CLH - Earnings call transcript Q2 2022

Due to licensing restrictions, you must log in to view earnings call transcripts.

Operator

Greetings and welcome to the Clean Harbors, Inc.

Second Quarter 2022 Conference Call. [Operator Instructions]. It is now my pleasure to introduce your host, Michael McDonald, General Counsel. Thank you, sir.

begin. may You

Michael McDonald

facts and and for our over call are to and Litigation could Christine, our that invite McKim. information measures turn the Alan GAAP everyone. me are only our historical Clean these performance. Relations, publicly website, included Battles; measurement With Information risks believes you EVP period. opinions such and release Relations and or Participants and call measures that CEO, like With Eric Thank to reporting as to to operations management's of of provides along. company Investor SEC potential are the call of the meaning to most an the SVP news on our are revise includes Matters Reform Chairman, Alan filings that, good are in not today's directly filings. comparable discussion which undue presentation. available on consistent the President its place today's Investor to President is our XXXX. to Mike Officer, are Chief XXXX. Securities release, comparison references on historical website results Buckley. additional Officer, call appendix factors Alan? we in forward-looking Reconciliations today I'd through in concerning Operating discussing any today's the of of these considered made and in affect of on of no to other today's measures. follow Officer, made The Today's this revision that undertakes obligation statements and non-GAAP results Gerstenberg; we than of are Slides Private today, of Harbors within you, Jim cautioned Financial reflect morning, X, Chief statements, today's Chief and McKim; reliance statements on not the Executive posted Act August

Alan McKim

once safety. Thanks, like everyone, a is about our metric again by critical for thank us. investors. that by and morning, and Good you joining It's employees I'd underappreciated often us Michael. talking to start for

customers, in decide bid. most the competitive that can wins For who of important we deliver a oftentimes and one it's numbers

XXXX, that team goal incident we XX-year XX, currently total under in our rate, with the X.XX we good June For delivering Through milestone X at challenged first the a ambitious TRIR, the of a time for an to and or achieve year. recordable position in for of history. are

that team is anything peers for a a Our us. and this phenomenal year. differentiator level exceeds safety are delivering of competitive our The far is doing job

Turning on Slide financial results to X. QX

I'll segments. our tell. our far I takeaways of want have to the -- to key We operating was strength on our a walk let going results the of before which on financials, quarter through you guidance focus great from Mike this we far the specifics story of segments, through the quarter X exceeded of each our both for but

our First, assets, higher. scarce been our never demand disposal for particularly has services,

volumes of more year. waste shut captives outsource. are other companies final determining stages largely who And to with the captive continues will As due they high-value of their partnerships processing and this U.S. XM, down also earlier ever flourish, to closed manufacturing incinerator than are in we before, whether like

Industrial and talented provided us Service of to offerings, Service employees, elevated great our be as assets business, branded acquisition. deal is which with an proving The a now includes market HydroChemPSC, leadership gave HPC and a Second, impressive Industrial, position. legacy our us set Industrial

to are the remains this us, the While strong business. the we still capture to we fit have and for long-term do all to about available excited work prospects cultural synergies

trajectory. positive or retail the service businesses, on our Field energy Services, Safety-Kleen our all Environmental, services, whether a Third, are

more to growth our record market this profitability we not have And Safety-Kleen Sustainability weren't levels have were is we tight, so in been the Solutions transitory. hired our the if While faster. and impressive labor could they quarter, even believe organic and higher could lastly, results rise

are many of in are a spread, the from long-lasting historically we favorable While wide changes benefiting market nature.

For example, impacts grow blended as positive base And IMO prevalent, XXXX more are the permanent. interest sustainable oil we in and ESG are seeing of products becomes our exponentially.

to we to our are gone. Those days command for future. forced ago, base a the oil premium Years discount were We long green output in products move our to expect volumes. Overall, and cost-reduction environment, executed pricing, our our performance. team for the services process well demand in an through chain-challenged industry supply improvements best-in-class and programs, record effective inflationary exceptionally to meet

Slide Turning QX. addition growth Services XX% the was to of HPC. generated XX% Environmental X. that by grew Approximately in on segments of

while XX% service half decon utility stream for the COVID of work demand its quarter, size projects. of turnaround the Safety-Kleen the spring rose increased incineration an Services results We a steady and increased Environmental our same through sizable in QX Industrial with and pickup Group, healthy a recycling business. utilization of service demand, XX% of Services emergency waste in the the XX% a $X extensive projects XX% landfill volumes generated response Field addition on HPC's by season also While core was pricing disposal and At incineration about grew XX%. and year offerings. capitalized grew remediation in remainder time, ago. of by in from average the million

points Looking supported rose a technology basis than reductions XX investments basis sequential inflation, cost at Segment a segment XXX efforts on and our Environmental offset points from with enhance year on pricing XX% profitability. to more to in expanded by the productivity. our our and by coupled revenue, Service basis higher ago QX. from EBITDA overall QX margin Adjusted

HPC, in points not even terms hit full of were synergies, ago. up exclude stride has capturing margins which from you its If year basis a XXX

rose was by EBITDA XX%. X. more Adjusted our in of on oil Revenue than in or a year Slide pricing XX% $XX higher Safety-Kleen to back segment million our Moving versus the QX Sustainability up ago. of products

our by the gallons in pricing We quarter continue on ago. million front re-refining from back levels, end carefully a managing on cost end. as collection volumes we $XX the were costs capitalizing oil year on and market XX demand at up gathered million Waste to again maximize up the our and favorable collection spread

of the expected we're ongoing our on blended oil The value. of just rise quarter Plus our conjunction given the direct brand industry to products the with sales our Clean not of scarcity sales. that recently continues the that conditions as really fully of Our re-refined generating quality, that products. launched due in our but to shortages in and the reliability and came profitability view, we and oil in recognition additive to In base capture volumes also market the base value

Turning to Slide X.

