Clean Harbors at Oppenheimer Conference: Strategic Insights on Growth

On Thursday, 08 May 2025, Clean Harbors (NYSE:CLH) presented at the Oppenheimer 20th Annual Industrial Growth Conference. Co-CEO Mike Battles and SVP of IR Jim Buckley highlighted the company’s strategic focus on safety, margin expansion, and capital allocation. While Clean Harbors showcased strong performance in environmental services, challenges remain in the SKSS segment. The company is optimistic about its future growth, driven by technology and strategic investments.

Key Takeaways

• Clean Harbors is prioritizing safety, achieving a record low Total Recordable Incident Rate in Q1.
• The company aims for a consolidated margin of 22% by 2027, with environmental services driving margin expansion.
• Capital allocation is focused on ROIC, with $430 million remaining for share buybacks.
• The SKSS segment faces challenges but maintains a $140 million EBITDA target for the year.
• Expansion plans include opening 30 new field service branches, leveraging technology for growth.

Financial Results

• Vision 2027 targets a consolidated margin of 22%, with environmental services aiming for 30% margins.
• Environmental services contributed 91% of Q1 EBITDA, demonstrating its critical role in the company’s performance.
• The leverage ratio ended the year at 2.1 times, with expectations of generating $500 million in free cash flow over the next nine months.
• The company reiterated its commitment to a $140 million EBITDA target for SKSS, despite a conservative outlook on base oil prices.

Operational Updates

• Safety improvements are a core focus, with Clean Harbors achieving a record low TRIR in Q1.
• The Kimball incinerator is ramping up, expected to process 28,000 tons this year, though not at full capacity.
• Field services are expanding significantly, with 10 new branches opened in Q1 and 30 planned for the year.
• Industrial services are experiencing deferred maintenance, with modest growth expected later in the year.

Future Outlook

• Environmental services margins are expected to continue expanding, potentially reaching 30% within 3-4 years.
• Modest growth is anticipated in industrial services, despite a 10% revenue decline in Q1.
• The company is optimistic about PFAS incineration opportunities, pending EPA and DOD testing results.
• M&A strategies focus on fragmented areas of the environmental services industry, excluding incinerators and landfills.

Q&A Highlights

• Safety improvements are expected to benefit margins, though rising healthcare costs pose challenges.
• The company anticipates growth opportunities from captive market closures in the next 5-10 years.
• PFAS incineration testing results could unlock significant opportunities with the Department of Defense.
• Technological advancements in industrial services aim to enhance safety and operational outcomes.

For a detailed discussion, please refer to the full transcript below.

Full transcript - Oppenheimer 20th Annual Industrial Growth Conference:

Noah, Analyst, Oppenheimer: Good morning, everyone. Welcome to day four of Oppenheimer’s twentieth Annual Industrial Growth Conference. So we’re starting off today with a great one, Clean Harbors. We’re really delighted to have the management team back at our conference this year, with co CEO, co president Mike Battles, and SVP of IR, Jim Buckley. Gentlemen, welcome.

Thanks so much for being here.

Mike Battles, Co-CEO, Co-President, Clean Harbors: Hey, Noah. Thanks for having us at the Oppenheimer team. It’s always a pleasure to come talk to investors and and, and and and, you do great give us great, good coverage and and appreciate it.

Noah, Analyst, Oppenheimer: Well, thanks, Mike. You know, listen to a lot of scripts over the years and realize you always start your earnings call off talking about safety. And so I wanna do the same, actually, start off here. Great. You you reported a record low TRIR in one q.

You know, I think other waste companies, unless several earnings have made the connection for investors between lower incident rates and margin benefits they see at a lag. Can you talk about what the company is doing to achieve safety improvement and how we should think about that showing up as a margin benefit of the financials?

Mike Battles, Co-CEO, Co-President, Clean Harbors: Yeah. No. It’s a great way to start. We as as you may know, know, we start every meeting, with a with a safety moment, and that’s that’s when I was the CFO in finance or the operations or in I mean, we start it’s really important to talk about, you know, kind of our safety, our safety culture because it’s just so important to kind of who we are. We want our number one goal is to have every employee go home safely to their family.

Every night is the number one core value of our of our of our of our STICS core values. And and it really is, you know, a big part of kind of what we do. And and because we’re managing such in dangerous, going to dangerous places, majoring dangerous, waste streams, safety’s served multiple purposes. You know, we don’t normally talk a lot about what the safety culture does for our p and l because it’s not the purpose of what we’re doing it for. We’re doing it to make sure that our our people get home safely and that we don’t have, you know, injuries on the job.

