 here, our inventory costs are lower than they've been in historical periods. And that's what, you know, gives us a good feeling about Q2. In our guide, we do have, you know, profitability in the business increasing a bit in Q2.

Eric Dugas: Yes, Jim Eric Dugas here. So when you think about kind of the inventory values your comment a moment ago around the lag.

Eric Dugas: There is probably a quarter quarter and a half a lag between when we're reporting.

When we're talking about you said pay for oil and now we're charging for oil what that creates is as we close out Q1 here our inventory costs are lower than they've been in historical periods and that's what.

Eric Dugas: It gives us a good feeling about Q2, and our guy who do have profitability in the business and increasing a bit in Q2 and some of that is because of the lower cost of our base oil inventories. So that's really where you see that that lag come through kind of on the cost side.

Eric Dugas: And some of that is because of the lower cost of our base oil inventories. So that's really where you see that that lag come through kind of on the cost side. Yeah, Jim, I just reiterate to you that we all feel pretty comfortable about continuing to focus on that 140 as our guide this year. Team has done an awesome job at turning around our used motor oil collections to a high CFO rate, as Michael talked about. So we feel pretty good about what we've done, how we're operating, how we've managed costs in the business, even with some continued anticipated fluctuations in base oil pricing.

Jim Buckley: Yes, Jim.

Jim Buckley: Just to reiterate to you that we all feel pretty comfortable about continuing to focus on that $1 40, as our guide. This year team has done an awesome job of turning around our used motor oil collections to a high CFO right as Michael talked about so well, we felt pretty good about where we what we've done.

Jim Buckley: Our operating how we manage costs in the business, even with some continued anticipated fluctuations in base oil pricing.

Eric Dugas: So we're in a good spot, we think. Yeah, we think we've turned the corner, to be fair.

Jim Buckley: We're in a good spot, we think and we think we've turned the corner it would be fair.

Unknown Executive: Okay, that's great.

Speaker Change: Okay. That's great and then just lastly for me because I get this question a lot, but I know in the past you were never interested in selling this business because they're there'd be some dis synergies.

Unknown Executive: And then just lastly, for me, because I get this question a lot, but I know in the past, you were never interested in selling this business, because there'd be some disenergies, if that's a word. But I'm curious, if your thinking there has changed at all, or what would have to occur for that to happen? Or is that even possible? Yeah, so, you know, obviously, we always think about all these types of things and what the best interests of our shareholders are. So we're always thinking about, you know, kind of what we do with all our assets, whatever business it is.

Jim Buckley: That's a word.

Jim Buckley: But I'm curious if your thinking there has changed at all or or what would have to occur for that to happen or where is that even possible.

Jim Buckley: Yes. So obviously, we always think about all of these types of things and what the best interest of our shareholders. So we're always thinking about you know kind of what we what we do with all of our assets.

Jim Buckley: So whenever businesses. So we do that from time to time related to the <unk>.

Mike Powell: And so we do that from time to time and relate to the SKSS business. You know, the challenge of that business is that, as I've said publicly, is that it's just many of the locations, they're shared locations with our SK branch business, which, as Eric said in his remarks, that having continued to have a terrific year and had a terrific few years as far as an industry leader. So our concern is that even if we get through the exercise of separating the business, you know, from Clean Harbors and try to sell it or do something with it, there's a risk there that the buyer of that business would want to create a competitor to our SK branch business and we wouldn't be able to offer a bundled offering that we do today like some of our competitors do.

Jim Buckley: Challenge. The challenge is is that as I've said publicly is that many of the location of their shared locations with our SK branch business, which as Eric said in his remarks, but having continued to have a terrific. You had driven few years as far as that is an industry leader. So our concern is how is that even if we get through the exercise of separating the business.

Jim Buckley: From from from Congress, and try to sell it or do something with it it would it would it was there.

Jim Buckley: The risk there.

Jim Buckley: It's higher in that business would wanted to create a competitor to our SK branch business and we wouldn't be able to offer a bundled offering that we do today like some of our competitors do so not only as a competitive disadvantage to the SK branch visits are perhaps create competitive jurafsky goodness, because obviously those whoever buys that business would have to go in service of our customers just like we.

Mike Powell: So not only is it a competitive disadvantage to the SK branch business, but perhaps we wouldn't be able to create a competitor to our SK branch business because obviously those – whoever buys that business would have to go and service our customers just like we do and perhaps they want to sell, you know, similar types of services. So that's – there's a lot of reasons behind that. We think it'd be very difficult to separate the permits, we think it'd be very difficult to separate the locations, but even if we get through all of that, I think we create not only a competitor, but then also perhaps hurt what we think is a very profitable and growing business in our SK branch business.

