CLH - Earnings call transcript Q1 2021

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Operator

Greetings, and welcome to the Clean Harbors, Inc.

First Quarter 2021 Conference Call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. pleasure Clean your Harbors, my General Michael now for Counsel Inc. is to host, introduce McDonald, It Thank you. Mr. McDonald, you may begin.

Michael McDonald

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

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

Alan McKim

I on Safety start of and time, is a more point our family company for important everyone, the goes our night, Starting competitive today. critical nothing the want focus injuries and which of the a with sure with to corporate is Michael. well-being thanks of a component it’s home and and Slide morning, joining and not than every strategy There’s workforce key customers. safety, lost every on to for Thanks, culture. but success employee to selling our with that a only uninjured. us today critical Good our X. their differentiator making associated costs

see incident You past have in. take as a rate, pride since tremendous can progress total slide the our this metric a an recordable XXXX. by made TRIR, on decades, of the we or over reducing two It’s organization XX% lot we

on It Safety personal year. really and journey our be each employee’s reasons for approach they successful on at safety, Me: us with continuous safe Live the program part and to Starts highly As we improvement X-X-X The allow to at this successful every of relaunched program includes employee we sustain road our safety why this believe choose this to and will relaunch five work, home, safety. personalizes

X. Slide to Moving

believe shareholders As morning’s a release, our we changes. will updated outlined to approach detailed and we a be of this the operations is today. segments process, alike. new planning After critical in to our organization two Safety-Kleen better company we the reporting took the This to based reflect approach company beneficial on we our that have

and of Services the Environmental Environmental First, Services we service legacy our core branches consolidated Safety-Kleen the sales into regions.

this trucks people, allocation expect equipment. that our or We to is change whether resources, of strengthen

environmental in generate even gains efficiency business greater We it all also also opportunities of expect and network this to lines our cross-selling and reduce across consolidation. third-party spend, routing enables

sustainable pieces the was of The second change all to combine our business. we lubricants made

oil items of most providing our lubricant services Re-refining the customers. be business. The used to Sustainability the on antifreeze products sustainable filters, and structure maximize will enable will newly segment manage and formed this with motor within our Our both friendly our those Safety-Kleen us our will should other enable company collect focused to oil, related and legacy the the a the us re-refineries or organization. SKSS and waste more better spread oil be assets. environmentally aligns operations we best, used believe tightly Overall, value collection consists of Solutions all supply new we Safety-Kleen of managed standalone sides for best It This waste in under of available feedstock. to

exceeded QX XXXX performance. off as expectations. results We start kicked our our Turning with strong a to

service freeze rebounded our greater high-value deep in Our of March, Environmental recovery with February outstanding a the of to Services after South, volumes an due driven ongoing many segment, difficult waste in by businesses. the the and streams

better-than-expected SKSS million newly by $X.X in million, market in assistance government base driven QX Adjusted from EBITDA conditions. to profitability oil $XXX.X ongoing due included benefits which Our programs. segment delivered formed pricing gains was

by margin the impressive to productivity points Our grew along of basis cost an XX%, XXX our reflecting and benefits with initiatives. pricing controls,

free flow of strong $XX generated cash adjusted also We more than million.

branch the was we down Revenue the year-ago, on our due service effect pandemic to due on the at El in XX,XXX pricing, mostly decon this program to our due a price the results, was from to lot continue We’ve to adverse a were work Adjusted little an lower X% a into which of anticipated. up revenue. with with X% XX QX, terrific high-value million, our weather of basis streams drove points history Environmental revenue non-automotive closed and the well in drums, Turning and the more service over number core people in both and year-ago. QX the down U.S. volumes a trending SK’s a Landfill margins and gather up of heading Services trajectory. which In cost from of COVID year-end year a of effects XX%, less to offset helped than rebound. as and utilization higher rose with of down XX% a on up entirely as decline. so to The a February which revenues beginning also QX but assistance. February revenue the project result volumes government were in dipped began and $XX time, Deer and At XXX,XXX driving by QX, in of Even incinerator the quarter, to picked pricing at the our upward same the Environmental a most storm, record In up certain projects, vaccines segment lingering of Safety-Kleen the saw EBITDA the our Dorado offerings since to due growing providing in our services. incineration the highest customers totaled mix days ago. Slide portion was rollout both as storm. Park year-over-year backlog total parts our over X. average lost was well responses us waste work deferred services XX%, our began beginning we million QX, now completed to $X.X combination of to we from a washer Revenue as average that million pushed we driven pace strong from offerings with level COVID-XX while to X% savings, $XX.X of from volume nicely The QX.