But but to your point, Noah, there is a connection. It’s a lag. Right? Because when someone doesn’t get hurt, when someone doesn’t, you know, hurt their hand or hurt their back, you know, it it it takes a or it does hurt takes a long time for that to show up in the financial statements because of the lag of of a diagnosis and then a treatment plan if it’s serious that can take, you know, six months or years in some cases. You know?

Someone gets a car accident, something like that, but it does happen. You know, the challenge we see in that in that part of the world is I think we’re doing a great job of lowering the amount of incidents, but the cost associated per incident has been much higher. And that could be for health health care costs and and and and and legal judgments against companies are higher than ever. And so, you know, those my my view is that we need to be safe for a lot of good reasons and have an industry leading safety record, you know, multiple times better than the industry average. We do that because because that’s important to us.

But but it does help offset rising health care costs, which are rising at a rate probably faster than GDP. It does offset, you know, legal judgments of, you know, when when they’re injury cases, when the mortgage and mortgage of the world, you know, kind of suing the heck out of us and act and getting judgment at a pretty high lit rate and a pretty lucrative rate. And so those are the in my mind, we need to pedal faster from a financial statement standpoint, on our safety just to offset, let’s say, a dramatic rise in health care costs over the past five years and and legal settlements. So that’s that’s in my mind kinda why we do that. And, also, less accidents, less, you know, being safer on the road trans compliance.

We don’t talk about trans compliance, but trans transportation compliance is really, really important because of car accidents and the cost of automobile repairs. That’s also a a a very large cost for us. And so we have 15,000 broke pieces of trucks and trailers out there, and so that’s we have fourteenth largest motor carrier in North America. So, you know, car accidents you know, truck accidents are are hugely expensive. And so being safe is not just about making sure that people don’t hurt themselves, but they also drive safe.

And they and and they and they and they drive defensively. And so that’s all part of the culture of the company. And so those are all, again, to offset rising automobile repair cost is really what we’re thinking about here.

Jim Buckley, SVP of IR, Clean Harbors: And the last point I’d add now is that being safe helps with recruiting for people that are outside. It’s like, I wanna come work there because they take care of their people. They care about their people, and it helps with turnover for people not working.

Mike Battles, Co-CEO, Co-President, Clean Harbors: Yeah. I was I was in I was in Vegas earlier this week, and we did go to a couple of our sites. And and and and one of the sites we saw, you know, a father and and two sons. And that really does that makes me feel great because why would no father put their son to come work for them if they didn’t think it was a good company to work for? And so that really kind of kind of was really kind of a very rewarding for me as a CEO to meet the dad who’s been there for a number of years and the two children.

They’re also working there because, you know, it’s one thing for you to do it because you need a paycheck. Another thing to bring your kids there and the fact that they’re that that happens all the time. And we travel a lot in different times. You see, you know, fathers and sons and nephews and nieces, you know, all the time.

Noah, Analyst, Oppenheimer: I I think that’s a great anecdote, Mike, and illustrative. So appreciate you sharing that. I just wanna stick with the theme of margin improvement here. I mean, put in the context of some of the targets you put out at Investor Day, you know, that that sort of implied maybe a a 22% margin by 2027, obviously, exiting 2024 at 19%. So do do you see still the overall business getting close to that kinda 22%, you know, figure?

Is that is that achievable in your view?

Mike Battles, Co-CEO, Co-President, Clean Harbors: Yeah. No. I think that the I I think that the margin on the consolidated number is difficult to kinda put a finger on because of the movement in the SKSS business. So I’m of the view that we’re gonna get that right. We we talked about that.

Pascal, is true. We’ll talk about talk about this morning, but but that that has been a challenge from a margin perspective. Certainly, that that that when we did those models back then, the margin profile for the SKSS business was much higher. On the environmental services side, as as you know know, we’ve gone 12 straight quarters, three years of year over year margin expansion, and q one was no no exception to that. And so I’m of the view that that’s gonna continue.

We talk about environmental service margins going up, you know, a goal of getting to 3030% margin, like this always, guys. And I think there’s a real possibility of doing that. I I hate to kinda put you do projections on the oil business because that is I think we’ve turned the corner. I think we’ve changed the paradigm, but, you know, once is not a pattern. And so we need to start doing that over some time horizon before I come back

Look at kinda where we are on a consolidated basis.

Noah, Analyst, Oppenheimer: Yeah.

Mike Battles, Co-CEO, Co-President, Clean Harbors: I’d say that I’d say that Vision 2027 is on track. One business is doing much, much better than we expected, and one business is not.

