CLH - Earnings call transcript Q2 2020

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Operator

Greetings, welcome to Clean Harbors Second Quarter 2020 Conference Call. At this time, all participants will be in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] Please note that this conference is being recorded. At this time, I’ll turn the conference over to Michael McDonald, General Counsel for Clean Harbors. Mr. you, Thank McDonald.

begin. now You may

Michael McDonald

Battles; Reform Thank you, you statements today's made Private Officer, With today SEC Participants on could Officer, are morning, S. Jim X, today's Investor Buckley. not Slides place are not our and that are Chairman, our good operations the of posted affect invite historical release statements August for factors of Mike website Financial XXXX. in call opinions obligation Chief Executive management's no EVP these undue everyone. SVP The reliance potential other undertakes President of of within cautioned call or Matters actual of along. than McKim; which Act this facts Relations, me results reflect made statements, today, included and Rob, and filings. to and our and to Alan call as follow Litigation we to is publicly Information forward-looking that the are Securities meaning today's revise of filings we considered any risks on to XXXX. are Chief concerning the only in on reporting revision on period. results company and through discussing

will over CEO, on McKim. of website presentation. like today's to most consistent the comparison the to historical GAAP of In measures. I'd available comparable Clean news Reconciliations to measurement and to non-GAAP Alan provides discussion references measures in addition, and And Harbors today's information non-GAAP its include measures are our additional appendix the believes today's call that an such directly of performance. our Alan? in now release, turn

Alan S. McKim

for and Thanks, thank joining Good Michael. everyone, us. morning, you

the let team. those throughout discussing me our their Clean to the entire this Harbors' thank outstanding on front Particularly work for pandemic. take our opportunity lines publicly results, Before

DNA with plan. is response setting in and our to QX action safe. successfully to emergency into performance and among QX equipment enabled role Harbors. our the into job model leadership and It our our crisis to underscores an response. of Our workforce. and business The began well strict wide-ranging integral been here us Clean and that We've in our Responding the protect safety proper part in U.S. the infection below ability late staying at versatility of QX rates with of jump remains gathering workforce the per the rate Canada. protocols capita It's a

reducing on to turn and high-level wage let's comprehensive here the majority nearly Now with In our half our X. align implementing included our by service we overall freeze, spending; COVID-XX, our offering. travel Transitioning based results launching revenues; our home; actions non-field capacity. recessionary response our of closing to environment series re-refining capital to hiring, QX from Slide lowering caused work to temporarily COVID-XX structure cost a our a employees overview for the that of response emergency implemented

in QX. segment. spoke April, you performance in came at down that of delivered strength market Revenues these the XX% actions decline from since improving our On with a with and million, in the prior conditions in Safety-Kleen $XXX late we year, we bulk better-than-expected of

to or million cues. the Canadian $XXX.X us which a and than wage U.S. the pandemic-related programs workers million here These was included total CARES otherwise have able employ to enabled $XX.X EBITDA adjusted with for shutdowns. Act we Our the would more quarter of the the in emergency been from subsidy

work. accounted business, for in million grew our revenue result incineration Slide Services in response slowdown on X. Adjusted beginning XX% of and a by cost work, partly multiple $XX XX% a ago EBITDA the our results, Environmental programs, this which segment revenues our totaled year decontamination declined Emergency in whose average, across from margins the performance segment. and COVID-related to above two due strong of $XX.X to corporate tend at reduction Looking emergency the lines be million as facilities, quarter. a government efforts, Response the offset

increased into streams the coming due Our XX% and to customers. our to chemical healthy utilization from incineration backlog steady quarter

Our mix waste of price average us value X% up to drive higher our last from year. per QX of enabled pound

a Our average some business Overall, real drove a landfill year waste our deferral terrific quarter price due XX% our to for of per which Environmental and But Services base volumes ton were our stable, the down XX% remains remediation up projects. from segment. ago.

our response Given some additional expected COVID-XX X, provide investor interest, on we wanted work. details to Slide around

$XX XX, of to revenue million the related in As we generated June virus.

now As of customer doors and than new for responses, relationships. us work more today, opened to at X,XXX are this we has

of jobs services will eventually XXXX. Our subside a in – large track. an COVID cleanout small as armored as as do we $XXX a our that from over small to NASCAR work anticipate varied have vehicle from time, demand million We as for anticipate but over

this waste programs, temporary by government million million assistance two-thirds associated demand pricing was core XX in of Oil SK Safety-Kleen our the cost a and with lower re-refineries, demand declined oil we well Slide were shutdowns. $X.X base of the Moving XX% drop quarter, as SK the services normal revenue due in in Oil Parts both shuttering offset our the about of The the XX% X. to totaled for costs reduction offerings up which customer EBITDA and to reduced for down products branch for rate. gallons washers to our to slowdown due due lower segment efforts, for and pricing. businesses XX% revenue, oil QX. collected and our and partly Adjusted as the

the products re-refineries on to of demand end in the bounce over were we the and year, where value QX. course at segment course in April, overall a Nevada base with blended at direct see we're restarted this Given over recently, has back and of line products of recovered lower a pleased were quarter. basis we The to somewhat the Blended base the July. percentage but Kansas of for volume. Most our that last some oil recovered and oil point our volumes

miles prices any stable driven pricing half manage as holding vehicle re-refineries. levels, proceeding the continuously lubricant a year traditional we are and And to crude balance. before result, continuing our out again of below on the additional pressure with and in aggressively supply be However, charge-for-oil be demand as we'll There back reopening of may cautiously further remaining go program. –

to on Slide capital Turning allocation X.

