Earnings call transcript Q2 2023

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Operator

Greetings, and welcome to the Clean Harbors Second Quarter 2023 Earnings Conference Call. [Operator Instructions].

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, Michael McDonald, General Counsel. Thank you, sir.

begin. may You

Michael McDonald

Eric and posted call Christine, along. and everyone. me and for you Financial With Battles; Relations, invite of Thank Buckley. we our Jim our good Investor Co-Chief today's Slides Officer, Chief and are our call Gerstenberg; follow and Executive on SVP and Investor are you, today's EVP morning, Dugas, on Officers, to Mike website, Eric Relations

our within the filings. Today's reporting been our included Participants other are to X, statements made opinions Matters measures. affect August results than place of XXXX. no today, the today obligation statements considered Litigation filings factors these is Securities The this references management's or undertakes revision made not that are and on as SEC which statements, to XXXX. period. publicly of release facts to historical meaning Information any today Reform discussing non-GAAP are discussion not undue through of on Private reliance revise of includes results that only in reflect the company the risks forward-looking to could Act cautioned concerning potential

and that its the the GAAP and additional provides information historical comparison in appendix available in measures consistent are measures of presentation. on of Clean an website most release, believes performance. Harbors our these such of comparable today's Reconciliations measurement to directly news today's

Gerstenberg to start, over me Eric to turn call the Let Eric?

Eric Gerstenberg

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

QX Turning results financial to on X. Slide our

customer resilient is that a climbed and by scarce effective a points segment safety strength is our permitted close record, highly Services margin relationships trained supported our performance business technical year a where by adjusted from the quarter workforce, EBITDA expertise, basis underscores highly of allocation. second capital ago. This strong assets, Our a XXX Environmental

some headwinds Solutions and of lubricant experienced to resulting markets. performance the continue and decline the adverse conditions ES Safety-Kleen marked our Sustainable quarter our consecutive the seventh segment, profitability. that of QX growth Its affect segment oil which offset partly base from

the country equipment, to to our we all colleagues our you third X.XX. Safety results record more posted through ambitious quarter yourself heat After of a review on and we both keeps I'd challenge To as take record-breaking much protective we our on we everyone in I the the central our like proactive the do. of your segments because QX detail, across goal The a of best Before do we TRIR us monitoring safe. in and our second team, and track the wear continues a personal outdoors $X.XX and as in delivered is everything to QX to quarter history, required annual hydration. to Safety to on keep appreciate temperature which TRIR performance, often unique highlight is in move focused plant, QX so steps team are achieve

posted units Services increased volume business was and contributions initial turnaround way. with our Turning Services gains of of Segment pricing to and X. business growth on Services our Each segments year-over-year the revenue X%, underpinned initiatives. Environmental the Slide Services by season strong a revenue acquisition. the from Industrial branch Thompson Safety-Kleen of spring and XX% leading businesses heels by the Industrial on Environmental grew X

demand continue offerings Environmental is with which better the trending for Our XXXX core business' to revenue second grow. acquired late XX% HBC, we full year climbed of in Safety-Kleen than we anticipated.

that many attributed and year. X% grew X% disposal address modestly, not quarter, weather-related second planned services, revenue to our we Technical For having QX repair any increase occurred an maintenance despite grew revenue outages related at last facilities Services wash the to Field in projects. large-scale emergency from QX. the parts XXX,XXX largely consecutive performed response days of Services

reached incinerators had this our X fewer XX% points down days. points year, As last up expected, which but X quarter, from at down QX sequentially, utilization

half up than the important the and anticipate We in down waste. maximize throughput in of this incinerators days made worked incineration utilization year hard price address our of was X% less in we repairs we first QX. to our that investments had ahead, some but operations backlog to Looking back limited half. in Average the team the increasing

in year. flat with increasing XX%. strong by mix the high-value in a volume which good average with business Landfill our year, quarter was waste, This was the particularly prior resulted of base pricing