We our execute on continue all strategy. to elements evaluate of allocation opportunities to capital

acquisition million. we segment assets of collect waste also Southeast This our of the QX, not production Western the generate re-refinery U.S. quarter late we and legacy M&A in of the acquisition providing and Gas but In and gas overall for oil local only business collection Georgia includes by outside oil completed front, vacuum that core strategy oil divesting the for additional our of our bolt-on a $XX for were a Part non-core will focus. we that our On in we part of Florida. Canadian based believe waste reduce approximately sold cost will in a outlet Oil proceeds us, primarily transportation businesses are

our network services, let And to But share a determined capacity investment and 'XX. assets needed disposal this these core bring of indication cell nature see into perspective, under stellar repurchase program parts considerable that unique we the that of year, Nebraska QX on better early Clean that we're Harbors in touch the of this upon perform the of XX,XXX saying half slowing investments capacity. expanding our From tons facilitate business we a by of the make limited Mike the our in with growth. new a no in and to back in throughput incinerator and me amount crossover and build-out our of are of conclude his supported the substantial that remains continuing various debt ownership. our Given trends CapEx schedule, will will plan 'XX. around In and we landfill results our on market recycling comments. adding interim, would

disposal and in the that of incinerator ahead spending, a closures, should years through strict project faster multiple regulations, reshoring infrastructure and high robust demand, accelerate remain enforcement of and demand pipeline assets network Our of in captive U.S. recycling and Canadian industries.

hire grow Within additional are growth. We increased network will continue in as and continuing businesses, rapidly invest possible facilitate we our as order in to to the to demand this and to our meet to service meet demand.

implementation this the For collection is SKSS, production our refining the from in years business since X of in the a IMO the managed to all paradigm past phases well to sales. XXXX. over There's been business shift

gain In addition, with products our customers. sustainability our traction to continue

half leverage processes back continue we in the 'XX, the our as So margin the we've like to drive of seen improvement year. we move of will first superior half and through systems to

We and our focused team accountability have and optimize an fostered culture a executive performance. industry-leading of to

free allocation bottom our year top capital to We and flow deliver line record this a with to results cash expect along robust strategy. support

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

Michael Battles

everyone. Alan, Thank good and you, morning,

income we to Of to $XXX quarter. increase is our from related $XXX estimate statement with $X.X year's approximately the second a billion Slide that X. increased Revenue quarter, on second in start last the Let's million million record HPC.

basis our Gross revenue, productivity of improvement basis margin pressures a XX.X%, organic to our periods, remain basis. by We basis and XX.X%, with million. non-billable approximately the ago which an EBITDA revenue currency equates of year-on-year. was million than on of in a to and of SG&A year and from costs. dollar approximately improvement a speaks to to XX% XX.X% from which to improved profit improvements pricing on leveraging was fantastic. only on by margin up impacts over record revenue HPC points XXX on. revenue intelligent That a Adjusted pervasive, is controls a in range basis Excluding eliminating due that touched as improved percentage strong delivered SG&A or $XXX XX absolute ago, XXX Despite XX% an million HPC both costs. additional higher grew margin at inflationary our $XXX.X that $XX.X points coming reducing point expense performance in Alan a gross and SG&A year

is substantially expect the as expected and year, of to the level. our assets. revenue million, full percentage For amortization below QX XXXX the XX%, SG&A Depreciation of approximately increased which reflecting HPC in expense to $XX.X we be addition as now a

the we For in anticipate sizable with range depreciation operations our from reflecting efforts for increased improvements. in revenue now $XXX combined XX%, of by amortization XXXX, growth, million margin to our $XXX and across-the-board Income QX million.

billion. marketable with now QX our guidance, free debt-to-EBITDA year. Leverage on on $XXX of We were end expect X. balance quarter approximately at year-end. after of flat with declined sheet Turning $X.X to EBITDA the north X.Xx ended of just cash the start debt million, of Xx Slide year. our we securities leverage the to net new flow reduce being and midpoint to on has and a Cash over basis the below to Xx short-term by prior Based XXXX

Our are in a good with hikes, weighted is rate debt average at Even cost recent our confident of fixed we shape X.XX% the from of perspective. XX% we about debt are debt with currently rates. that

range $XX the slightly flow $XX.X million compared be ahead previously a to our to $XX to to to year million of Turning of build-out $X The the in with $XX XX% new related previous capital added of disposals well. we've was QX expectations. year, Slide at incinerator year-to-date. a and now up of in million ago for that full is million, free made cash million, business. expect incinerator our operations due cells in QX proceeding line million CapEx range and the expanded was of as and working of XX. Adjusted landfills. $XXX.X Cash on the flows approximately in higher expansion in our with was CapEx approximately cash $XX We the million Nebraska QX year growth QX several $XXX.X ago million from mentioned as HPC, net from the for in our accounted progress with

our to QX, For slightly supplies in be expect Kimball inflationary spend in range the for vehicles. -- our costs from net Kimball million now guidance CapEx $XXX and and in million, due XXXX previous $XXX to increase our to we up of the

shares XXX,XXX back at $XX total bought of million. we stock QX, of During cost a