environment, our remains in exit current on focus to ensure position. preserving pandemic to the Given best possible the cash we strategy the

well expect our controlling on carefully last call, As CapEx in to spend level. below year's we be we our here highlighted XXXX last and

in of to to said, stronger near-term and active that divestitures, we likely not be In from and than on M&A we're emerge confident position terms operational a some position allow this our opportunistic. downturn are be will financial us peers, of will basis. a we which That

the we our our half repaid million repaid tapped the of half, our and of the we other we terms In on healthy performed. company QX. cash debt, position given late in how $XXX revolver that in July, And has

to we seeing the a our economic Services, ahead our Environmental believe multiple remainder current steady measurable we parts still we've experienced for positioned ourselves network facilities well the waste recovery have Looking volumes. seen we Within lows of environment. is from April. business, a, the in flow XXXX, Within of of

decline our large-quantity any seen not generators. most have of from meaningful We

production some virus remain customers. the to common, with and due seen delays we've product chemical individual However, slower

can season While that maintenance to for our our anticipate so deferred coming industrial year year levels. long. summer services, high-margin disposal half limit driving only be we the areas services but trajectory Within positive may QX our and entered others on we demand still we below the will increasing in a for with volumes remain the as months, Safety-Kleen, back prior in work and like the ramp-up of

business. closely. in are has derailed the mandates the recent COVID rise monitoring But SK in We new the recovery shelter-in-place not the to-date, cases, branch

restarted online. summary, our Oil, active collection we're to waste of We'll SK raising to are plants with our and In CFO that results now model. we business oil value providing. continue QX reflect demonstrated services the the of rates resiliency the volumes production the our our manage For

Our pandemic role we our leadership decontamination. targets. that XXXX gives and the uncertainties achieve actions can that taken confidence that us our Despite we've in frontline and crisis remain, the our market in the to management capabilities COVID economic response

Battles. let that, over turn with me it Mike Mike? to So

Mike Battles

Thank good morning, and you, Alan, everyone.

the Let times, to more with of sharing me mirror The organization. work I effectively reflected presented to our our challenges crisis. Harbors the Personally, our pandemic. stood of proud are unprecedented be Alan's up in outstanding team team is comments In by responded organization about these the Clean we couldn't how results you this the today.

of the resulted Revenue we the basis light programs declined in We slowdown. in margin. to Slide delivered strong Those aggressively systems second the cost in we managed combined the X structure the income received with improvement our to quarter of government response two gross point statement. and from efforts XX%, pandemic. the and business XXX results in Turning

Alan ago, declined than our $XXX million revenues $XX from highlighted, year a despite As less EBITDA million lower. being

which over EBITDA closed how effectively costs, the reduced needed. XX.X%, quarter for time, workers and was locations speaks to adjusted Our and margin managed we re-refineries furloughed as

our flexed XXX(k), the down also total, quarter, rapidly benefits, of spending expense drastically fact CUES. structure performance by our efforts. to related drastically We cutting areas we ago, impact that reduction significantly including cutting the from travel SG&A as spend demonstrates $XX.X comprehensive employee in $X.X such are Our lowered multiple and year was million. cost that a million – the Of Despite CARES and our our SG&A up in cost marketing.

in severance expense. debt health bad the some also from to We and which costs benefited lower help care offset meaningfully quarter,

going see QX the continue months. with As $XX.X slightly small only in trailing in trend forward. to expected, bolt-on to depreciation should one this We and XX amortization down million, was acquisition

$XX.X XX%, $X.XX depreciation reflecting profit. $XXX below $XXX we from Income EPS million in versus $X.XX revenue lower and down was gross XXXX, is to the in a of which For the operations year range expect million, million, last was QX slightly and ago. year. amortization and

sheet with shape. Turning We XX. in from to balance second the terrific emerged quarter Slide our

marketable referenced. still repaid. of caution fully drawn at entire now began, million, The the XX. the $XXX we cash that $XX been Our securities abundance on short-term pandemic includes million exceeded has total which on June when $XXX borrowed Alan and revolver of million our That funds

the After long-term $X.XX and COVID has lower today with our of our balance team Given obligations down keeps revolver, coming sit customers environment, and pay revenue the associated at the our in current shrunk the and collection billion. costs. payables door debt full from our cash

excellent debt a position net X.Xx of debt for financially. an We've on lowered leverage basis at the was remains debt. our Our weighted puts Leverage attractive a us in QX. which it of cost XX, variable with trailing X%, where at ended June fixed at XX sits QX from and actually average an now healthy blend months in

over Our net down ago. year debt-to-EBITDA is ratio from XX% a

Slide plan million, XX% was Turning our in free was Cash cash to year. ahead operations net CapEx flows to to XX. $XXX.X was to is reflecting on adjusted of COVID of well response of $XX from which million. QX down up million, capital. an preserve flow $XX.X The result cash prior disposals, XX%