organizational base the modest collections XX% higher to Revenue flat from basis SKSS revenue by demand oil over with climbed offset million a $XXX,XXX accounted pricing. stronger spread. lower this segment Moving XX changes re-refining for side. On oil essentially at go volumes, margin Safety-Kleen higher along XX% fueled XXX prior was as were widening driven on Solutions year. as our by and The for reflects were EBITDA year the waste a with segment. the past in was to initiatives sequential rates QX for this basis, increased improvement, Sustainability QX, implemented oil cost particularly slightly Government of which productivity contribution SKSS oil the margin pricing point we of in in by of the X. our and higher part charge collection Slide Waste programs and gallons. Adjusted

of blended and prior and percentages volumes as with the year. consistent in Our direct expected QX came in products

higher Given oil move normal prioritized to margins. we of larger opportunities the base volumes environment, market at than

Slide X. Turning to

flow, in we position remain leverage Given our from excellent balance, a XXXX cash allocation capital low and standpoint. cash

will expect to capital internal focus assets plants on on the returns. and that generate other We growth our best

the is intend front. candidates to are the We to from this on robust. see active M&A market. we be more And coming as acquisition Our U.S. emerges pipeline pandemic,

will a great – represents our continue with at value to as we also our stock current We believe share levels. repurchases the program

recent has capital. Our focus invested return in years been increasing on on our

acquiring Our adjusted Every EBITDA, some then, by ROIC our energy-related since core support year our XXXX. that we’ve has companies our portfolio more since businesses pruning grown also and while divesting assets. than annual doubled

We significant believe a the promising outlooks strong excited last ahead, with deliver our industrial, XXXX. America adjusted substantial Environmental also landfills, environment year. we our Environmental along and cost about of today have We capital. performance year. opportunities including the for North in segments to and of Our permitted facilities exceeds our technical Within of to we services, and us as remainder see year. the of stream with the our many at we ROIC field plants incinerators, would TSDFs pursue. from summary, for from QX pandemic. reopens began We Services, the backlog In a are our prospects waste for this favorable both our SK expect and to disposal waste service recycling In grow quarters other expect branches offerings,

the million returns $XX full-year million as oil in Within results, in normalized SKSS, to QX on base we the revenues we our to demand capitalize XXXX. market to Given more the levels. COVID-related for expect intend $XX conditions, particularly positive now market

expect the remain strong used the healthy profitable manage demand. the actively of will strategy. to We a gallons re-refining our We cash in we XXXX, pent-up generating production months flow grow the continue free to vaccine Overall, we collected quarters, to levels ahead, oil expect and next conjunction in our support motor and several our to with spread. over travel year our intend rollout capital growth in allocation ongoing

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

Michael Battles

good and Alan, morning, you, Thank everyone.

Turning to income Slide X. our statement on

saw of back XXXX. upward As detailed, we in began half we the Alan with the same XXXX trajectory

in and in the both In quarter revenue we concluded terms the fact, EBITDA. with our adjusted March of best performance history

adjusted guidance the QX results we exceeded Our on our call. provided EBITDA last

revenue declined $XXX.X sharply improvement. We but last recorded up XXth Adjusted quarter in margin X% of EBITDA to X% month million. grew the year-over-year, was versus expected, year. As March consecutive year-over-year our same

with combined resulted and assistance, Our revenue, $X.X programs, XXX gross in million of mix initiatives cost improvement in program government productivity basis margin. of points reduction

the improved healthy due XX out points. revenue costs measures. EBITDA If you monies, the basis on government a in lower were margin control our our to SG&A flat declined effective cost back margin a our year-over-year quarter, reflecting basis and

$XX.X to we year Depreciation prior and dollars the in For to with essentially be up amortization our the on in QX from and the would declined percentage absolute expect SG&A range, of flat million, midpoint basis. using guidance full-year, a line expectations. our in

XXXX, quarter. and our million from mix continue anticipate amortization we XX%, the and to of cost range in operations revenue million. in increased controls the depreciation Income For $XXX reflecting $XXX to by

Turning XX. Slide to

Our excellent million $XX flat from balance same Cash sheet remains short-term up and March in securities marketable XX than at year-ago. with were a year-end $XXX.X more million, the quarter and shape.

debt quarter a leverage $X.XX with X.Xx. at end, Our billion debt on was at net basis

average debt Our with XXXX. cost is of until weighted X.X% no maturities debt

sheet balance position strong enviable execute to us our Our strategy. on an growth puts in

was Turning to $XXX from operations QX XX. million. on extremely cash Cash strong flows at Slide in

expectation, our these some other to The of $XX.X mainly receivable $XX.X million. QX of performance CapEx, was some driven improved down a the at flow two cash from management and result net below million, expenditures working stronger One lower adjusted this disposals slightly timing factors, year-over-year record was along of initiatives. was with AP smaller items, accounts was behind free due cost projects. of which capital by of drivers collections