Noah, Analyst, Oppenheimer: Thanks, Mike. I I I guess we can can maybe focus more on environmental services because it’s more controllable margin story. It’s also the vast majority of EBITDA of the company.

Mike Battles, Co-CEO, Co-President, Clean Harbors: So so 91%, Noah. Ninety one % in q one. ’90 ’1.

Noah, Analyst, Oppenheimer: So we’re coming off 25%, segment margin for 2024. I think the kind of implied guide here is modest margin expansion for ’25. How should we be thinking about maybe sort of multiyear trajectory and the levers for margin expansion?

Mike Battles, Co-CEO, Co-President, Clean Harbors: Yeah. No. I think that 2025 will be, you know, with a with a new plan opening up. Certainly, q one was probably a bit of a bad guy from a margin perspective. Maybe we get back to for the year, it’s not a helper or a herder, but when you’re like we we’ve committed to 28,000 tons.

The thing runs. Things are 70,000 ton incinerator, so it’s not gonna be running at full full capacity by the end of the year. So that’s probably a bit of a a headwind bad guy there. You know, we are we are seeing, you know, kinda good trajectory in pricing. We have been able to get you know, we’re always concerned about, you know, have we reached a limit on pricing?

We absolutely have not reached a limit on pricing. We certainly have plenty of room to continue to price and drive margin expansion. You know, do we get to 3030% margins by, you know, the next three or four years? I mean, I don’t know. But I think it’s gonna go much faster than I guess, continue on the good trajectory that we’ve seen for the past few years.

Noah, Analyst, Oppenheimer: We’ll dig into, the different parts of ES in a little bit, but I I just want to ask a couple of high level questions before we do. Think just given the balance sheet strength and the improving free cash flow conversion, just help us understand how you’re prioritizing the capital allocation over the next twelve to twenty four months between organic growth, m and a, and returning capital to shareholders? And maybe help us understand really the metrics driving those decisions.

Mike Battles, Co-CEO, Co-President, Clean Harbors: Sure. So first of all, it’s all about ROIC. You know, we wanna make sure that whether it’s capital deployed in our plants, whether it’s m and a, whether it’s buybacks, we we see whether it’s where whether it’s, you know, leverage and debt. You know, we’re we’re always trying to make sure that we’re deploying capital in a way that returns the best returns to our shareholders and that we’re thoughtful about that. And and so whether it’s you know you know, we haven’t done a lot.

We did we did we did, you 500,000,000 of m and last year, but we haven’t done anything since, you know, q one of last year. And that’s because the returns haven’t been as good as as we had thought of. That doesn’t mean we’re not looking at things. That that mean we can’t get there. It’s just that, you know, we try to be thoughtful with our capital deployment.

And in the interim, we opened up this wonderful plan that’s gonna have our you know, for 200,000,000, it’s gonna have an enormous returns. Every yeah. It’s gonna have enormous returns. And there are other types of capital investments out there. We’re we’re looking at whether we can take, you know, some of the byproducts of the re refining process and and and add, you know, some capabilities into one of our sites to to drive more value out of that.

But it’s all based to to your point, though, no. It’s all based on ROIC. It’s all based on returns. We ended the year with 2.1 times levered on our balance sheet. If you if you it was $600,000,000 of cash, kinda roll that forward and we generate, you know, 500,000,000 of free cash flow over the next nine months or more than that, you know, we’re gonna be in a great position to deploy capital in a lot of different ways.

We think the stock is still very very undervalued. We have over 430,000,000 remaining under our under our pre pre preexisting, you know, buyback program. And so we have plenty of opportunity, plenty of ways to do it. And and we don’t have any debt due to 2027. And so and so and and we got updated by Moody’s.

I don’t if you saw that the other day. We got upgraded you know, now now our consolidated book one dot below investment grade and all our secured debts at investment grade.

Noah, Analyst, Oppenheimer: So, I

Mike Battles, Co-CEO, Co-President, Clean Harbors: mean, I think that it’s a we’re in a really good space. You know, a a variety depends on whatever happens. If the economy goes sideways, we’ll we’ll come out stronger than ever. And if if it doesn’t, well, then we’ll have a great balance sheet to deploy it intelligently and take your money and and deploy it properly.

Noah, Analyst, Oppenheimer: So so if we think about the m and a landscape, I mean, you know, 30,000,000,000 plus, you know, environmental services industry still fairly fragmented. You know, is there a way to think about, and I think back to your twenty twenty three Investor Day, of the size of what’s potentially acquirable revenue for clean harbors, you know, kind of the size that the the TAM within the TAM, if you will? Sure. Maybe an update on the the focus of the M and A pipeline today.