Given are how has for flow CapEx. our expectation we our slightly raising cash trended,

For $XXX range of purchase year, $XXX targeting CapEx, the of headquarters and of net the disposals the million. we're million our to now in

the not and shares we at repurchase stock, During as stand quarter, repurchases planned, year-to-date, did XX.X of million. any

well meaningful approach until cautious markets level are their We be will recovery in stage. of the any to our buybacks into

on Moving XX. to Slide guidance

guidance. early sequentially. conditions, there from not that slowdown business improved EBITDA kind and of we guidance to based any profitability Given like million. a – services throughout localized the slight levels, the segment million of now the environmental how has of will expect assumes QX on nationwide We This based performed well XXXX saw XXXX adjusted range outbreaks in expect but we in the $XXX does $XXX the assumption pandemic of our shelter-in-place, is current This on while be in virus, continued are reestablishing assume our Safety-Kleen QX. market

at guidance the split EBITDA be and perspective, year we QX. QX of the evenly Looking our range, in to second adjusted half quarterly between from expect our a

cost translates guidance above slightly level projects just other of Environmental comprehensive within from incineration, from expect in offset to and Here's within declines segment be in Services, waste Services, initiatives perspective. profitability the million how In adjusted profitability EBITDA work our $XXX million. remediations, a XXXX business. full will contributions year expected we $XXX lines decontamination Growth and of in Industrial landfills, XXXX's reduction

XXXX’s from EBITDA we Safety-Kleen, approximately adjusted For anticipate to XX% decline $XXX million.

of EBITDA second adjusted XXX(k), time, to Based $XXX by expect the to incentive levels lower flat severance business on same from well negative debt, as and bad historical to the expect branch million aggressively as segment, and of current we challenging In spread. Oil remain in essentially XXXX's compensation the are due our still increases we a guidance offset and working free front We At savings. Free we adjusted $XXX the levels. – from miles cost back demands. capital vehicle half, accurately SK quarter, the to range re-refining below be largely our our difficult in April-May above in to to to the $XXX base is flow QX manage assumptions, improves to million. we expect cash cash XXXX expect always less working rebound driven flow norms a influence and pre-COVID of the spend capital end million predict than from due oil market hard but continue period, corporate

which total defer tax from will certainly be free deliver north strong quarter million, to to ability In cash $XXX April summary, for flow we year-end, should of million. that QX without likely to all while was payroll to the challenges, not However, a with $XXX proved business. shareholders, it payments is it our operational

As a types these in of response company dynamic are can core, and Alan we we at thrive crisis our environments. highlighted,

of control will to That limited. market some Looking remain initiatives, conditions our additional said, we opportunity the business ahead, pursue we of see recover. stalled cost lines while for

XXXX, and core support in our out our but from within the a may lastly, that, open – our in services, And the expect With back we push until as up meanwhile, demand COVID year. today project half SK providing the the toward we for branch network and will call a decontamination Rob, see steady of in ramp of base opportunity blended turnaround enough we up remain Some Safety-Kleen, Oil, continue focused production. the on uptick vaccine facilities ultimately Within work market to please questions. to race continues. while services we

Operator

Tyler Thank be James. question-and-answer now with Raymond line your session. from conducting proceed Please We’ll [Operator a Brown And coming you. the first Thank of is Instructions] our you. question questions. with

Tyler Brown

Hey, good morning, guys.

Mike Battles

Tyler. Hi,

Tyler Brown

that have half $XX to Hey, half in basically was Mike, the it. in But a that with PPP and Or million want payment of just I I ES from right? it assistance, so make sure in EBITDA that SK? is not the roughly

Mike Battles

Yes.

it Tyler, So is.

We're cash to So payments. remarks, get $XX of said And think about I into it, million, the for said $XXX first said in have some should before prepared defer talked flow all, my free tax million. I year. I we we going payroll I

So that's wrong.

just So is $XX million the right number, FYI.

don't So people get crazy.