$XXX approximately our buyback existing We have program. remaining million under

market $XXX raising with Moving our conditions of to $XXX range $X.XXX adjusted substantially on and both our segments, we quarter billion XX. midpoint current guidance operating million. second XXXX EBITDA Slide to outstanding Based results a million a are for to of

we of perspective, increased contribution, QX than the ES due Looking what to quarterly a in QX continued SKSS strong approximately segment XX% adjusted expect our XXXX guidance EBITDA from expected profitability. at demand HPC's posted be higher we to segment in and

our revised segments. year at we XXXX. In adjusted translates midpoint guidance from full our expect year XXXX increase approximately how guidance Here's to EBITDA adjusted of Services, EBITDA to full XX% the our Environmental now

We core and our will growth lines benefit from of all of volume HPC. the across addition business

We of cost-reduction comprehensive profits of our enhancing are pricing and with myriad activities. offsetting through impact margin our the of and the implementation inflation a strategies

For SKSS, XX% we from year midpoint anticipate to guidance increase of the full EBITDA at adjusted approximately XXXX. now our

addition flow also $XXX addition range a -- the to a cash or much free XXXX, EBITDA EBITDA these Based midpoint up Plus, year due free free from we assumptions results, half to is year slight our as $XXX of business we increase back The to not that first guide, adjusted million are HPC to working severance compared our have our adjusted the -- of midpoint the million inflation, In we adjusted are and capital corporate to offset lower XXXX improvements expense our and from now we and seasonal the ago. Given negative previous by in year-over-year initiatives revised cost Clean integration in typical increase at such the current beyond with segment, of slowdowns. of largely made cash guidance, have a expect marketing XX% half our million. be and spread expecting wage full narrow on we a $XXX flow of raising conditions, approximately our guidance. underway, corporate a

that significant reminder, a As investment range in includes the Kimball.

million organization, Clean profitable our evidenced approximately believe talked performance. in trajectory adjusted share and In I closing, investment, that call. year. $XXX a enthusiasm QX consistently hallmark Excluding resiliency our is about that for I our by beyond. about free prospects I our flow and our be XXXX strong cash would midpoint growth characteristic Harbor's this earnings Alan's of growth

We that, are their we the the both face serve bullish Christine, And our for pressures. of customers. very of even our operating sustainability a remain segments for inflationary them, up critical please vendor call personally partner and With many for solution. I questions. about in as open

Operator

[Operator Instructions].

Our from the with first Oppenheimer. Noah question line Kaye of comes

Noah Kaye

These pretty are some incredible results.

decelerating of with resiliency, of investors I are outlook. trying to So broadly I on economic something wrap their heads around right would you mean, to now. green it congratulations your picking maybe around We made some comments your up about hear commentary Mike, slowdown, are a this to lights the And on for think, like team looks the at And start lot the indicators. that I all is this. of And the around comment point. lot manufacturing like an business, a

back the gives talk a sustainability you into bit you Services about potentially can Environmental the confidence what the some So of of little in half in trends beyond? and

Alan McKim

Noah, maybe is Alan. start. This I'll

through looking have present tried our take recessions sort recessions company keeping many whether has to or downturns at geographically going. through and profitability the expanding and that it's of and the to opportunities continue advantage line growth our passed top those of and going it's many think and I M&A grown really

standpoint. deferred, with So But a I seeing I ability think deferred, we're seeing think really in is deal with confident our When experience I all that the again. in our quite going volumes our from look with I up at into to it growth I in we're we at through plants. manufacturing, our And those Eric slowdown from expanding think thrown coming is our on-shoring, our significant. us gets think feel we whatever think the downturns past,

have. backlog that we You to want speak that might to

Eric Gerstenberg

Yes.

continue have very deferred We strong of backlog inventory. a to

have to volumes grow. bulk continued Our

across business waste plants, Our been spinning All our into have the our project know, increasing. our have been not base. that customer you plants, board, very, flavors up. landfills. is we And as diverse of customer water treatment And off plants, a of our incinerators, very volumes all has just recycling and volumes base

And going here. future the very strong outlook so into

Michael Battles

of there's first going No, strength year. don't enforcement. say that certainly Yes. see I how that And forward. the half also seen that We've the in changes regulatory in I

And X So house what Alan about stronger. happens and plenty for other market. high come regardless and regulatory Eric seen in this enforcement, at we and talking He's Alan things: was said, the the as pipeline waste of the kind all increased of been talking the reshoring, he's take end streams that those our doing bode we about XX all of years. recessions, always out well

Noah Kaye

Do pick to around pricing that guess, Appreciate able help a comments something see price that premium the potentially you additional at being of some seeing by just the products? timing that your I product or market. mean exactly can base Is on you then commentary. to at SKSS you're color to that? Just I happening want us premium. level around and blended give understand what And oils and up us you the around pricing a around currently? more the pricing