Mike Battles, Co-CEO, Co-President, Clean Harbors: You know? So, Nolan, when you think about, you know, some of the big areas of where we are today, when we own kind of the 14 hazardous waste incinerators in North America, the likelihood of us being able to acquire another incinerator is probably incredibly low, incredibly low, even if they were for sale. You know, incredibly low. And so in in areas like landfills, again, also probably not gonna be able to buy that given our dominant position in the marketplace. Other areas where we have, you know, 20% or 15%, there’s opportunities there, and areas even smaller.

And so so, again, I think that I think that private equity has had interest rates rising on them. They they they are under pressure because they’ve owned these assets for quite a period of time. The clock is ticking for them to get a return to their shareholders. They’re worrying about a recession. They’re worrying about a recession and high interest rates.

So that’s if I’m if I’m an PE guy, I’m gonna be going, let’s we gotta go. We gotta go today. And I’m here to tell you, it’s tough to prove a negative because we haven’t done anything, but there’s a lot of assets out there in a lot of different areas. And as you know, Noah, we take all ways short of short of hazard short short of nuclear. Excuse me.

And so we’re open to any types of industrial waste, any type of industrial waste that’s out there that we’d be that that that, again, fix the screens of of strategy and of financial, rigor.

Noah, Analyst, Oppenheimer: I wanna move through some of the segments. You know, I think starting with tech services, you know, the company talked on the earnings call about active conversations with a number of captives. You know, we’ve monitored this for years. Of course, you remember the three m announcement. But I think to to level set, right, there’s there’s 41 different captives today making up half the market.

So how do you see that trending within the next five or ten years, and how do you position yourself to capture the market share from cap shutting down?

Jim Buckley, SVP of IR, Clean Harbors: Can take that one. Yeah. The, the captive market is a is a source of growth for us. And for those on the call, they there used to be over a 20 captive incentives. Now this is going back to the mid mid nineties, but that 20 has winnowed down to 41 today.

So when you ask next five years, ten years, there’s gonna be more closures. You know, I can’t tell you exactly when because it’s a it’s a onetime decision for those operators. And so it’s a major decision that that can never get that permit back. And so but but when you spread it out over that length of time, there’ll be some captive closures. And the other challenge in more recent years, three m has given us perfect playbook to bring to those folks, but it also really packed up the industry because three m sent a lot of volume exclusively to us.

And because of that, if there were some captives considering closing, they were probably waiting until we open Kimball and and our peer is opening one later this year. So there’s some new capacity coming in the market. So logic would tell you, if that if that was the gate, that gate’s open right now, and it may not be open for for for all that long. So I would say within the next five years, you’d certainly see some closures.

Noah, Analyst, Oppenheimer: And I think speaking of Kimball, right, I mean, the message from the call was very much on track with its ramp. I guess, talk about the visibility you have into the demand of the pipeline for the 28,000 tons you’re expecting to process this year.

Mike Battles, Co-CEO, Co-President, Clean Harbors: Yeah. No. So it’s 28,000 tons. We’re we’re on track, and it and it you know, opening up a new plant’s challenge. We opened up late last year, you know, right before Christmas.

And and, know, that the winter that we experienced in the, you know, Midwest and the South, I mean, it it was it it slowed us down, and we were concerned. But, you know, the team is a great team. I mean, as as investors, you should feel proud of the team. I spent I’ve been out there a couple times in the past few months, and they really they they run that plan as if they own it, and they take they take care about take care of it, they wanna maximize its value and maximize their returns. They’re they’re they’re really like many places around clean arbids, they’re terrific operators.

Terrific. You know, I’m I’m of the view that the pipeline is go is strong. No. I think that I don’t I didn’t I mean, we hear we I was the other solid waste guys. They kinda had the same answer that they see, like, a a a reshoring phenomenon that continues, and and there’s plenty of waste streams.

As you know, 16% of our of our revenue comes from the chemical vertical, but that’s only 16%. You know, you take the top you take the top 10 verticals, it’s only, like, 45%. And so we get waste from whether it’s pharma. Yeah. It’s it’s amazing.

What I find amazing is that it no matter what industry you’re talking about, government, hospitals, universities, I mean, they generate hazardous waste. And so that generates a waste stream that comes into our network that that that I think that regardless of what happens, we’re gonna be in a great spot.

Noah, Analyst, Oppenheimer: Yeah. I thought Doge was gonna eliminate that, though.