So Tyler, back to your question.

is is So into of the broken the from two money it parts. we received government. portion Canadian A

That's in not is Alan Canadian As grant, other a Subsidy, refundable. million and SK $XX that that's in between a PPP corporate. $X and $X broken money not credit, is $XX is in loan. about part retention Wage CARES that the and is Act. It's that And a or ES, is million the from out million of million That so that. And – mentioned, million not the loan. $XX Emergency about

Tyler Brown

Okay, very helpful. that’s yes,

Mike Battles

in – P&L whether it's where have belongs, the SG&A of at all you. Tyler, Look what the or COGS all it wages, it be or reimbursement

Tyler Brown

additional very expectation not that’s yes, the there's half be in But Okay, an assistance helpful. guide. to clear, back of

Mike Battles

And we of much year there retention There's additional back nothing anything for morning. both for How the the and we open Canadian working the the today. credit. have that the the much isn't get I monies half there this CUES number Senate is version the CARES through in and do and much gave second of Act, qualify we Bill, House the available the both think an how in question. they're really government

Tyler Brown

Awesome. That's helpful. Okay.

SK. feel is you today, all isolated on be because there's really that that it adequate a the spread the a oil those a normally, spread may or base even gallons? mean where that pre-COVID this know team spread feels do well, it's you're going you I hard I see noise. achieving but that call CFO very the based it's the on operating, if to a but on in hard and are feel, gut let's lot with is and managing Alan, an so is But question And it, re-refineries just

Alan S. McKim

Yes.

we because of I also think surplus when we're driving all managing us of been carrying impacted. well. unfortunately, shutdown also very and carrying was when and significantly then And significantly the capacity But are lot oil, the demand impacted. volume all was really our the waste the spread have significantly oil really state a obviously, to available reduced, was for the

we coin, of to on both sides address And that. so the have

have plants in the And temporarily our there. so always by and we always people shutting ready plants, keep keep compliance. to We

be more a cost running. would if absorbed carry we lot were otherwise that So they

think done managing of job good really spread. I a So the team the has

Tyler Brown

Okay. would a just good be expectation? we last expect – of back that slightly just that would And half is XXXX, under gallons – collected

Alan S. McKim

bringing have drivers. are I bringing drivers some we're seeing think back. them – did We we're to furlough back. And we

We are today. hiring drivers more

by end right to were that what So our year expectation of our would volumes we're seeing they on now. is where the based the back

Tyler Brown

that’s one, then And Okay, great. my Mike. last

guys think we've you you. I So as, cash maybe ever are heavy, seen about

at Your is Xx. leverage

You have a coupon. X%

you're we maybe or projecting capital cash on pillars you the work But additional flow think to in putting some should the buybacks acquisitions? about four capital think half. totally of the I back appreciate really allocation. when I

Alan S. McKim

with at least because to that think months had X,XXX integrating with from during in extremely have deals over Alan. somewhat our or – been five have opportunities our believe would been mean looked I real acquisitions. case, that didn't a think looking couple some discussions we home. we're much there. we people acquisitions four last do of would to those very that this is working prior that at themselves. – some – I We've I we like presenting hard continue at We've out Again, had difficult COVID been

businesses of have get we get I we're better think past. the as out a acquire to we be position going I in pandemic So and this integrate people think to in we and back, like

Tyler Brown

right, great. appreciate I All it.

Alan S. McKim

Okay.

Mike Battles

Thanks Tyler.

Operator

The David questions. line Manthey next Baird. question is of with Please your the from with proceed

David Manthey

Yes, thank guys. Good morning, you.

Mike Battles

Hi, Dave.

Alan S. McKim

Dave. morning, Good

David Manthey

a on first question ES. three-part So off,

exclude in here see if you to ES in to we downtime? reduction any lower you programs? do that is benefits third, First, Is is, to the utilization pull then supposed what here terms a related mentioned, the quarter might in due is did that? Second we quarter-over-quarter third that incinerator scheduled have on quarter? be the you government-assisted profitability forward read Or of the sequentially. the capacity second And in –

Alan S. McKim

on think Michael, My forward. take downtime. anticipation our above was average into frankly, for incinerators bit. the our and maybe, quite I the is historical progressing, turnarounds the bite we And �� normal is pull we little the didn't deferred a that anyway. did it But anything

when we first had we end came not the of the a – into throughout lot but So on-site, of quarter, TSDF waste, network. our only at

feel about are are to Mike, we to plants I where I be quite we you would as on in the utilization basis. chime think strong. So think a continue will And I think want on? good running now And deferred expected.

Mike Battles

Dave. Sure, Yes.