Michael Battles

this No, mean a Yes. the We marketplace. in with We're getting the we early see is brand. Mike. this. out a lot certainly of of I came new innings traction

sustainability just boon term, can to nature -- actually mean, long to our are of savings there. of it our that, do more of QX. is long said, and the of sustainability the see But energy here that And for pricing I days documentation that and we're the provide to understand that's Alan kind oil customers. I of or a As I at QX in people kind and think kind work just how discounting of and that we above. there's base gone, have not

Noah Kaye

Right.

oil base pricing at now the you're market? confirm, to just above So or

Alan McKim

reposition a plan together better that to we a not we're where now, in business say held I bit. such would If to our to we closer we've we're manage manage instead the the product, market And a I move full products. move to also discounting at product were captive. logistics whereas and the think to quite probably somewhat discounting plants market. I we're way put overall able to chain better get are much need of say, supply now just would

And those better at we our keep even allowed X that. now, so relatively we market and to right factors think can do have than pricing think pricing us I

Operator

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

Patrick Brown

call mix XX% Congrats on Alan, any way the mix? parse guy. quarter a good was It the could like and between, here. seemed ES, there On core is pricing price incinerator you it,

Eric Gerstenberg

is this -- continue to like the answer. again. of had And Tyler, our know, them Eric with The Yes. as XM you captive partnership. I'll the evolution the strong incinerators well. as customers' all we've be of partnerships just

So handle with closing those some we waste to conjunction captives difficult see that we shortly, are and streams. them other here in work of

pipeline to that strong. be So continues

Patrick Brown

very Okay. interesting. Yes. That's

Okay.

gears to shifting Just SK. over

more So end. control I want little a that on the of to you over focus bit kind the on part have front

you at the based this level ask of base So the don't great is what how PFO impact. of I way question. I'm is versus front-end trying understand might at how don't mean But history, much your mentioned your better expected but past? you And looked a how know I to IMO of an know having I if much oil some this basically, to better actions. in tracking spread have again, seemingly to is you exactly that's ask on the And question, if

Alan McKim

Sure.

$XXX the following know, in you XXXX. million year, close as were to doing in Safety-Kleen bought probably we So $XX they doing million. were about we And --

crude base then really that oil. as experienced the of downturn result we pricing significant in a disconnect with happened So back a oil

to The our manage EBITDA pay $XXX looking honestly, better. think our particularly so would we're manage the at the I on spread, we have also in XXXX. would has here, we that less demand paying And for what probably to really XX on is seen increased ability we're we diesel. oil And X/X later, years IMO would Street. say probably XXXX have what I And ability Safety-Kleen paying we say million been I sitting when back than bought Safety-Kleen that what first or early

oil. bunker oil created I surplus subsequently surplus has and think in a in a used there motor

have diesel market the we us been long. we don't continuous many shift scrubbers anticipate The that on for continue, continue on. future. put think and why that's We really positively to But so going is And in changing. think there's marine ships is here, play and a demand the to anticipate that we out really that real

Patrick Brown

That's flip selling pretty you're end, extremely on back the on look guy. XXX Okay. annually. But side, Yes. basically, a going and million But blended so to the really base this of I'm gallons oil at I'm some helpful. just simply. simple

Clean the got Plus. of You've addition

the market understand help to the re-refined of trying green You're oils. aspects

the So that basically, can oil versus, that the but realization way index. conceptually? you because Basically, help control "spreads" you can't about good improve a that oil idea is should price to index. base a you of your your it, Is kind think call it's improve base commodity, to it

Alan McKim

relates we it Certainly, our Yes. the with flooding a where constrained And oil, to example. X as business base a majeure out recent base we've years Louis, in St. here of had is real margin. purely our oil even We been for margin blended over force opportunity grow to because than continue really better the additives. even to but past our have

industry, to manufacture but been sell necessary some that demand only extent ability also for a for has and real demand we for to which the not us but actually want curtailed have for. oil our additives base to blended has a oil, the So that problem, our we

to think indirect a the and continue that and green direct premium we side business. grow of that our as a And so will have because we'll believe really materials of we we blended branding margin our product,

Patrick Brown

but much does did, plant re-refinery quarter? Okay. appears that have? maybe the how capacity Excellent. Mike, this one. My last did Georgia It closed it

Eric Gerstenberg

potential million expand. Capacity with XX gallons to is

Michael Battles

close late -- oil it's XXX a we million QX, gallons sell of it Tyler, in million did QX in And year. And XXX -- Tyler.

Patrick Brown

XX? the Plus

Eric Gerstenberg

there. inbound an Exclusive of is XX plant -- number. down the with We're Uomo that making BGO

Operator

Our Larry with the comes Solow next Securities. from CJS of question line

Lawrence Solow

But for first question, going the I still you onshoring of next I But lead worried infrastructure on inevitably Alan, things going just maybe guess of that margins a know like sounds of the you as SKSS. is you been whole years, think Maybe synergies of an But you that business? on. even sustainability just in a the any like PFAS do offset And -- points of looks storm sort end -- not general large of improvement, with on as strong. a piece. the you year just on margin is the well We've things your and advocate. visibility, improvement as this the host there's it devil's made. environmental maybe an in economic fabulous concerns at And the play concern probably quarter perfect quarter. listed slowdown forward, acquisition from some about that had the you've will listed this sustainable. economy to amazing to the least I the trying slowdown that couple slows will this your bunch all just a through over just some bill. Congrats to have