For which XXXX, CapEx $XXX the $XXX expect we is continue higher XXXX. to to range million, of than in net million

million. program. XXX,XXX million we cost remaining. over at $XXX authorization, just have committed our to we repurchase $XX.X We During the total now quarter, shares a remain bought $XXX our million of back Of

to $XXX Moving XX. We in we adjusted of results now to midpoint range guidance. and raising EBITDA Based Slide are million conditions, expect million. $XXX $XXX with our on of a XXXX current the market QX our million strong

are a year-ago. QX would the be expect our to we we pandemic-related in based above higher guidance than EBITDA perspective, in adjusted of QX to XX% XXXX. of range, the on midpoint experiencing that levels quarterly EBITDA slowdown from momentum a X% and our be the XX% prior At QX business at year Looking adjusted positive

translates digits guidance we our Environmental how segments. adjusted is EBITDA new expect Here full-year EBITDA adjusted In XXXX basis to on in percentage from to decline the our a XXXX. Services, mid-single

other service a incineration, from the SK branches profitability measures. within and our We expect to cost businesses benefit growth rebound and the and in comprehensive

million from not XXXX significantly, the segment. high-margin contribution that However, work, government programs these the more this in and totaled large offset $XX.X benefits will assistance decline in decontamination in

For XX% to EBITDA Safety-Kleen from of Sustainability XX% XXXX. adjusted range Solutions, to we in increase anticipate the

have increases blended in We is products. expect year in spread extremely our Re-refinery due to an we as wide driven business price to manage that the base outstanding supply oil and business

digits comp. XXXX the incentive As will year, collect negative customers received time, than SKSS in In spread demand now miles the half from At oil EBITDA in rises however, driven XXXX. our be assistance more waste and that more mid-single to $X.X normalize. to second Corporate offset ability expect adjusted begin this in segment those cross-sell low other million our the XXXX same SKSS higher lube that to These expect in we to we of in due and improvements to same segment, to our products should increase. up to the government

adjusted $X working free XXXX, million cash range million program Canada. primarily of assumes $XXX assumptions, a government million or XXXX in a we our Based capital expect million. $XXX EBITDA now $X receiving from midpoint now flow to current assistance, For guidance of $XXX of EBITDA total guidance the on and of adjusted million our to

Turning to Slide XX.

on As the long-term pandemic from of our to on longer-term of new it start company. you targets plans formalize a basis. would emerge time opportunities with based Board thought We markets. outlooks annual share for view be the in five-year today year and XXXX, we a some we good our strategic We’d and some current to with objectives an like the within longer-term review those

First, expect than to growth points organic be X the GDP. better our we year each X to U.S. percentage

programs. expect adjusted extraordinary Second, EBITDA excluding our assistance items XX we as improve government such to points margins between annually, basis to XX

conditions. the million any to year. XXXX. start the adjusted based to current in a macro we Third, we that continued to outlook of and ahead. should see on path further free five-year than or profitable $XXX XXXX This by more are of acquisitions market remainder flow the through support growth momentum great targeting is closing, years cash are clear off a and We also future excludes divestitures see trends In positive

up We and future excited please of Clean for call are With Harbors, the near Christine, the about both open long-term. questions. bright that,

Operator

you. Thank

Noah comes Oppenheimer. Our question. conducting the with your be Please from session. proceed now will [Operator question-and-answer We a with Instructions] first question of line Kaye

Noah Kaye

done. Good execution in morning, Thanks for questions. everyone. the And really guys, taking nice job the this quarter. Well

Alan McKim

Thanks.

Michael Battles

Thank you.

Noah Kaye

guide this I Am the money, little to if sounds sounds like more Maybe that more second start XX% with bit to money ahead quarter. outlook. out I like than XX% do thinking for we I of It XX%, XX%. had of government I right? just I’m a we XXXX, of The million. it government you’re you if maybe in apples-to-apples, last But quarter lot year, EBITDA up just a can Mike, benefits get government the and think back really mistaken, the about might quarter $XX like not basically, of mean,

Michael Battles

think Yes. had really, million mean, That’s a government about good way it. we $XX QX in assistance of to last QX. I year

crisis drew kind And year, an guidance, we everything it really a sharp on is last good I so we year, QX this was growth. to revolver. mean apples-to-apples I mode, last at it quite get time download. And pulled was mean of look a basis, the right.

So up much. we’re it’s surprising, not that

Noah Kaye

Yes.

just reducing terms mean more comp major bridging you out in I items ways, it to what illustrative. If improved that spread? of of the to business I kind the call of that XQ is, this So your OpEx? profitability? what’s really? pricing structurally it some are compare lower Is Is Is are – guess, XXXX can improved you initiatives? some in it pre-pandemic, maybe translating to