Jim Buckley: Do it perhaps with one is health and similar.

Jim Buckley: Similar types of service. So that's a there's a lot of reasons behind that we think would be very difficult to separate the permits we think it'd be very difficult to separate locations, but even when we get through all that I think we create we can be not only a competitor. But then also perhaps hurt what we think is a very profitable and growing business in our SK branch business.

Unknown Executive: Right, that makes a lot of sense. Okay. Thanks, Mike. And thanks, guys, for all the color. Appreciate it. Thank you.

Jim Buckley: Right that makes a lot of sense okay.

Speaker Change: Thanks, Mike and thanks, guys for all the color I appreciate it.

Jim Buckley: Thank you.

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

Adam Bubes: Our next question comes from the line of Jerry Revich with Goldman Sachs. Hi, this is Adam Bubes on for Jerry Revich today.

Speaker Change: Hi, This is Adam <unk> on for Jerry Revich today good morning.

Adam Bubes: Good morning. In Safety Queen, hi, good morning, I'm wondering in Safety Queen, you know, it's pretty impressive because the 1Q results are very similar to last year and in a much worse base oil pricing environment. How does the charge for oil that you're flowing through right now compare to past cycles in similar base oil pricing environments? Are you seeing any changes in the competitive landscape there? And is that having an impact?

Speaker Change: In safety Kleen.

Speaker Change: Hi, Good morning, I'm wondering in safety Kleen you know it.

Speaker Change: It's pretty impressive because the.

Speaker Change: <unk> results are very similar to last year and in a much worse.

Speaker Change: Soil pricing environment, how does the charge for oil.

Speaker Change: That you are flowing through right now compare to past cycles in similar base oil pricing environment are you seeing any changes in the competitive landscape, there and is that having an impact.

Speaker Change: Packed.

Mike Powell: Adam, this is Mike. And first of all, thank you for pointing that out. We appreciate your recognition. We've had our challenges with that business. So we appreciate you acknowledging that it's done well. You know, what I would say is that, you know, we changed tactics and was very aggressive on CFO pricing. And we did that with a public announcement, and we were aggressive in Q4, and we stayed aggressive in Q1, and we're going to continue to stay aggressive. I think the industry has followed. That's your question. We do think that there's been that there's a, since we're the national player, we're the largest collector of used motor oil in the country.

Mike Battles: Adam This is Mike and first of all thank you for pointing that out. We appreciate we appreciate your recognition we've had our.

Speaker Change: Challenges with that business. So I appreciate you acknowledging that that has done well.

Speaker Change: The what I would say is that we changed tactics and was very aggressive on CFO pricing and we did that with a public announcement and we are aggressive in Q4. When you stayed aggressive if you want I'm going to continue to stay aggressive I think the industry is solid if that's your question. We do think that there has been there since we're the natural player with a largest collector of used motor oil.

Speaker Change: The country.

Mike Powell: You know, I think that that other people recognize the fact that they're under pressure to try to manage the spread as well. So they're having to do the same thing. So I don't I see this as a, you know, we were assuming we'd lose more gallons. And that's really what the surprise is for the quarter that the collection gallons are actually up year over year. And there's some M&A in there that clouds a little bit, but the level of collection gallons still be very high. And I year over year, which is a testament to the fact that we believe that the industry is kind of full of used motor oil, pricing is there, we're going to, we are aggressive, we're going to remain aggressive.

Speaker Change: That other people would recognize the fact that they are under pressure to try to manage that as well. So there has to do the same thing. So I don't I see this as we were assuming we lose more gallons and that's really what the surprises for the quarter that the collection gallons were actually up year over year and there's some M&A in there that caused a little bit but at that.

Speaker Change: The level of collection gallon still be very hot and a year over year, which is a testament to the fact that we believe that the industry is kind of full of used motor oil pricing is there we're going to we are aggressively going to remain aggressive and I'm really excited about as Eric said, we feel good about the 140, we kind of committed to today and nothing changes that matter of fact, I feel better than I did.

Mike Powell: And I'm really excited about as Eric said, we feel a bit about the 140 we kind of committed to today. And, and nothing changes that.

Adam Bubes: Matter of fact, I feel better than I did 90 days Great, and then in environmental services, guidance embeds an acceleration in organic growth in Q2, and then another acceleration in the back half of the year. You know, obviously you have Kimball ramping, weather presumably won't be a headwind, but you also have some, you know, field services projects that were a good guy in 2Q last year. So, just wondering if you can parse out the puts and takes on the organic growth cadence in the balance of the year, and any other moving pieces we should be thinking on.