Michael Battles

Larry, then I'm jump start to will in. Alan going

So to think as given year, year. be year-on-year. first the to about the our that business, the flat half QX year, look last you of about here talked up the ES XX, quarter, all, we points be see XX in basis view the We the performance going that's strong of back and year-on-year we will think ES we at prior when margins, of

settles think or head from just XXXX, and were We from that out get a I last so will of strong. record, quarterly review of sustainably we XXXX, times. beyond. less those we those robust." so asked "Pipelines -- The everyone an kind be which and up And people So dust all-time we And very think their the question past -- than said, when margins are XXXX that. kind into X the kind operating remains well and there, really pipeline around had go where week, incredibly X on of they go

And about So about activities. I and list. view cost-containment long, of the that. a list on very again, we're our I'm bullish mean kind building talk is long-term we new really

resiliency, that's I will list part see. about culture. Harbors. so talk you of That's when And that Clean and continue part our what That's -- that's

of is what know we challenging. because really kind be to going working that so that's we're And right on now

Lawrence Solow

Absolutely.

there. a the shot I just would just purchase or it sounds I you additional side? switching last there some fair on know you about on -- Is -- took focused a And on statement? things million expansion XX at that thoughts still looking And that gallons is of year. of re-refineries assets nice more I there the -- What know that facility are the are your Georgia like are the Vertex the Okay. SKSS. gears small -- guys added, that guys out a still you assets that at? Are possible acquisitions think you're on. incremental

Alan McKim

plants. speak I Eric, think there's I think to to want you for opportunities space, our existing And might there's also clearly, expand some opportunity in certainly. the M&A that.

Eric Gerstenberg

synergy we we into existing asset while ability our expand to took have hydrotreating Well, network, plants. Yes. capacity in the to our our continue the

every projects some re-refineries. to have efficiency targeted across also We one throughput grow of our our

grow So very about at internally look continuing acquisitions. also bullish but we're to

Lawrence Solow

too There's you back just revenue opportunities, But mentioned on a I on. know a building that? in can Could in on assume guidance. much just I maybe much. too suppose XXXX you're terms your Anything quick of just going just you in lastly, us that earlier. of not sort a I give building lot I just a update then But going give And on near-term PFAS. on, just you're update? general Great. the Okay. that not space? us in

Eric Gerstenberg

Yes.

most very for continues on disposal through methodology So believe units PFAS contaminants. assets. assets, regulations but the to obviously, Clean thermal high-temperature really side, preferred And positioned not landfill our to assets, permitted well the continue only And our Harbors RCRA destruction incineration our our through the be that continue to evolve. we is treatment importantly, PFAS

there. testing out stringent Xx and the done of suspected third-party X are safer with the a out we've emissions what federal order all to proven some magnitude In our testing state really fact, that guidelines company, and than we've most we've along:

really about the excited we're So future.

but We growth a have will market will -- because PFAS, evolve. in to not that of big continue factored that

Operator

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

David Manthey

So discuss those oil? on speaking what on they're have X favorable just business, of us about you used if about contractual the just the could The how is oil ago? motor sourcing And versus you how that. structurally you're you versus currently had I you escalation higher spreads much what color could could but might volumes, years contracted give for the suspect these some indexes days, by you in negotiated Street. that talk is approximately mean I And more

Alan McKim

Sure. of Certainly, and footprint. have that American offer we is of major I'll North a here. the things national accounts, start corporations our lot a we one

And really so sure have we that contracts a lot and -- We're for also accounts. branch-owned those both make good we sides. negotiate of they're

we those from business where recycled participate hazardous that we in a your oil, that And at the what based level negotiated things goes. so spills recycled of those collect lot lot oil market, on oil all the based into because and looking of tank which off-spec basically cleanings our industrial markets. on kind oil a aggressively, all are at waste the fuel We typically local quite that is oil local lot a that's frankly. your of oil, quite pricing and go market is services It of

So I in more think But trouble. we not that we're back in there. 'XX. XXXX, regional, into our that's going early to anything really back I our go and going learnings much today get lock ourselves all granular, more that's pricing we And through don't to market think look us at much

used services, the filter their line motor that generating oil well or emergency disposal parts they're containerized other think washer us is I are or as it's all of response. customers for here for waste those demands whether bottom oil

containerized driving segment. more that's win network our high-priced really So the sustainability today. think a through we're into waste our I really solutions lot And seeing we're

David Manthey

I don't your results if... And excellent Okay. to throw on but today, wet mean blanket

Alan McKim

You're going to.