Subsidy, back of maybe the there's it number, be – – there's no get $X the So all, Wage model, half will first if money we the in any to under it. no million about money, that's government like Canadian upside but that do

set expectations second is to just be in normal. there. half will Utilization So the –

a waste Remember, of we're a I being get – chemical And little a a we're lot. we bit late. what's – little waste some We – mix not versus going bit I in business. get here think July, QX. a the to really profitability think drive down is the with experiencing bit we is not get this little

normal. anything incineration Down have say, part we move to in are I didn't think the – I'd to from QX Nothing it's around. QX days flattish, of business. the if

David Manthey

Okay.

potential second, just wondering of out part the just as Sounds demand for lube was a could that clarify supply Is oil maintenance to forward? down year? and shuttered I the getting it that mentioned facilities assume right if And routine went you and And then those on you the you balance SK then pulled this did good. side. later two on you Alan, statement. that facilities,

Alan S. McKim

on guess number of shuttered of shutted. investments maintenance were – or maintenance, also we and bit I Sure. that quite a the in a capital the did plants

complete that And relatively that is take to couple going are of was So we to our of going a temporary. key anticipation here advantage down projects be to was being soon. CapEx accelerate this did be

bit, think is really expectations in runs as has that out for oil crude our I as base the to was kind color with only of think IMO – maybe been and XX%. side well certainly, made, some a still we the that materializing, that amount were running in as still in – that kind we we from With products February. just jet we not fuel, of the see January remarks. really market the think see refineries obviously, decline extent, pressure we I somewhat significant although the where a the of is that on and explain refineries XX%, And oil the have of there our business recovered the balance to were of trying quite

David Manthey

very Thanks great. That’s much.

Alan S. McKim

Dave. Thanks,

Operator

is Our Please with line the questions. of Stifel. with Hoffman next coming your proceed Michael question from

Michael Hoffman

being activity guess plant turned at Thank we are you Dorado what per trying be the on? El XX? SKO, just that On East using is production for XX? is the what, XXX Chicago; instead So of in very gallons half, to second much. should Kansas

Mike Battles

Michael, have don't I that number can't… I have I handy. – don't that

Alan S. McKim

I are numbers. those Directionally, for locations. right Michael, say, would the three those

Michael Hoffman

you describe trend we relative the average branch Where would pre-COVID? Okay. week, recovery? how revenue to And are per then percent

Mike Battles

Yes.

Velocity about June. Michael, it's So exit all here in

in June. XX% were week range by exited branch the low by we we as so And

the for the have up branch ramping the get into that XXs into back XXs and in mid-to-high low as SK business. into We we QX QX

Michael Hoffman

Okay. terrific. that’s All right,

Mike Battles

sense? make that Does

Michael Hoffman

Yes.

just them sure number I so I scribbling want got sure I I to I then make And sense. makes – make to think fast, heard want right. that was

overhead to million. is about at So up guidance flat basically and gets SK the is then $XXX to flat, that says is ES the midpoint year-over-year. corporate you down and XX%,

Mike Battles

Correct.

Michael Hoffman

than SKE inference is How down SK, is is it and your XX% XX% is the I SKO one Is what's about In how XX%. that – was less more than And – do the that? gap down think XX%? Okay. the assuming XX%, there? I'm one

Mike Battles

losses The SKE in SKO the more probably the No. are than side. side

Michael Hoffman

midpoint in what both account I of but million million benefit both Okay. there's $XXX EBITDA, $XX.X free And cash million the in $XXX what's guidance, the assuming the $XXX million your flow of should – $XXX cash then the decontamination? decon then piece the from the in flow free And for and million and for I'm of those?

Mike Battles

So though. above we for reasons. don't give average, out that number competitive It's the corporate

Michael Hoffman

Above That’s okay. so average, All the right. all I Thank you much. corporate needed.

Operator

next line the Markets. Our BMO questions. with proceed Jeff of from question with is Silber Capital your Please

Jeff Silber

much. so Thanks

just back Just I wanted or not to correct? cost sure in to want offset make funding. pandemic either I just is understand This services an to is the of This SG&A. to it. Is revenues. that go relief

Mike Battles

Correct.

Jeff Silber

Okay. Good.

to there rest what double we the going what's you Can going wanted year? get Just check the is over on think update to on mentioned and an Alan, of you XXXX that. on briefly. happen IMO

Alan S. McKim

I just disruption. think huge a there's been such

taken know, you from has shift the place. the certainly As sulfur X.X% to X% whole

all think any have vacuum of given think don't for of market, oil just and down. upside impacted of that at the has heard turned we in demand the just market, but been X.X% VGO volume subsequently, decline I the – gas how that that all I sheer So oil relief

we today, can mean, just everything different we are from see. where when we a I January looked So coming it's to we at ballgame were early total into where

Mike Battles

add. thing one Jeff, to Yes.

gotten is just ships, Cruise be to ships aren't IMO a It right? really – clear, It's still So still unstuck. hasn't regulation. just it tankers, moving, applies.

visions big for and yet. hasn't is so yet to obviously, time happen. That XXXX, pandemic, going hasn't the And mean being frankly. doesn't not happened Alan this because IMO business of – just a this in having IMO so had catalyst – it's it at is we happened It

Alan S. McKim

Yes.