Michael Battles

about point, But the prepared – like to was said on Alan around comp. Yes. kind No, our sitting crazy we and of here your year, as though, XXXX because we’re and the reacted. and that’s January we why kind I hit and all year pandemic and systems of it that’s were running what and we others all the of in spreads of kind widening, kind And put kind go. then pre-pandemic, went of are to a going have, mean a really good comment well. we was of how sideways, how everything February, I plants talking were were Jim last QX really and remarks XXXX

our things real is, kind of into being in things our the why reasons mentioned, I way it, cost kind this was pandemic. did I Pandemic it everything of good in into back going pre-pandemic pre-pandemic. you mind, – I and online, working of spread to the guys our the through control high-volume parts think washers plant, year their online. year mentioned, feels it. is and yesterday mean other being maintained, sideways. were But added all management on a was do think like high-volume hit, my waste last all I be and ability the where price it just plus. lot parts was drive of areas. I other great that. to this business job feel like talking the a that’s of really Noah, our streams about of you it waste are And – going team how we’re that’s went were things the now that’s we And some in about back wide, the all were last just that well Whether streams way

Noah Kaye

in I one did some more quarter. in spending was there for If M&A Alan. sneak I see can Yes. the

sound what pipeline. you on bought? optimistic touch First, could you actually, bit And you the just on little pretty a then

or maybe you the see you existing of complement really assets kind are the portfolio. areas market opportunity coming to us where give to color seeing Just on some

Alan McKim

Sure.

in both do I at have I made normal very if two had our Safety-Kleen part of patient. think to due substance grow And do kind to a the But pandemic we way certainly great both disappointed the you are are difficult things certainly we looking been, opportunities a and optimistic. Gulf would acquisition the a do and of And excited that go it as tuck-in sides. standpoint. think this to or we from would it small I now. did We it integration down year we’ve the potential pretty deal think, We business. are typically business. diligence deal M&A some to of been us our are acquisitions through sides grow there segments a we do really we’ve be out our because through opportunity very that business see both But on on there and I about of seeing didn’t of

Noah Kaye

All right.

looking Thank to forward guys. are you for We that. questions the

Michael Battles

Thanks, Noah.

Operator

Please Our of Brown question. line with next proceed comes question James. with your the from Raymond Tyler

Patrick Brown

Hey. Good morning, guys.

Alan McKim

Tyler. Hi,

Patrick Brown

I it just make Alan, Hey, the to reorg. have sure back and I want on come

work into the new re-refining, basically the collection So and that’s part crux ES going get and Is forward, so it’s of branch right? waste SKSS. kind then of folded going like washers, to that’s oil that

Alan McKim

I tightly seeing side of the antifreeze environmental generator Environmental that believe the And lines all our pieces Clean of out moved in were Yes. that think penetration volumes that is are Harbors with our Clean we group. Essentially, the very now we’ve of the Safety-Kleen, We that. on lot Environmental re-refined through our the of waste small of the visibility to of eliminated business, are the the all much I products. it side I year. this collection, business our Harbors under and of – segment gives motor business, we quarter Safety-Kleen go on the all second clear there Environmental. used SK driven by oil, oil moved business record side of recycling under that sort the that all SKSS, created of tell a remaining would along merger think industrial of and managed one drum that you what quantity But It’s now basically the we of last us of of new I sort actually sale which

So one why there. I story think the deferred great a a $XX reasons million. good – is It’s of at

in new new very, and just in busy streams. We’re waste customers very bringing

Patrick Brown

prepared it the And new maybe helpful. EBITDA then you That’s the Do Okay. full-year? the segment what Mike, you even maybe and was that? remarks, for somewhere, have gave in but in XXXX

Michael Battles

we has the XXXX by was filed Tyler numbers X:XX, the it $XX.X the Around X-K. all That quarter for and million. for Yes. Safety-Kleen re-casted XXXX. for full-year Solutions EBITDA. the XXXX Sustainability was

Patrick Brown

Yes, out that I’ll X-K. Okay. check

I and here. it perfect. make to of back come kind then just Okay, want sure kind Mike, And so – I’ve of got

midpoint, doesn’t So be you lot QX from half outside It I for first you it frankly it, that you call mean, mind. guidance great. I’m raised back guiding in in normal take the for half, to in than a EBITDA is subtract my trying which full-year is if actual seasonality. wildly and of just sound and But half? I the that million, guidance but less the is the are that would it. out by, and the QX giving appears you the that that conservative, totally just $XX second implied something work of like there being get caution full-year

Michael Battles

Yes, Tyler.

to meet we pandemic I’ve know. even or five exceed big is we been our know doing hit, QX, years unknown. make try for now, and Normally, as we guidance a you expectations. you raise sure The don’t So in this guidance

And world. open pretty spread we’re know the but for back and so SK going the it again, we hopeful number. have to that. I did There don’t around we’re we don’t comforting kind across is of And long? lot that going in I’m wide come raise pandemics to know fact in And days how don’t a a and hit segment. be that. Sustainability going we feel we that say the about the continue know is rollout to And about – that we to And we questions the of and that should that XX

Alan team And are. about where the we the that’s land. and leadership that’s with we Board, talked and with we where and it So

Patrick Brown

some then much target, But the That’s am bit right. helpful. one, free there, about five-year I last Okay. helpful. I appreciate particularly All And cash. around of in little a my very the assumptions very curious