Mike Battles, Co-CEO, Co-President, Clean Harbors: Say again?

Jim Buckley, SVP of IR, Clean Harbors: I thought

Noah, Analyst, Oppenheimer: Doge was gonna eliminate that. So Just just a a follow-up on Kimball. I mean, do you think that it becomes kind of mixed neutral or mixed positive within incineration once it’s at full ramps? Is there anything kind of, you know, structural about the waste streams going there, the asset location, or is it

Mike Battles, Co-CEO, Co-President, Clean Harbors: kinda No. Yeah. If know it’s on an existing it’s on an existing site, and so they already have a, they already have an incinerator there. Yep. This is the second incinerator they put on the site, so it’s it’s sharing its logistics and so forth.

We had to have that at a warehouse and a couple other things to make it kinda operate effectively, but it’s it’s, you know, I don’t I don’t see that I don’t see that pipeline even slowing down a bit. I you know, April you know, March was one of our best months for drum volumes. Drum volumes is one type of waste stream. We take all kinds of waste stream, but drum volumes is a good kinda good KPI. And and and March was one of the best months we’ve had in the company’s history, and April will beat it.

And so I that’s I’m of the view that the waste volumes are gonna continue to fill that plant up. I people ask me about, you know, the capacity coming online this year and the the one in one of our competitors’ capacity coming online this year. And what’s that mean for pricing? I mean, you know, we own 10 out of 14, and when they come online, it’d be 10 out of 15. They own three, and we own 10.

And why would we want a lower price on that? Who’s that? Who does that help? Who does that help? And so I I I don’t see us kinda racing to the bottom kinda anytime soon.

Noah, Analyst, Oppenheimer: I think, you know, you’d spoken on the on the two on the call, the one to call about the testing with the EPA, and DOD for PFAS incineration, kinda looking for those results to come out in February. So I guess just broadly, what are you helping the study determines, and and kind of tie that to how it might support growth in the PFAS project pipeline?

Jim Buckley, SVP of IR, Clean Harbors: Yeah. I can start on this one. PFAS is one of my favorite topics.

Mike Battles, Co-CEO, Co-President, Clean Harbors: Yeah.

Jim Buckley, SVP of IR, Clean Harbors: Yeah. This is our for those, just background, we we completed a a test with the EPA and DOD, as as Noah mentioned, back in November at our Utah facility. It’s our third incineration of PFAS test. And each time, we’ve tested to the highest standard available. So the EPA has gotten more comfortable around incineration.

They participated in our study, last time, whereas the first two, we’d sort of been on our own using third party designs and outside experts to evaluate the data. But the EPA wasn’t involved, and they they’ve tried to create new, more rigorous standards to get themselves and everyone in the market comfortable with it. They have an OTM 50 is the name of the new highest standard. And and assuming they don’t move the goalpost again, we think this will be hopefully a big unlock for us. And we sort of know the answer to the test because we’ve seen the preliminary data, but we’ll have to wait and get the study officially published, which we’re hoping will be in June.

May maybe it slips to July with the you know, everything seems to be going a little slower with a little Doge impact all over the place, it seems. But, you know, with six nines of destruction, we feel like that’s very achievable. That’s sort of the gold standard in incineration, and that’s what we achieved the first two times with the first two tests, and that’s what we think is gonna be the outcome here. The question of sort of what does this do for us? Very importantly, the DOD was involved.

PFAS is a problem at military installations depending on who you read. There’s 400 of them out there. There’s 700 of them out there that are contaminated. There’s several hundred highly contaminated military installations. And we know in discussions with the different parts of the military that within the DOD that they wanna shore destruction, and that option is just not out there right now.

The work that we’ve done so far in military bases has all gone to landfill, and and we think that’s a a wrong answer, particularly for stockpiles of AFFF and things that are very highly concentrated PFAS. You just really shouldn’t be putting those in the ground. And and and and so having this study, could unlock the DOD opportunity for us. And I always tell investors that’s our shortest hallway. Right?

Because we know who did the contamination, and we know who’s writing the check, and they have a pretty big, deep pockets. And so there’s gonna be opportunity on the private side. There’s a lot of rivers and waterways and locations that are contaminated, but there gets to be a lot of litigation and fighting about who actually, you know, put it in the Ohio River. When you’re talking about military bases, it’s a really, good opportunity for us. So the unlock could be that today, there’s a moratorium on incinerating PFAS of DOD waste, and we wanna get that lifted, and I’m hoping that study will do that.