David Manthey

U.S. production industrial say, for impact the anyway. But a, But you. if and the print renaissance a XXXX, and in your discuss just end I'm factors were X% to that being a enter Harbors? think recession chemical you talked that we've of lot you like you when Clean be are going reshoring the mentioned was state in what about could XXXX markets, cyclical to of would favorable we other to If about minus

Michael Battles

everything past and X before, incredibly and that our It's I reactionary. idea That over we month. we more that period, Yes. to do time of the like XXXX, we resilient of at out made But -- when closed how fast are. process. I to course shows Dave, nimble are, -- it But the we the guess I say back over at hit, as the would That you and we there and kind And wet And for appreciate thanks pandemic of managing -- going for continued kind me how re-refineries. over look pandemic of amazing means that. blanket. we from as mean all. wasn't what a business XXXX just to you our the that had we taking if started fact a and said and costs EBITDA shuttering stopped. we're the back to to X we grow I effectively that to the do. go was sites the incredibly hard closing plants. an

so grew other very things to like these XXXX, of hard back areas happens to I together business because of other service And find and of are going -- the what kind for very hung well. I think tech homes most think us. regardless Areas and

would we kind do be XX really that nimble, -- Alan an said opportunity that been earlier as and happen, like as Alan's a that I well to we to maybe an I will to available -- recessions. kind of we have be positioned out, seen that we'll question, in So come plenty for believe one And to like no get his M&A earlier mean of I can happen, wants use think if recession he's faster. years. grow of we even in us,

Operator

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

Michael Hoffman

heard feel ever you right now. in long a think I've strong thrived word about I'm here. use I in a you Alan, the business I've release. for time. That's the how press don't you a quote covered

Alan McKim

Right. Yes.

Michael Hoffman

So $XXX gets about million; million? guidance to that's $XXX you Mike, overhead, SKSS, the around ES, taking million. corporate around your $XXX segments, $XXX around That million;

Michael Battles

Yes.

pretty you're think close. I

you're the higher think and a a I corporate in side. on little I ES side ballpark, But little higher Michael. think it's on the the

Michael Hoffman

Okay.

So around us $XXX we might SKSS. a be okay. that in million, the gets and in like the right to puts That $XXX me million,

February, have So this there really acknowledged and you year this back narrowing us some difference. the At up of coming you is XX the 'XX Because we're point, this looked million. oil world What that think that that. had with now and don't at $XXX I and "That below spread as on reflected stays in plowed you all guidance in said, extraordinary supply How demand soon. that. and that in all now of we've much have million of right guidance expansion. somewhere think normal do $XXX through structural? rebalances. numbers, sort of your point of a We've be us would million down was kind this Did $XXX SKSS." And round is anytime

is million. the $XXX So reflection understand there. us Help maybe on XX is base that what

Michael Battles

Yes. right. Michael, I you're think

We those all say, kind our of of long to thinking focus growing have a of includes thinking much between of the Having not chart. talked an better business those to color tankage more and focusing actually about the having out, business Alan on energy this. on break some oil, you give org place the -- it's you things, terminals but to it it my changed kind of of normal things kind front million. And managing a business which have our kind which business changed more business store let's out oil terminals XXXX, be be the talked this going our of just whether about in right the But all $XXX things better. kind and includes And it the have spread. since SK the on It's of small of changing being call, and sustainability about lot more when does being the I'm manage years to regulation, breaking what term. customers. to

we that's winter have move that and to base closer a have so wintertime buy down out and don't our And to oil where we we $XXX go that And sure in so than, storage be. in run short much for much, program new we're to we say talked and customers to the take me now where that norm say, And from coming oil things Hard that think mean, soon. going But I of change going really for what in are think, Ukraine. going Russia anytime higher better about. small and we not And much closer ended from and obviously, end there's oil today crude those that marketplace. That's here up. I XXXX. to are is to the -- all I'm I'm to million yes. the XX% that's than the certainly, tell to forever. -- it's where you in base going the to prices -- to I game going is sure, get it XXXX

Michael Hoffman

Eric, plant, gallons, X the the Georgia VGO? same it X/X Is into on million of... what's Okay. to the yield XX the the --

Eric Gerstenberg

XX%.

Michael Hoffman

XX%?

Eric Gerstenberg

XX%. XX%,

Michael Hoffman

base base into to that and plants plan hydrotreater on VGO a convert your that oil? to there oil? into other put push it do you a turn take is and then it And and Or

Eric Gerstenberg

move in some that future. certainly, the expanding But some to hydrotreating had capacity plan our about plants. the term, into discussions we've other VGO initial there short in We

Michael Hoffman

yourselves I significant Veolia got incineration in increase on Okay. this Veolia, think comes the there's first. the Springs on comes And -- there's and -- market. Gum then percentage side, between right, or I fairly if a

XXX,XXX the in how potentially structure relative supply-demand? your some marketplace? impact coming is today, the that about of in So that feel to do How normalize of where the that pricing capacity does tons you

Eric Gerstenberg

of of about feel continues generated the to across being different across coming groupings multiple expand. that's capacity the high to We all volume our continuing good waste and Yes. be on pretty customer utilization units. The

are really positioned difficult-to-handle And handling very direct seeing in waste uniquely is capture streams we've drums, we're our market. the more and burn. really that's more what mix. Our focused That's to what around incinerators structure handling

needed but market. be capacity is on. our don't Gum much in I'm here. we not capacity it, Springs about we feel sure will -- that And position to I really So think that that the very really good us, be and about continue bullish added before come will

Michael Hoffman

Okay.