Speaker Change: 90 days ago.

Speaker Change: Great and then in environmental services guidance Embeds, an acceleration in organic growth in Q2, and then another acceleration in the back half of the year.

Speaker Change: Obviously, you have Kimball ramping.

Speaker Change: What weather, presumably won't be a headwind, but you also have some.

Speaker Change: Field services projects that were a good guy.

Speaker Change: <unk> last year.

Speaker Change: Year. So just wondering if you can parse out the puts and takes on the organic growth cadence in the balance of the year and any other moving pieces, we should be thinking of.

Eric Dugas: Sure, Adam, Eric here. So you're exactly right. As we move into kind of Q2 and Q3, the organic growth does increase from Q1 here, which, as we tried to call out, was greatly impacted by weather. But as we move into Q2, obviously, the pricing strategies, the great volume momentum we're seeing, we do have a headwind with those ERs in Q2. I think last year when we spoke to the street in July around Q2, we talked about roughly $24 million of larger types of ERs. So that is a headwind. But making up for some of that will be just overall growth in field services.

Speaker Change: Oh sure at Americare, So you're exactly right as we move into kind of Q2 and three the organic growth does increase from Q1 here, which as.

Speaker Change: As we tried to call out was greatly impacted by weather, but now as we move into Q2, obviously that pricing strategies. The great volume momentum. We're seeing we do have a headwind windows E ours in in Q2, I think last year. When we spoke to the street in July around Q2, we talked about roughly $24 million of larger types of D. R.

Speaker Change: That is a headwind, but making up for some of that will be just overall growth in field services. So.

Eric Dugas: So we opened 10 new field services branches this quarter, so there will be some organic growth there to help offset. And then as you move into Q3, again, same kind of pricing strategies, good volume. And as Eric Gerstenberg mentioned a moment ago, that's where we're hoping to see some stronger turnarounds in the industrial services business that will go up against that Q3 comp last year. And then Q4, probably a little bit smaller just sequentially from organic growth, but again, growth over last year. So those are the largest puts and takes, but the underpinning of all that is all the great things we're doing in the businesses and environmental services.

Speaker Change: We opened 10, new field services branches. This quarter. So there will be some organic growth there to help offset and then as you move into into Q3 again same kind of pricing strategies are good volume and as Eric Hirshberg mentioned, a moment ago, that's where we're hoping to see some stronger turnarounds in the industrial <unk>.

Speaker Change: <unk> business setup that will go up against that Q3 comp last year, and then and then Q4, probably a little bit smaller just sequentially from an organic growth, but again growth over last year. So those are the largest puts and takes but the underpinning of all of that is all the great things we're doing.

Speaker Change: The business is in environmental services, the Kimball ramp up pricing strategies cost cutting initiatives all of those things introduction of some new technologies are those are all driving the organic growth.

Eric Dugas: The Kimbell ramp-up, pricing strategies, cost-cutting initiatives, all those things, introduction of some new technologies, those are all driving the organic growth.

Unknown Executive: Great.

Speaker Change: Great. Thanks, so much.

Unknown Executive: Thanks so much.

Adam: Thanks, Adam.

Unknown Executive: Thank you.

Speaker Change: Thank you. Our next question comes from the line of Tobey Sommer with Junior Securities. Please proceed with your question.

Unknown Executive: Our next question comes from the line of Tobey Sommer with Drew Securities. Please proceed with your question. Tobey? Yeah, good morning. I want to ask on the labor expense side, if if we do get a pickup in inflation, how do you think the company is positioned to be able to adjust pricing mid year and respond to that to keep the margins and return profile that your card Yeah, Toby, Eric here, we, we will continue to outpace through pricing initiatives, our increased costs due to labor, would say that on the labor side that team's done a great job at continuing to reduce our turnover and in a difficult environment, strong employee base, but we will we will no doubt work through increases in labor by price adjustments in the market.

Adam: Yeah.

Adam: Okay.

Adam: Yes, good morning.

Adam: I wanted to ask on the labor.

Speaker Change: Expense side.

Adam: If we do get a.

Adam: Picked up in.

Adam: Inflation.

Adam: How do you think the company is positioned to be able to.

Adam: Adjust pricing midyear and respond to that to keep.

Adam: The margins and return profile that you're targeting.

Tobey: Yeah Tobey.

Speaker Change: Here, we are we will continue to outpace through pricing initiatives are increased costs due to labor.

Speaker Change: Say that on the labor side that our team has done a great job of continuing to reduce our turnover in a difficult environment straw.