Noah, Analyst, Oppenheimer: Super clear. Thanks thanks, Jim. I want to shift to Industrial Services. You talked on the call last week about customers and IS deferring maintenance and turnaround work to the back half of the year. So maybe just thinking about the context of prior industrial downturns, periods of uncertainty, you know, how long do these push outs typically last?

And do you actually get more spending at the back end, you know, because delays create additional problems? Just give us a context of where we’re at.

Mike Battles, Co-CEO, Co-President, Clean Harbors: Yeah. So if you think about a great example that I know will be COVID where they plants shut down, they slowed down, you know, and and, you know, that was in 2020. You know you know, 2021, especially 2020 and then the prior 2021. And 2022 was a great year for us. I mean, it was a great year as far as the amount of industrial work that we got and the margin growth we saw in that business.

And that was you know, it kinda depends on on on when you get on-site and you open up the vessel and you see how much damage is there. It’s tough to it’s tough to say today that, you know, ’20 or back half of twenty twenty five or the first half of twenty twenty six will be awesome. I mean, but I do think that you can’t defer these forever. This type of maintenance needs to happen. The plants are still running at full capacity, and so they are creating opportunities there.

You know, obviously, an unplanned shutdown is actually the best thing that could happen for us. We’ll get kinda emergency response rates. And so you kinda like, they’re playing a they’re playing a game of chicken right now, slowing down some of their turnaround work, or limiting the amount of work they’re doing during a turnaround and effort to getting kinda lower cost and get kinda get back at it. You know, we we did see we did see some, in q one, some timing issues. I mean, people just say, look.

Come back in a month type of thing. So I’m hopeful q two is good. Now if you know now, you know this, Noah. Maybe some of our people on the call also know is that we had a bad q three last year with lower oil prices and some push out some very large amount of project work. And so we’ll have a good v, in q three in industrial services.

For the full year, there’s gonna be modest growth in industrial services. So even though q one was negative 10 on the revenue side, I think we’ll still have a pretty good pretty good year. You know, it’s tough to come back from that tough start, but we’re hopeful that we’re we’re modestly profitable for the year if you’re doing some form of waterfall.

Noah, Analyst, Oppenheimer: You know, I wanna ask about how you are evolving capabilities of industrial services. And, you know, there’s there’s been some notable acquisitions where you’ve talked about that, like HPC. You also highlighted a pretty tight labor market and automation and technology becoming a priority as trends. So maybe help us understand what have you done since that Investor Day to improve, you know, technology usage? And what

Mike Battles, Co-CEO, Co-President, Clean Harbors: are the areas of sort

Noah, Analyst, Oppenheimer: of technology advancements within IS going forward?

Jim Buckley, SVP of IR, Clean Harbors: Yeah. I’ll I’ll start on this one. I mean, when we bought, HPC, they came with an r and d center. So something far beyond anything that that we had as legacy Clean Architectural. And the real focus has been in a couple areas.

We do a lot of high pressure washing and cleaning, and this is not your father’s, you know, pressure washer that you clean the the siding or anything with. This is the type that’ll, you know, take a limb off if you’re not careful. And so one of the things has been to move a lot of that water jetting to where the the operator is behind the joystick as opposed to actually holding the device or risking getting in that line of fire. So there’s that level of it. There’s also a lot of risk with confined space entry, which we do quite a bit of.

And so there’s been a push internally to, you know, get the robots in there and have them do some of that confined space. At least the inspection side of it, you could do some of that with flying drones inside the vessels. We get really sophisticated drone technology that we’ve been advancing over the last several years, and it really goes back to the whole common discussion, you know, with Mike earlier about safety is, you know, the the the challenge with us is that some of our injuries can be very catastrophic, particularly in the industrial services world because you’re you’re in an area where you might be under a nitrochip blanket, you know, on a respirator or you’re in an area where you’ve got a a PSI wand, you know, spraying a thousand per square inch, that that can do some severe damage. So this isn’t No. You know, spraying ankles and pinch fingers.

This is severe. So the movement within has been guided quite a bit by how do we make our people safer. It’s not so much about, hey. You You have a three man crew. Can you get that down to two?

There’s a little bit of that, but it’s really more about keeping our people safe. And and the customers, that’s what they want. And a lot of those folks, whether that’s the Shells or others of the world, they their their whole thing is is safety. And so it creates a competitive advantage. That’s another thing that comes out of our TRIRs that it it puts put gives us a leg up on some other folks that don’t have the track record we do.