So that takes piece of me the broadly. to next this

might a You statement. be reasonable -- I this think

think probably of rate price -- I have never since in the of enjoyed you the all change have seen that a company. you beginning in

do product much hold and price that changed when confidence a prices you've into the is What cycle So you cycle? we across lines. a on your to pretty if enter eventually, all unit and changes unit comfort there's and

Alan McKim

inflationary overall all going continue go labor. this whether to to Costs costs the those of is not service, away. costs, Michael, right, Alan. seen we've it's gas, certainly, transportation natural just rise, All that cost are

April. here. aggressive time, at And so be for our reduction same services, in We in taken we've had had a of out force pricing to a but the lot in costs

address industrial continue and out years to jurisdictions, the capacity costs. at right, expand where the with to we we enough our to anything mean think we get we cases. we continue our our pricing the rail can trying of lower constraints service don't -- is our equipment line to things We have be you some bottom they need have want to move is tractors list customers to all do particularly lower-cost on of to labor our to really fact I transportation cost move to of not X margins look opportunities them of, the business, that we pressures. network use have. where the the that in in have -- on to are and that constraints, We're to But

our our address issues But overall, we continue we costs with COVID, to where work concessions we margins as with back, we'll And the here. so work some to accounts. and like inflationary to costs of gave need customers our other during increase continue

Michael Hoffman

oil versus is and one compression What give of for me, it last maybe that there period, $XXX confidence second operating in some market million. was today Clean half on that this The while the different of have more that, XXXX. spread million, that's really baseline. the XXXX, recession all $XXX industrial Harbors an in But that's therefore, about might us

Alan McKim

We'll and work oil of sands generating a we after of the lot the of and a on know, were industrial of growth as probably $XXX really acquisition going pure and fracking in business. $XX If part focus of you side lot lot close service we've in side lot that now assets, to the EBITDA business remember, Eveready our in of and and sold after that EBITDA tried a the generate to expansion, a million you we've work, million because the those environmental business. that our on

during care materials. that We challenging the times when made think grew our you so our And it that we the in health because And up customer all grew loss. we're I those that we the we and through were doing whether service, verticals expansion in base, other a talked recession, their we been for waste health of growing. care, adding be it's autoclaves, nature returns going of about, and as big growth That parts really has business. the expanding the regulatory on environment has our they're the capabilities, us. dealing or of medical pharmaceuticals on stringent side boxes, the side them been retail real with The for Whether market market extremely has retail been their waste business. how

that of that those things for some grow and really another might after we any kind verticals we we're seeing through to recession. grow those density, small so historically have we drive And think at size, continue go not of us. look route And the these quantities. can those been of do And when are I

Operator

with line the from comes Jim question of Needham. next Our Ricchiuti

James Ricchiuti

wanted HPC, couple than if I seems to comment be through better go things. which performing a I expected. could, just of hearing to I'm And on

of where the the ahead have business versus were acquisition? of costs, -- changed expectations for in terms that In your the Are there? you you are earlier you target

Eric Gerstenberg

Eric. is this Jim, Yes.

work really We customers to continue is with of continue develop But lot go we're we've importantly we're partnerships opportunity with still to we're at. track servicing them synergies Our of to there large and the continuing our just some that midway have customers, be support working synergies better. margins with Most looked better, really XXXX we here. to with through the expand them that those branches. getting through as those a on

Alan McKim

would I initiatives. lagging the probably think I pricing say on we're

inflationary can job that's cost that to I increases with simply part So tremendous a business on keeping the we're cost in up increases. of from do continue hoping would area. lagged, and that we the taken better that we've one that's say

James Ricchiuti

that When us of flow you about to price when but begin might without would through? increases anticipate assume would start specifics, talking some and to you -- potentially

Alan McKim

We've longer been it. rebranded doing We've consolidate it. had than to we've It's We've to. merge and contracts. taken wanted

expect make And that, rationalized both this the time but us so doing it's rest that and would year, taken and to in a little that extra pricing contracts throughout of of for legal continue the bit of -- midst and yes. I to we're the we'll see

Eric Gerstenberg

show in up the to year. the long go started way to here half this quarter, here has certainly It latter a in second of have but we

James Ricchiuti

follow-up And you it. Got question. -- a talked just

over the some see experiencing Just I'm pressures the begun you talked about last curious, been of business? either of cost you've the part have but of plateauing inflationary cost quarters lot containment, just you several that dealing any pressures. you're in also to with a of

Michael Battles

the Mike. increases that is haven't. outside see are inflation, price -- we see so fuel -- we certainly of the see -- some We we go But obviously, helpful. this bit, things the wage coming prices down far, Tim, some of No, don't which that, things really of doesn't that like a away. is

we really it the and feel our started back. And slow but steel I steel yet. going yet, in just to cost so that's and like commodities of that drums Certainly, for seen not some forth pricing has down, so haven't

Alan McKim

today pricing an we want were an call example we example. just to are saw Eric, as to the as what to you of speak from where we might where

Eric Gerstenberg

a in XXX% cleaning that the Yes. really over solution, years. use and our past ESOL solvents over X.X washers, elevated year we have both and parts materials The the

that. we're continuing to So see

So to costs are certain continuing areas. in increase

good we X,XXX still go retain Mike employee over to and On fairly at long the employees continuing way labor have base. said, while on adding our side, successful been grow we've as year-to-date, people a to

James Ricchiuti

levels? you moderation the attrition Are in seeing

Eric Gerstenberg

are. We

rate. We are. our We've reduced attrition

Michael Battles

Yes.

think I flat. we're

which think where from to we is we're see think I that which as good, were, flat, start Jim, belt. I we

job Eric better so said, of we've a And done as hiring people.

up year-end. So from that's why we're headcount

James Ricchiuti

on the Congratulations it. Got quarter.