So free here midpoint of I call to, in guided at cash think you million it, the just flow XXXX. $XXX

say there for that. But do but just the half it just X% $XXX that is And use doesn’t You there, years. call looking again, sure. feel I’m is like exceed, curious going to in you and about maybe there’s own word rise. embedded for gymnastics, let’s you’re in say, a this in implies growth is lot $XXX slightly of it, I a from given of my kind free CapEx margin. cash come million math guess to flow what’s I’m CAGR. leverage than EBITDA appears, million. it your four of planning But less but maybe longer-term that not

would would I cash broad helpful. flow. expect flow for that thoughts that pretty would be free But through well So any there, just

Michael Battles

quick good it was for you. pretty That No, right, got you Tyler. math Yes.

probably going grow as grow we We to are CapEx revenue.

try I makes think to our replace equipment. as we that sense

other or $XXX or it’s about. going just that. million. feel that good going And than we’re $XXX million, million to I’m dial we that $XXX landed. I better $XXX to But to $XXX where thing good in we to about again, be mean prepared million – I more in, feel million. that’s more I said not it’s think We I than want I going do give The numbers remarks, that right? my As than we that. said is

we that. better than much that hopeful do We’re

we will. I think

we past, have. certainly our at look you If

that’s where So landed. we

Patrick Brown

Okay.

of not statement. point, a So a more finer just broad

you Okay, awesome. so Thank guys much.

Michael Battles

Thanks, Tyler.

Operator

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

David Manthey

Hi. Good morning, guys.

Michael Battles

Hi, David.

David Manthey

a branch that things First was there a transport the impression truck. was to oil were I I’m washers. there? like is changes collection functionally on oil Clearly, to that at boxes parts off also to business those the something on changes level, just physical collected box the is reorg, the there and operations the the trying truck certainly are branch operations? under understand filters might tanker

Alan McKim

we about both out that oil here XX,XXX service group bins and gather have recycling heavy of as automotive has at part Well, an on sites industry. that oil customer we that filters that basically do

over oil XX,XXX But well. a waste that service that services periodically of small part is we which compared filters of customers. as do to We moved it’s so still And do containerized of part up percentage Sustainability as drums those to offering. SK pick to their those Environmental,

look storage there we’ll that – And branch the earnings Environmental may probably BPS articulate bulks we product waste, I show to are have the business and allows that at all we’ll focus And services. kind substantial the release, quarter, in that organization this all locations interactions and really them. when really still the SK all think are some second containerized with our number for terminals, facilities rail environmental on because stand-alone. different there all structure, have and overall, where service most locations assets. Environmental business business, branches branch is still are small service stand-alone you at of are of But the the But SK Canada. a facilities, it VAC U.S. the be the part, this throughout

probably business. trucks adding more VAC XX in that We’re

XXX have washer but companywide, that parts assets. assets our as XXX as in overall those. And We are There then a division. both we have of well lot company-owned our our about – customer-owned just XXX,XXX several of services,

now So of business. about grow And with. now of as part added XXX we actually can help we focus on really those salespeople. they those think really And lines this,

there’s uncertainty, of particularly been between we in Ontario, which Ontario out really like growth this coming part really says, been is really, know. really hurting, So shut is Canada, of But still those businesses the our Mike why really have think Alberta pandemic, I in and Canada, we’re assistance, to government and and accelerate business down Alberta you there. as getting and hurting expect

will will we time but come think back So those soon, tell.

David Manthey

in EBITDA of touched you in terms as think And of I you’d from benefit any stronger this change. you questions. expect Is you of savings is that on And talk growth targeted what or any because a from there to focus, A – said you these derive a organizations? about? then couple of there to Okay. as like bit, Alan, change it expect change the leadership cost this for far

Alan McKim

you’re XXX I and motor are Well, have say, new obviously, which oil the to XX trucks used let’s a a focus refurbishment have, growing. to now on, Elgin, put we’re support actually business. building facility a in think this out up Illinois, we much We going better there that year up trucks we

you’re our margins on I the create customers, natural more hydraulic about been the services in going to rerefined also we’ve improvement expect our expand our of And fleet, materials – offering of I that call, our bundling products waste, see a together, types oils. because our focus. all our like out that there. think the to markets all oils, talking collection like We And continue but dense think to waste as route-dense also closed-loop well to purchase different antifreeze, our these our of like as both the here blended offering of our of those products, just

start of think think here. to seeing for more is, that more overall received. offering consumer I recycling and I I you’re going looking So think I is to going going to that the be more our message company come really out well think, that And and be sustainability

David Manthey

you. Thank Okay.

Alan McKim

Okay.