Noah, Analyst, Oppenheimer: Can I just unpack that, for a little bit, more, Jim? You know, it sounds like you’re saying the way that you’re using, you know, some of that technology, not not really a change in, like, labor hours, labor utilization. They’re just using the same tools in a in a kind of using the tools in a in a more safe way. Are there material opportunities to, like, reduce time on-site, reduce labor intensity, you know, and get those people out to more jobs, you know, through, you know, some of these technology innovations? Is that, like, a feasible opportunity for the company?

Jim Buckley, SVP of IR, Clean Harbors: Sure. We’ve we’ve introduced last year, just to get into an example, a total exchange management where we actually take the bundles from the the customer site and actually bring them off-site or or on-site and dump them in a tank that using sonic technology and other things will actually clean. You put something in that way as opposed for example, they give us 12,000 tons, and then you pull it out, it’s 10,000 tons or 8,000 tons. So, you know, all that contamination came off. It’s a safer, better way to do it.

You know, in in the water jet world, it’s, the example the team is is it’s not necessarily more efficient, but you get better outcomes. And so if you were to take a heat exchanger, which for those that don’t know, has just got thousands of tubes running through it, and you try to do that manually as historically was done, you know, the industrial guys would tell you the way of doing it before was kinda one two skip a few. Whereas if you mapped the whole set of of pipes inside the heat exchanger, you know, on a cab cab type design and then punch it into the compute to to the robotic arm there, it’s not it’s never gonna miss a single one. And so you get a better outcome for the customer. You get a safer outcome for us.

And so we’re we’re looking for both of those kinds of things as we, you know, use our r and d center to advance with the new offerings.

Noah, Analyst, Oppenheimer: And that’s a bit helpful. Thanks, Jim. One of field services, HEPACO, that was clearly a win for field services. You know? And it looks like you’re now investing even more in the business, opening up new locations.

Just talk a little bit about the impetus, behind that investment. What’s what’s going on with what you’re trying to do strategically in growth?

Mike Battles, Co-CEO, Co-President, Clean Harbors: I mean, no. That’s a great example of of an area that’s still pretty fragment. I mean, whether it’s whether we can go up by another, you know, incinerator is a debatable topic. But I think that, you know, field service, as as you know, from our Investor Day deck is still highly fragmented industry. And so our ability to go do m and a is still very relevant, but we felt there was a great opportunity given our large footprint.

We’re in over 700 locations. We could add new field service branches based on the marketed market was need for that area into an existing site. And so an acquisition like Hepco said, hey. Hepco is using a third party resources there, and we should just open up a branch to compete with that. So that really is the impotence.

Normally, we open up five to 10 new field service branches a year. This is we’re closer to 30 this year. We did 10 in q one. And these are small you know, it’s it’s a it’s a it’s a it’s a branch manager and a few drivers. It was a with a lay down yard in a in a location that already has it’s already existing clean harbor sites with low cost, and and that’s helping us to phrase some of the cost of travel to those locations, and then you grow it from there.

And what we’ve seen is that you give them a chance. You give them a target. You go say, go go find it, and they go find it in that local jurisdiction. So I think that’s been a that’s been a win for us. You know, it is it is a bit of a you know, the day to day work is is is good margins, high teens, low 20.

It’s when we have an event. An event then then it’s not and so having more locations and being first on scene usually wins the work. And so that really is having that larger footprint allows us to have the larger events that we that we have seen in the in the past year or so and going from there.

Noah, Analyst, Oppenheimer: Yeah. I I’m not gonna try to do math on this call, but, you know, adding, 30 locations on top of 700, that that’s a good sign of where you think the growth, may may do and build services on organic basis.

Mike Battles, Co-CEO, Co-President, Clean Harbors: You just wanna be smart about it because it is a cost to put people there, and it is it’s not it’s not free. You wanna make sure that you see a you’re doing a market analysis to ensure that when we get there, there’s enough work for us to be competitive. And that’s why Hepco is such a great acquisition for us because they were using third parties in that region. So we know that there’s that there’s work there for us to do.

Noah, Analyst, Oppenheimer: On SKES, record containerized waste services in the first quarter. Any industries you’d highlight is kind of driving that demand growth? I mean, I think it kind of goes to your point earlier about the macro headlines versus what you’re seeing in the business.

Mike Battles, Co-CEO, Co-President, Clean Harbors: Yeah. I would say that I would say that that business continues to perform very, very well. No. I mean, that that that business, whether it be back services, containerized waste, parts, washers, I mean, that business continues to go at a at a pretty good clip. If you look at the historic look at the quarterly revenue numbers that we publish, you do some form of trending.

You can see a a really consistent steady growth rate. Some of that’s price. Some of that’s volume. And and, really, what comes down to is that, especially with containerized waste and back services, is route density. Can we get the route density that we need to drive that?