Michael Battles

you. Thank

Operator

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

Adam Bubes

is Jerry This Adam today. on Bubes for

Nebraska investments incineration of about in magnitude achieve plants increases can alone? new existing the talk you to from Excluding you capacity the expect incinerator,

Eric Gerstenberg

Eric. Yes. Adam, is this

We and incineration. of target continue our landfills that to network year incremental look the our say other only tons also infrastructure. are infrastructure, I'd capacity across not of we water cell recycling also our XX,XXX treatment X,XXX plants, to But expanding a capacity,

of across that seen of the because areas the we've So a types number throughout all our growing disposal different waste we're network. of capacity streams in demand different

Adam Bubes

landfill going a should That's amid was pricing what on about And recent mix-adjusted this basis? the mix-adjusted industry landfill side, we it. Got And on think pricing forward consolidation? helpful. quarter how then

Michael Battles

takes and that, one, not quite bit. You are price got down. what mix-adjusted certainly, work our the the coming that a performed a And is. up certainly, us waste quarter, from that I'd we I'm But landfills say Adam. number when network. usually pipeline average projects happens, see into project volumes our this that of sure very well, well strong really

to I back that's for Harbors. industry good consolidation, Going think Clean

be going very that. pricing. disciplined they're I that in of think their think beneficiary the And I to we're

Alan McKim

thing, expanding recycling, in particularly just expanding Eric recycling we're are other the the manufacturing. not we the but think demands, I only to our to mentioning, to was meet oil what our And chip solvent add

Ohio We new have in Ohio. being facility. plants our built We're recycling expanding

high going need can. at as and to of plants is stream. we're getting buyers natural the of look those the lot here solvent doing you business job to as of part several capacity a products. we're noncore additional But continuously at want really in make -- gas, investments. and And possibly many of outsource think reuse we to look captive I that, as difficult Clearly, more goal have the to and a cost market recycled We because much incineration of waste recycling end, recycle is their good we treat the those a where it

expansion capacity like that, did we El at when with that Do, is we going we So have of look doubt needed. to capacity the no be

Operator

[Operator Instructions].

the next question Zane Karimi D.A. from comes with Our line of Davidson.

Zane Karimi

the strong results. Congratulations on

Michael Battles

Thanks, Zane.

Alan McKim

you. Thank

Zane Karimi

was working Service strong to the together much results. margin could But point? and on lot things help a to have extension HPC growth contributions? legacy seems And was are profiles you this question these but of versus HPC of Jim's growth this of the Environmental differentiate an how produce Maybe at the organic earlier, versus of differing biz how business rates

Michael Battles

this is Yes. Zane, Mike.

standpoint, grew grew XX% business organic the at reported. It an Services from So XX% Environmental organically.

what different if or question your pieces that is of answering I'm So kind not sure the I'm not. are.

Zane Karimi

a there Yes. you margin versus And any Yes. from are HPC differences the the business legacy seeing perspective, contributions? then between

Michael Battles

Yes. Sure.

basis Services points comparison, Environmental year-on-year. the over margins So up out points But doing you are kind we're XX an basis of year-on-year. if up take HydroChem apples-to-apples XXX

step it the and and So with up kind basis controls decon back have without points work good testament XXX better you margin a it. one year-on-year. up improvement, government driving really last year, and go if of that talked this cost really almost And and about call funding further even been pricing on we HydroChem is that from up we're to out

Zane Karimi

Okay.

impactful theme been has industries, turnover COVID, Okay. all And employee in a important employees fairly new roles. almost are more then through there of in across and the era which more

number can or to response of impact response the or if you to to of emergency response date? types on jobs So maybe how jobs? seemed accident emergency has speak Any updates this your

Alan McKim

Yes.

I and here. the is been think start can that me here to of here began. Let maybe mention things Eric chime in But we've key COVID since one

performed probably XX,XXX field Our the responses. people in

work services task was so for offer. monumental only emergency everyday standpoint it service our we our basic to from for and come an And not teams that in customers, a to

hats our So off them. to

onboard them. to been close pretty that. really try might and it's going the across clearly, good. needs you of pretty organization. I market hires to that want we the commit job think important the people Eric, that HR, our made to of in to close but still comment to workforce hybrid the fact new really our to so And how on of field, office we've to And realize a to recruiting, we're office, there. are the I be locations, some far, in have new We get that's to and investments the some a good we're would mindful doing say hesitant

Eric Gerstenberg

We Yes. to -- No. last Alan. recruiting, organization directly year, end the really onboarding our we the Thanks, align business tail units. of with restructured at it

our well and to and all been go number senior and new are and focus employees decreasing really fast turnover, trained. which field them seeing about recruiting trends the our as positive business needs But So to business. the successful with on the the where bringing we've aligned increasing call still extremely at in dividends we've And across that; it what and as we efficiently we well workforce that paid though, long a we're spoke be. we're done on, one, leaders to But stabilizing to really way the off. well, have earlier get seeing

Operator

There further time. call this would no the turn are McKim questions back I comments. to for closing like over to Mr. at

Alan McKim

several this Investor Thanks starting City front team James be will later The Raymond Relations in event next active Okay. in today. on New for us month. the joining with the York the months,

have a and Thank of great So rest the you. safe. stay summer

Operator

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

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

Clean Harbors (CLH) 7 Aug 222022 Q2 Earnings call transcript