Jeff Silber

that you. understandable. tax coming your And final besides think I'll have we a ask so if got We horizon big on the might election next Yes. a a few over lot, you in months. question get change We've the this one. up impact administration? reform one Anything business just Completely

Alan S. McKim

this new we've is seen no at and being ones so and are administration rules matter enforced are that regulations think don't mean I I environmental point. in what being historically promulgated.

I see our the we So don't don't impacting administration – one another really in to business typically short-term.

Mike Battles

can lot tax to of we to state reform what's to with level. And us mean we just of been, have as around in a and the on on customers. lot administration. comply a what they've our a the enforcing regulations as with regulations going different state debate I with always as has happen at corporate they're But – state diligent

Jeff Silber

Really Great. so Thanks helpful. much. Okay.

Operator

Jefferies. of is line next Our the with proceed Hamzah questions. from question with Mazari your Please

Hamzah Mazari

more Good with morning, just that what that? would thank seeing disrupts time? those any capacity helpful. just Are maybe over shutdown? you're Just does COVID on there market? And us you of you. anything update the that people I incinerator was update give an How you hoping you in Are could seeing evolve be captive seeing acquire them?

Alan S. McKim

captive because this we've all of sorry, to had volume by would competitor is that that lot imagine, plants. And not struggled And try waste to try me, to that noise that pretreatment that business and taken out much we We saw lost their positive COVID, that kind what generate. hazardous as processing a to wants them. by waste – I cases, going it's us. that's handle was Very of hazardous because of a of impacted site. there one of because were commercial got as to probably to any you But to a there's shutdown, in we sure kind have a to lot We've handle and true commercial really necessary think that that of capability that uncertainty of over plant our did I'm excuse customers seen see that. impacted lot all some waste subsequently, there. been for I the for – business can where obviously, We just difficult that in captive the the go shake say would our area, commercial. We're we out – so say, I customers as gained

closures still positive So I a we're looking captive say us. would for at the that as

Hamzah Mazari

as follow-up Got the incinerators. realize at digits, comment pound of number had? on Is it. go very the just forward? And it's saw But do function per that history which still mix. about pound my around just digits were long in right sort going benefits price is mix the And pre-COVID? back running to the the where X% healthy. going We question this be given double think going you is double Or average Or just you've would per average the how you I we a at we the just we're decelerating to were? could of to forward see to X% price today, of incinerator and relative

Alan S. McKim

to right But the continue most in for we've at that mix off the our now important price control. taken our right that We foot sits tell I us thing look as increases gas on of months where would now, for our our months. the side example, lowering customers or are. and we – price big business, for on requests discounting nine realizing next our We for saw six of saw the industrial you

of – see everybody in now. new customers to off trying what price pandemic, the there. right out with going – think price we you'll really I this we in increases held We've that the where is is we'll on dealing been that look mix our reflective is to be number realizing with and we've work any But do So at January. probably

Hamzah Mazari

Thank Got much. it. so you

Mike Battles

Hamzah. Okay,

Operator

proceed is with line Please Sachs. of Brian Maguire Goldman with the your The from questions. next question

Brian Maguire

Hey, good morning.

level? sales where re-refineries a is bit that volumes, the the versus volumes in think I But restarting, sense it? be get to production One, XQ with XQ couple. Michael's little question. just the could granular could – if a you Or with two back Just any

Alan S. McKim

combined the running is from will about both again. those XX start up an on gallons plants million And think annualized we them I they basis. full-bore back when typically, number two are our run –

decision we turn two end So of to by plants the on. those made July, the

number. be So the that would annualized

Mike Battles

about the business, the different was took modest, that to in Breslau. at way, as think exit August we as And would velocity try your answer and September. of of kind little of that question you I'll Maybe of think I Brian, and in and without the very June about kind July, be will XX% kind profitability a

So it in landed going they into ramp-up a XXXX. the QX and QX QX – with from and into modest recovery is and it's really where

Brian Maguire

down the or And so million SG&A, Okay. Great. year-over-year. on then $XX

expense that of care crisis, back through is importantly, probably much probably of all just the expecting back come you of getting come the the do how health delayed think doesn't the assistant get travel we'll comes we of back of some, that or it and think $XX in? that But half but back, the that stuff is the maybe of of reflation lot stuff will either obviously, business versus surgeries the people through the sustainable, much sort back, year government wondering Just the work, all goes million, see come how probably eventually truly you of way a to will more once in kind some away. out stuff back

Mike Battles

lot there. a question about, really sold in good on that to of work real savings SG&A, have on goods both some a Brian, cost done the it's of and both we've cost Yes, actually think

it that's different away. government as of think I goes But of three kind funding and of Some it buckets.

first things care affected with in that health every world going down everybody. kind self-insured The the travel to happen going company costs costs down and and things is that your of bucket of other

how quickly, that. the a year, costs world at my it. is you that assumption in some over we're months, a beneficiary of on obviously, months, so And post-pandemic six those come back horizon, time three look depending And relatively