Michael Battles

David. Thanks,

Operator

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

Jerry Revich

Yes. morning, everyone. Hi, good

Michael Battles

Jerry. Hi,

Jerry Revich

Can I’m pricing? more And about margin got I’m improved to maybe that the efficiencies of the or how wondering have folks if you as could that laid efficiencies sure in for from is areas about out in talk granularity. talk relative you through significant one most much two Thanks. targets here operating a you margin bridge. that you’ve bit improvement up just well, dialed

Michael Battles

get analysis, at it say together. there. what is didn’t at look hangs this we did do Mike. high years, I’ll and What how XXXX back of level. where SKSS go ES We were the we I pretty Yes, or Jerry. math if and the you – and did kind is three is that This versus in four and when of go I we back start we a past mean, kind did at to would we look

the why the that, revenue So on felt we good margins, and that’s pretty the on flows. on both cash about

trend is have I to we’ve past things, mean out. margins that good growth. taking years, year-over-year our that have rely the pretty kind doing been few on manage cost a we working I was our quarters, we upon though, that costs as forward. of thought our I going so price, mean over All and And – we know And structure. history. to this XX margin in straight a manage proven consecutive how the

day. that so mean regulation think working that kind I work all and continue. can’t we on opportunities? of we’re that’s And specifically on no is versus of How versus reason there’s price new that every we stuff to much

Jerry Revich

pretty are pipeline? be obviously updated folks cash sheet fit you the how and is this thinking M&A And to a cycle? How balance on you larger-scale clean strong I’m would folks flow. wondering in business? any what free reasonable economic about active have And for bolt-ons a beyond earlier thoughts potential your

Alan McKim

Yes.

deal sizable I the probably are available where last think $X.X deal about some our that back private of most competition be that deals think, that But did when there are XXXX, acquired seem at. was in and are – more billion deal, with did equity we like we back. we other I sponsored companies these looking seeing last in large to Obviously, we we Safety-Kleen that was, recently. that, most which

think And we offer because a so size, we quite we we equity buyer, just the a more again, that’s looking little discouraging a But and a we strategic are that see do selling been off those deals. and as get lot private private in see and frankly. equity more synergies, can lot at bit opportunities sometimes

Jerry Revich

incinerator the for lastly, And that can mix? back level you you Okay. we And for folks, head gains I’m that ASP. see as Perfect. into pricing rates utilization of does come what strong really sustain XQ? wondering online as nice mean to

Alan McKim

Yes.

drive to $XX last into capacity. trying really approximate online this investment the over We’re two further We our came Aragonite plant past and month. an made that years, capital million

we so that this additional hope investment. X,XXX to next tons gain and tonnage another hopefully, And year year through

that pretty raise business. X% increase coming that expansion further is new year, think doing. growth receptive debottlenecking we our new implementing the to are really are And were looking any for something we all see an prices. customers adding so captive price we didn’t And even in markets, We because much I at seeing we’re technology, last of and and volumes incineration from do

gave large last a we on pricing corporations. lot fact, a In lot of concessions year of to

those back and getting improve now And margin. driving to we’re improvement going concessions and removed price our so

the some are those of So doing. things we’re

Jerry Revich

discussion. Okay. Thank the appreciate you. I

Michael Battles

Jerry. Thanks,

Operator

the question comes line from proceed Please with Stifel. next Our of Hoffman Michael with question. your

Michael Hoffman

million in what calculation? Thanks that your segment overhead, X% into dig assumptions. revised The for multiplying to shows to overhead as $XXX in corporate couple against? taking corporate of the that my the EBITDA I question. I’m can X% up that’s on Mike, if X% That’s a X%

Michael Battles

Yes, sir.

Michael Hoffman

a are working And not then capital benefit It’s – use. we in neither a either or neutral? is assuming XXXX,

Michael Battles

Flat.

Michael Hoffman

Flat.

free esteemed GDP to mean, is of unless Okay. that, top. points, better is observations capital sort compounding to that’s then a then get X% EBITDA, your to XX X% of the X% growth and assumptions than you – if X% spending million. the I five-year, silly, something cash basis colleague’s on my at do doing you’re X% on sort To on X% the X% which alone, And $XXX your at flow the in

So are is, CapEx underlying at I we is as to the big part to stay assumption? of question that revenues going X% X.X% of guess

Michael Battles

of as floor, any to $XXX and beyond grows. from CapEx that are events, new go That’s for. million’s say looking would we’re So you’re revenue our we there. capital. going Outside what grow I growth incinerators

Michael Hoffman

X%, CapEx X.X%. at around a Well revenues, been has as mean trending I percentage of

Michael Battles

That’s right.