Speaker Change: Strong employee base, but we will we will no doubt worked through increases in labor by price adjustments in the market. Yeah, just to follow along with Eric just said our voluntary turnover for our direct labor our cost of goods sold labor is the lowest it's been over three years and it really is a testament to that all of the things at all.

Eric Dugas: Yeah, just to follow on what Eric just said, you know, our, our, our voluntary turnover for our direct labor, our cost of goods sold labor is the lowest it's been over three years. And it really is a testament to that all the things all the investments we've making in our organization and our people. And that and that allows us to be, you know, aggressive in how we how we price and our customer service. And it's really has a has a virtuous cycle that we're in right now.

Speaker Change: The investments, we're making in our organization and our people.

Speaker Change: And that allows us to be aggressive in how we our pricing and our customer service. It's really has a as a virtuous cycle that we're in right now.

Unknown Executive: Thank you. Ladies and gentlemen, as a reminder, if you'd like to join the question queue, please press star 1 on your telephone.

Speaker Change: Thank you, ladies and gentlemen, as a reminder, if you'd like to join the question queue. Please press star one on your telephone keypad.

Davis Banton: Our next question comes from the line of Davis Banton with BMO Capital Markets. Please proceed with your question. Hi, good morning. This is Davis on for Dev and Dodge. Just a quick question for me.

Speaker Change: Our next question comes from the line of David <unk>.

Speaker Change: With BMO capital markets. Please proceed with your question.

Davis: Hi, Good morning. This is davis on for Devin Dodge.

Davis: Just a quick question for me just wondering if theres an update or any commentary you can give on how the ramp up of those groups three oil processing is going.

Davis Banton: I'm just wondering if there's an update or any commentary you can give on how the ramp up of group three oil processing is going? Yeah. Yeah, Davis, I can answer that question. It is, you know, it's growing. It's going to grow up in two to three million more gallons this year than last year. And it's just it's a it's a slow ramp. I mean, we want to make sure our plant, you know, works well. And, and collection, you know, collection logistics is always a challenge. Make sure we're getting all the bacteria that we need to fill the plant and and move forward.

Davis: Yeah.

Davis: Yeah.

Davis: Yeah, David second answer to that question is that.

Davis: It's growing it's going to grow up in two to 3 million more gallons this year than last year.

Davis: It's just it's a.

Davis: Slow ramp being we want to make sure it works well and and collection.

Davis: Logistics is always a challenge for sure we are getting all the three that we need to fill the plant.

Davis: And move forward, but that's that goes along kind of unabated here in 2025.

Mike Powell: But that that goes along kind of unabated here in 2025. David, probably just to add to that, our Castrol partnership, they've really expressed a lot of interest in helping to grow and manage the Group 3 that we're producing under the Castrol brand. So there's good, solid opportunity there. Okay, great. Thanks.

Speaker Change: And Dave is probably just to add to that our Castro partnership they've really expressed a lot of interest in helping to grow and manage the group three that were producing under the Castro brands. So there's good solid opportunity there too.

Speaker Change: Okay, great. Thanks, I'll turn it over.

Unknown Executive: I'll turn it over.

Speaker Change: Thank you.

Unknown Executive: Thank you.

Kristian Berg: Thank you, ladies and gentlemen that concludes our time allowed for questions I'll turn the floor back to Mr. Kristian Berg for any final comments.

Eric Gerstenberg: Ladies and gentlemen, that concludes our time allowed for questions. I'll turn the floor back to Mr. Gerstenberg for any final Thank you and thank everyone for joining us today.

Kristian Berg: Thank you and thank everyone for joining US today next week management will be at the waste Expo in Las Vegas, and participating and Stifles Investor Summit, there as well as the virtual Oppenheimer's industrial growth conference later in the week.

Eric Gerstenberg: Next week, management will be at the Waste Expo in Las Vegas, and participating in Stifel's Investor Summit there, as well as the virtual Oppenheimer Industrial Growth Conference later in the week. We also have several conferences lined up in Boston and in New York in early June. Based on that active calendar, we look forward to seeing some of you at those events.

Kristian Berg: We also have some or conferences lined up in Boston and in New York in early June.

Kristian Berg: Based on that active calendar, we look forward to seeing some of you as those events.

Unknown Executive: Have a great rest of your week and please stay safe. Thank you.

Kristian Berg: Have a great Western U Rusty you weekend, please stay safe.

Kristian Berg: Yes.

Kristian Berg: Thank you. This concludes today's conference call you may disconnect. Your lines at this time. Thank you for your participation.

Unknown Executive: This concludes today's conference call. You may disconnect your lines at this time. Thank you for your participation.