Because me going to Noah’s auto body shop and going to Jim’s auto body shop next door, I mean, that incremental stop cost us nothing if he is on the same route. And so that incentivizing the team to go get that waste and go knock on those doors has been a good unlock. And that not only are we driving an incremental price because these you know, our drama is $500 now. It cost $525. It’s not a big deal.

But it’s really, yeah, getting that getting that getting the team to be more entrepreneurial and do this do the work and get the data to do the stops and and drive

Noah, Analyst, Oppenheimer: And and I think maybe bridging to SKSS, you know, you touched on during the earnings call. Just how effectively do you cross sell between SKES and SKSS? You know, can you talk about some of the efficiencies that are on the operating and service side of the crossover?

Jim Buckley, SVP of IR, Clean Harbors: Sure. I I can start with that. We we actually saw that when we were out in Las Vegas visiting local branches, and they talked about what’s the term like? These guys are very coin operated, right, the drivers. And and I think the key to this, though, is that you and others looking at our our reporting statements see them as two separate entities.

To the customer, there’s just one Safety Kleen. There’s no Safety Kleen oil. There’s no Safety Kleen environmental. And there may be two different drivers. Mike may be the oil driver, and I’m I’m the environmental driver.

But there’s no greater cross sell than I show up and they say, hey. My oil tank’s also almost full, and I’ll say, send Mike out. And so for them, it’s just one engagement with Safety Clean. And whether it’s selling VAC services or picking up containerized waste or picking up waste antifreeze or or my oil filter bin’s almost full or I’ve got some some, you know, spill I need responded to, it’s really just one engagement. And and we talked to the team about how they’re working together and how the incentive programs could be tweaked to be better to make, you know, the symbiotic relationship between the two really good.

And and so for us, it’s it’s all one entity on an internal bay at the actual level, customer engagement level, whereas at a reporting, you know, financial level, it looks very distinct.

Mike Battles, Co-CEO, Co-President, Clean Harbors: And and the management different and the two different two different management teams with priority. They’re they’re trying to maximize the oil guys are trying to maximize the charge for oil, and they’re trying to sell the branch guys are trying to sell pipe washers.

Noah, Analyst, Oppenheimer: Helpful. Thanks. You know, I guess just ending on SKSS, you know, switching to charge for oil position in November, and then you doubled, I think, CFO per gallon from end December to end March. So with base oil prices, guess, flattish or maybe even softening, does Churchill have to keep moving higher throughout the year to support spreads? Can you just tell us what’s embedded in your reiterating the $140,000,000 EBITDA target for the full year?

Mike Battles, Co-CEO, Co-President, Clean Harbors: Yeah. I know. So when we put together the guide, and as you may know, we we had a decent beat in q one in SKSS. You know, would be by, you know, 5 to $8,000,000 of of EBITDA. And so we didn’t, you know, we didn’t we didn’t raise the guide on that because, you know, once is not a pattern, you know, once is an accent.

So let’s let’s think about let’s think about price. But what we did do, when we thought about base oil prices, normally, you know, summer driving season, base oil prices normally climb a little bit, then they fall for the back half of the year, and that’s how we normally model. We normally model that. You know, we have a small increase in, you know, April, May, June, and then in the fall, October, November, it starts going down a little bit. This year, we just said, look at given the pressure on crude pricing and the pressure on the business, let’s model flat to down over the course of the not and not model a bit of an uptick.

And that and that hopefully covers for some of the softness we see in the crude market, maybe some softness in base oil as well. But but so that’s actually a switch this time. That’s really a change because we just we felt that, you know, we need to we need to, you know, hit that one forty. We need to start growing from that. We need to, you know, change the paradigm and start, you know, charging our customers for the waste that services that we’re doing.

And the good news is we are the, you know, 800 pound gorilla in this space by a fact you know, we’re largest collector by a factor of six or seven. And, really, that is something we should act like that. And and and that’s exactly what happened. And so I’m of the view that that that the the new paradigm is that, you know, we’re gonna be able to charge for oil. And even as oil prices start to recover, we’ll be installing a good spot.

Noah, Analyst, Oppenheimer: Seeing that play out. You know, great conversation, wide ranging. Mike, Jim, thank you both for the time. Hope everyone has a great day at the conference. You can follow-up with us, of course, if you have any follow-up questions, or directly to the company.

Thanks, and have a great day.

Jim Buckley, SVP of IR, Clean Harbors: Thank you. Bye. Thanks, Nolan.

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