Michael Hoffman

to to going that get mean X% I at. what the still you – X.X% of holds revenues underlying as that grow as much I’m have – can So to CapEx you the want, trying is is

Michael Battles

fair. that’s think I Yes,

Michael Hoffman

in recovery? sort a current thing are the my the – what back underlying about to or of is pieces, the the And right. on assumptions service what pre-COVID version technical side new adjusted getting like or All presumption service the pre-COVID year industrial Okay. is then the What’s SKE? of in the from about last – assumptions, industrial

Michael Battles

Yes.

the kind And of line QX. kind as in continue. this pretty top a So good service think year, flat It I it tech year. didn’t And suffer. Michael, had business going actually really know, was is you to of that for here full the

large continues we’re the kind going million And that we down backlog work, to As that’s see in to way because here In think We pandemic as to million because $XX $XX I of in a be work do, and year decon after in a going did that’s trickle. to field the tech for decon great to number going that about said as did. work and get Alan said, service, we to we long had here do but of we And have that plants. a said a in on the a May, of see service we $XX of of – QX down. the kind well. of XXXX we million is year we the call, that because

And sitting that happy a everyone for broader here, a be thing, so speaks win. societal issue good – actually frankly, turning which in seems the is a we’re that, to that room to into

So business and The that that’s that’s XXXX. decimated going the I was last decimated. here all mean, always come QX oil think in side, on SKSS thing I’d to QX, I back say in that’s and SK the is –

Michael Hoffman

Okay. Michael. very helpful. That’s Thank you,

Operator

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

John Mazzoni

update filling an you the is in you’re us John This there? what PFAS regulators and Hi. hearing from for on Hamzah. give the Could just opportunity Mazzoni

Michael Battles

you talk about bit that? Yes. little why Alan, don’t why you – take – a don’t opportunity, the PFAS

Alan McKim

absolutely. Yes,

and the address be administration, a driving, we this coming is I this up final obviously, in conclusion to to environment. on this think going with believe, how issue

drive so substantial into is as be way. plants we’ll in our groundwater watch what some develop, focus volumes regulations this stage. And gets Washington. and we of technology a And to most at treatment under we’ve this our certainly, hoping been And happening standpoint, on has been see from when continue these that able to

Michael Battles

a learns still lot a this ton a and lunch lot – at a lot lot of questions, a not People of are of asking of we Yes, questions, volumes. of juncture. Q&A, as

Alan McKim

Yes.

John Mazzoni

Great. are or catalyst us in down. follow-up, picking captive accelerates terms you Is Or up Thank you. incinerators in on how Thanks. could the And then slowing you’re there there those that any seeing many of today? closures? marketplace pace And remind comments just what the any my for out closures?

Alan McKim

XX, certainly incinerators. outsourcing well rather over we see about looking and than at Sure. to XX facilities. realizing a maybe years, one There now or that’s their a at time. And was competency we’re incinerators continue down to XX, liquids-only not reduction industrial kiln-type them core running But in number of facilities fuel of over companies captives, XXX Of large are those the rotary then XX. past

and we’ve reasoning we in because at look result certainly incinerator the been, And closures. XX so a coming the the of we last And continue hard of volumes new think years, routinely the strength. anticipated of whether we’re the in was talking captives built for XX, captives part will for new to capacity we a that taking Dorado right need now the more because El

John Mazzoni

Got it. Thank you.

Alan McKim

Yes.

Operator

Please Needham question with your Ricchiuti next proceed question. of the line Jim from with & Our comes Company.

James Ricchiuti

wanted the SKSS – just to reorg. go good to I back morning,

in that something played that standpoint You the has of thinking the about in at wondering, savings. you’re that is EBITDA cost from And talked Or to about I’m all guidance? longer-term the change benefit?

Michael Battles

we played the spread results – QX, is is the good raise played as this well has in big into hasn’t decontamination Jim, SKSS streams That better-than-expected business, obviously the Mike. had work. – wide Hi, high-volume of the here in and what the being guidance kind as waste results

So in. all those things played

I such, QX, to headcount, lowering guidance. year all us the we think felt that dividends at are we’re we of year, paying cost raise and here seeing it the rentals, good things did working And that be comfortably whether took last actions on working all overtime, last in Jim, kind as our it. consolidating rental sites, lowering our assets,

James Ricchiuti

pretty earlier you it really like in And just strong the had you level. respect a Gulf, going but with in the the sounded QX, quarter that at to issues obviously, February, on in exited were

I about wash, and ended was was it how way sounds disruptive came sounds It right like it the And net-net, it? mean, strong, quarter? like not So you but fairly is for maybe a it – that strong. it back fairly the was to it think

Michael Battles

the – event was in guidance was XX we winter winter of through the the XX. the February, the storm event, it Yes. as on XX because Jim, event gave interesting

had landfills areas. other a our impact weather we for plants weather impact, as was the QX, going be So in good we knew gave sense and and guidance of to the what least at

were we’re impacted our base that that is oil area. other such, that competitors down, by What spread, certainly, as we our and the were past So increased as the it didn’t didn’t in space. – quarter, expect the refinery price plants And of bit so quite beneficiary over is a the were experience we – the that. in we of

was that of business counterbalanced lost of probably the any So that plants down. kind because being an surprise upside

we’re March. our the in a bad we’re a that of February. had And a rebound was, great And going we looking is too. said as we just prepared April, here remarks, April, have question As to a good in

February. not really a was feel really And really bad like trends of like right so it’s are – just the going That catch-up I more way. that wasn’t the

James Ricchiuti

just wondering, activity increased this market, point, prices we’re at, vertical maybe you is for Yes. are in playing that outlook? in the significant – rising into And you seeing seeing what pickup industrial business say, just about how prices, you’re resins. to Mike, commodity yes, the the look hearing And petrochemical broadly I’m and just as

Michael Battles

versus Yes. great. and XXXX. really even strong, the pipeline The looks XXXX, the about we’re really versus bullish and It’s and course, QX rest been of year of

to go As our a customers that here. receptive been and he question pricing. answered, all up, to has that Alan, said peers, that’s pricing see they’ve receptive his is in and comments are on Us to we inflation,

that, customers have been price to increases we’ve working but We’re those. feeling receptive through the been and

James Ricchiuti

a lot. Thanks Okay.