The was are on we're and looking some SG&A of aggressive over actions OP side tools that looking the it crisis, looking shuttering is our around all on both arm. of we I because effectively. a other facilities, leases, very longer, and being of view without facilities, place took out more the in at actually that. on some and – business, types locations, kind at taking the in – my get side, type costs that lower that muscle at aggressive time, And we moment go utilization, leadership, of and we think the of put the manage tools that costs things those because at doesn't good shutting away looking And shot about for that to employee

there's over pandemic of that mean, is and in the smarter hopeful be over took experience side, the when horizon, it and that lessons we'll believe there, force longer out be I we're and and sales. on and an margin sales expansion do cost there to really about cost I the apply learned we more took, the really take So and it this recovers, cost here, the we'll the both we the horizon. longer actions opportunity have because some didn't leverage structure on – of that that we SG&A affect out the our

a and to But get So million the is haul, bad what because lot of there's going other I savings the I go, there that put of lesson be real is and over we've $XX some and here that hard debt offsets that to there's with to a exact finger the long things. on, it's long number we'll learned, a horizon. over really that think think stays

Brian Maguire

Yes.

decontamination for Just you're get doing me. side to help last everything the to work. appreciate one on back We people

the at of it competitiveness lot It that looking hope seems it's people while are the and have sort get to that But in reasons some quarter. it into today, just of deceleration. obviously, it or where a like you because you doesn't that like, But $XX Just had have so seeing forever. that kind a are expecting continue I the it. you million looking the one, business? you're mark, of great of market to seems probably lot in of mean, you that opportunity

you entrants to versus year actual that just think or new is much shrinking how the the be competition market going progresses? as of from because wondering just XQ that levels Just increased is

Alan S. McKim

And work there's training I provide regard some would that the that decontamination don't to not them. the at with sort and these think standpoint We of for clean the decontamination we are be insurance but provide there policy that we will historically look a competing are the we players that been firms competition kind say and that I really plenty competitive guess really in that harbors approach from this that out professional janitorial we're take of to there. also protection that of always I of we for and personal other them. with And work, really of just pricing people there firms kind think choose done. have out

So any to slowdown is competition. not all just going slow as we necessarily down. that continue infection have rate because to hope slows I pray the down it's we

Brian Maguire

Absolutely. Yes.

guys. so luck. thanks much, Okay, Good

Alan S. McKim

Thank you.

Operator

Oppenheimer. the question from Noah Thank Kaye of is line with next you. The

Noah Kaye

question Thanks just in safety. and both the the ES. taking the managing guys. price/mix nice Hey to like expectations really job for profitability I clarifying with maybe would and start around trajectory the

price resume at customer price point? a sounds from increases just expectation it portion in we petrochem. think benefits your could see mix that bit these see from the XXXX, in assessing you a pressure like we assumption for and production planning for this half, Is So in of also little longer the price/mix I bit potentially of and a looking re-acceleration guess downward base XXXX? you Do reasonable maybe then may pausing partly could a a back that then of term, increases. with

Mike Battles

say able been and our get XX of talk see I a question. kind to but I anything we've that to post-pandemic early years, Yes, past don't that's the world. that to to XXXX, about going in that's a will change Noah, X%, And pricing, over good X% too in

the but I of it's thing that going of, really But see to see I think does don't the would any the to smart over QX don't that smart businesses to affect I to that to do, speak pause Alan QX, the it be I that there. tough spoke and XXXX, So and shift say – horizon, long do. type

an and you something a be that might to closer to Harbors that supply chains putting fact, And Clean our world for I what – matter of that terrible a when end that, about the learned As opportunity talk has customers. do see there's it's the idea. is is not

So the long-term years. for I think next catalyst that might five over us a be

Noah Kaye

And sense. That PFAS as opportunity? treatment the some incineration remediation this noise a thinking Obviously, around there's opportunity How Yes. and makes are does been fit then cleanup the both you point? at about the where option. just

Mike Battles

it's a a a very changes, very compelling. Alan, a lot And Nothing There's still a new we opportunity still out I I'll we has of to now. shot is for learning long-term important can this know. don't be post-pandemic opportunity we take get it's We Noah, I'm a view us. sure catalyst a going a But and took has industry. that world. as PFAS administration, a And on on remains maybe it. real it. perhaps really changed I in think I inbound for that's on Yes, know lot there, think think the of that as And has traffic that that

Noah Kaye

Great.

Okay, thanks safe. guys. Nice job, stay

Alan S. McKim

Noah. Thanks,

Operator

Please is from line with of Ricchiuti [Operator proceed Jim Instructions] The with next question questions. Needham Company. your the &

Mike Cikos

today. this is on detail for for color all Thanks Mike Cikos and Hi the guys, Jim Ricchiuti. the

Alan S. McKim

Hi, Mike.