Operator

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

Jeffrey Silber

prior target. go and margin wanted flow the target a can the long-term on adjusted free remind that much. top targets? But I How compared know financial us to expansion five-year new cash line targets. so is to might your I you growth you to Thank back have targets?

Michael Battles

model look years, looked Jeff. five and trajectory, type or answer they’ve your back and about went go four question, – back to past to the been our We of this and five-year for all

spoken held kind to history the past that. on I kind of to five the or of over has think and we’ve four this that years

out, we’ve able I get pay measured been hit targets that longer-term compensation these targets. So we’ve our these in think on has we’ve been plans, to able and which to been because to great been we – able those incentive

Jeffrey Silber

that that weeks in Okay. might the still Follow-up Who what a happen. Washington That’s just plan. pass plan if know your out rolled eventually anything beneficial of ago, great. business? in was will does there couple question. it infrastructure knows there I But is a is be for

Alan McKim

of the infrastructure related I part sort do and as these other remediation see of putting cleanup contaminated of when money spending. that government some starts major soils out those certainly, think to we to work projects opportunities, that tend gets led

So would at we that look positive a thing. as

Jeffrey Silber

you Fantastic. Thank so Okay. much.

Alan McKim

Yes.

Operator

from [Operator line with the Instructions] comes Our of next question Alexander your Leach question. Please with Berenberg. proceed

Alexander Leach

on quarter. morning, guys. Congrats Good the

in I this of pricing. will any supply parts favorable about margin through the Or reverse to moving is normalizes? shortfalls partly are expect saw SK, Do – guys that? that volume as supply the increases benefit of how what some know thinking the expansion which is you I into were Am year there? there correctly? I leading saw sustainable? terms margin why Or Meaning that of believe you much in the offset you In year, some

Alan McKim

going the recycled that sell what fact rerefining to why, of coming pressure. of not at lot much our has aviation lack our is we the it’s standpoint, product that is that pinpoint oil fuel as much margin because kerosene out right which side jet in to gone business, conservative outlets really a well really there thought exactly there’s and a we lot not has and but into for standpoint done the under might basically past, market. We’re to our fuel how in the to that of We spread market, thinking really, business kind A otherwise well. market thing the impacted first oil fuel And XXXX, we versus of bunker the opportunity pricing now that recycled a do about has market or would fuel. of of all. have don’t went from compete is was of in really know difficult oil say one certainly into when so management. we this the But IMO a big was And

materials So on the sort we’re impact there’s the of certainly But that, the a are we’ve this lot and market. year, of see we think by and to being end where parts is be that year. will feeling got outlet conservative the bunker of spread having in we some we of moving IMO this

Alexander Leach

Great. Okay.

the you it it was Q&A And Safety-Kleen? and power specifically earlier, Can had? will my sorry about any bit rerefining if business? impact I SK? could impact impact inflation it slightly. Environmental it spread you’ve a And then missed incinerator out how talk pricing line potential the would how Services offset And Would future in how the versus cut

Michael Battles

Yes.

of that think had So we’ve expansion. all, XX straight first margin year-over-year Alexander, quarters I of

be overtime, like we’ve pandemic. So They to and know and we say management. that I’d through done whether did. margin, good before consolidation, Cost on site bring how last our we dividends And job glad hard we decisions headcount, gross made some year, margins, to SG&A, location, we’re pandemic, down. it a manage with cost the actions that, the in

fuel up, And you is to that extension going so surcharges have that we on the said – cover off that. fuel

to of think inflation well. in receptivity and to pretty I able been, I pricing that, we’ve So the – been feel areas plan like has and manage other the with

Alexander Leach

guys. Thanks, great. Okay,

Operator

comments. now end McKim turn back the like the reached of the to have to for We I Mr. would session. question-and-answer closing call over

Alan McKim

joining Okay. us today. Thanks for

all Relations very day. look we there. Thank you. a you And safe forward months, Our with connecting hope and of to in many the so have remains Investor coming calendar active we you

Operator

Ladies today’s and gentlemen, teleconference. this does conclude

this a wonderful may And your day. your you time. participation. at lines You for have disconnect Thank

Clean Harbors (CLH) 9 May 212021 Q1 Earnings call transcript