Mike Cikos

if some XXXX. to you this detail, more we're coming or back work, I the expecting in $XXX could me was curious decon so million give

slide, the QX. to year-to-date, So looks in coming you back million like generated $XX $XX million

in tail off I partial how, should to is the of we're we in that far? rest million, And Or then to that off this looking of $XX an then additional was additional that a kind if benefit to QX? guess, expect QX come what's So and so QX tail QX? XXXX, in out

Mike Battles

Yes, Mike.

think end toward So and actually million of first of was was the of the way, original in $XX – this it $XX the half QX March million QX. for so million, in $XX year, it of the

less half QX. the year, you $XX QX through million give you implies So that QX. need? kind what we're Did $XX at a We that said back the in end so of in million the million, in and of more year-to-date of $XXX

Mike Cikos

OpEx? simple million in that's $X as exactly. OpEx cost was of or in with Yes, that to that the better received. call guys versus funding separate so what you to and assistance remaining, in then included it I'm back attributed curious, taking And sold just as coming assigning you help us up goods it COGS? assistance the Is $XX corporate the million to could

Mike Battles

have you give our here's – all We'll financial it's the it. all statement. And we details

as there laid filed out it'll well. minutes, so all to in Our be Q is going be

segment, So million million in COGS $X and it Environmental broken $XX million out million in QX, And it $XX as $X about million Services, and $XX.X of in in in million SG&A. by Corporate. $X of in SK

Mike Cikos

question, then one one And just squeeze other in. you for if I Okay. could Thank that. more

versus $XXX year, up at for us the million, think and what parse out trying would help your range go to I'm get takes, puts go million you that way the you looking to Just that you to this us what to gave million if you to the to EBITDA can bogey? of $XXX $XXX the guidance right $XXX about, need some or gets million

Mike Battles

Sure.

Environmental that When and So of parts business in as the certain business. our an about growth is to the sounds. be crazy trajectory slows opinion, of Services think work as the really speed you decon business. offset of will it in that my down, theory, that the If

And so business. Services concerned I'm Environmental the really about not as

the to will and of drive On on to of does end the and of that its the drive better, that's the and current range. and Safety-Kleen know. miles is and on demand that trajectory of corporate business, kind it you depends the going oil trajectory we that and in driven versus low us And pretty tightly, expenses, variable really continues as that. even high If that that managed up picks end range

really guidance. It low high of kind – either will And or end end our SK the comes in so the to the is. it that's going my of what result business be to opinion, in down the

Mike Cikos

That’s Best you. very Thank helpful. of luck, guys.

Alan S. McKim

you. Thank

Mike Battles

Thanks, Mike.

Operator

question Fields, next of proceed of Our America. with the line is Matthew questions. Bank Please from your

Matthew Fields

guys. Hey

half want a free now you down robust down the balance Just and the a kind of have the balance but back year balance pretty in of question the your sheet something that pay the of the appreciate or you're you the have full rest not robust cash ask paid planning two. you kind is revolver to of kind of then quarter, works in I Or for out plan? Why year. half outlook flow do to balance? cash the if

Mike Battles

July. genius paid – in the before before actually – down a that's early Matthew, it idea. We

we script. that mentioned And so the in

not must You that far. gotten have

Matthew Fields

queue Sorry, I late. in a There's running dialed morning. this

Mike Battles

I okay. Yes, know. It’s

Matthew Fields

does the overall of I of load against backdrop. balancing of share Where kind recovery? And a then maturities. know real you with what this kind of up your strike later scheduled as debt your sort given leverage, balance that ramping kind at in kind cash But leverage healthy year, any buyback same the think flow. the kind you free point of function do maybe you about have don't in of of

Alan S. McKim

go think difficult months say, start next, real working of the for thinking I integrating about do as in now right would about from it would well the try think typically we to is or let's be a us we'll our than a how and substantial doing those an so. lot hope acquisition with through home. When we acquisition, make more as six do focus we're our an and to growth grow organic that I workforce we grow to acquisitions. And today that amount positioned and business well to still

could transaction the sheet be sizable an like to So of I'd we have have, the I'd acquisition balance us and That's that that take advantage low and a debt think do for strong we leverage we would do. what really like us. to

Matthew Fields

apologies, I and I thanks missed the prepared Good Okay. luck, remarks. Fair enough.

Alan S. McKim

No problem.

Mike Battles

you. Thank

Operator

for our this the reached you. Thank end of At closing remarks. time, And turn Mr. back McKim session. we've now Alan question-and-answer the call over will to I

Alan S. McKim

your safe this and families thank Okay, hope Rob, I you pandemic. during us all that you. today. Thanks staying for joining of are

day. James. the you great with Raymond virtual with month, participating of a then. to investor forward connecting Over Stifel in remainder Needham, look and Have We conferences many are we this of

Operator

everyone. concludes you, today's Thank conference. This

this disconnect your lines at time. participation. you may for Thank your You

Clean Harbors (CLH) 5 Aug 202020 Q2 Earnings call transcript