Looking a segment the once XX% line. again the growth Profitability, at ES adjusted Segment outpaced EBITDA top

profitability. assets, greater higher consistently revenue Given should of our leverageable drive highly network

last a across efforts of noted counter productivity programs million been inflationary $XXX company-wide targeting of cost are from and quarter, XXXX, also in ES. benefiting we've the organization. To reduction of much reductions in number it As we cost pressures,

As a increased the quarter great for these XX%. factors, result all ES now our and are we of a Overall, margins topping segment. U.S.

handing to SKSS. to Before through it off take Mike you

materially related business Services the years. PFAS benefit should development to touch our me a Let that recent in coming on Environmental

which installations. X. Turning Defense U.S. materials guidelines is July, incineration issued related In containing to Slide indicates of present new research PFAS, the hundreds at Department to the of of military

comprehensive at an that compounds, authorized including DoD incineration year, demonstrated addressing we destroy method that alternative the scale. effectively as remediation these could has results hazardous a range we a of also study DoD commercial for clearly foam waste The forever waste third-party of of hazardous The landfills wide published method. AFFF firefighting allows guidance a chemicals. commercial as Last PFAS

XXs proved can gold that we In of for study, standard which that least consistently destruction, thermal methods. the is at achieve we

similar came North for incineration. Carolina conducted the and out at potential EPA Additionally, its study own the pilot with conclusions about its facility

destruction. this levels and guidelines year. as and we DoD's compelling final soil long acceptable contamination study, of Harbors the very positive for transportation of EPA to development said, our The to amount material Clean methods storage, removal, of opportunities provide expect lift moratorium decision a in must we That and the the still from view the term. related DoD of being set results a PFAS water Given don't recommended

to to we protect installations plan the with military DoD interim, forces. nation's best the the closely work solutions develop armed right at In our to

over and turn to to Mike Mike? capital things me that, With SKSS discuss allocation. let

Mike Battles

Thanks, everyone. morning, Eric, and good

me Eric's we the number consecutive team overall that about of standout in in deliver That a contingency with in. of ES our something quarter. quarter. our helped Let performers us line pride work echo for segment XXrd results great had We that our comment the guidance take is personally this

our another quarter X. Slide the expectations. segment short profitability to had fell of Moving challenging SKSS as

our do lowered anticipate we call, and pricing last expectations of pickup demand unusual in year. absence our not While seasonal the the this QX on we

prices a which a June, long. decline spot after fact, fell April, was combination pricing of in the price In in again all weak quarter environment posted early

While a crude have not prices oil yet base lubricant have pricing. correlated risen to in and more recently, they rebound

major dropped SKSS XX% compared about market discounts. disruptions. in rose to pricing prices concerned a gallon, year, in QX year fell were pricing year line, when on pricing based top based by In XXXX, the prices the customer even of and supply exhibiting $X by this the -- QX of last primary posted weak scarcity deeper weak on climate concern brought posted ago by customers wake whereas shortages On $X.XX, market allegations. In of conditions a revenue was global on with spot

and the to destocking able buyers for been year, sidelines, on wait have inventories patiently this out lower holding Conversely, prices.

as spreads our adjusted drop in been SKSS of decreased As year a a compressed. refining XX% near-term our year-over-year EBITDA with margin -- result conditions, term as have these

pricing volumes production While control, remained as to and sold. quickly SKSS unfavorable, plant team that we market in executing collection rapid The has volumes compression. conditions and spread -- as the is there's counter have can well well reacted team areas the as production well the as

During pricing pay while quarter, XX for rapidly we for generating charge gallons. the model, collections to record from million of shifted a oil oil

from record XX% QX, re-refining as level run in to Flooded the sales gallons year oil of accounted a product ago, with up base total our volumes a plants XX% of product our we plants for sold compared also but continue flat reported QX. from -- blended well. output We

customers XXXX additive to the of due in half we back back blended continue We to lost shortages. win

ago which from at in a year volumes, is line approach direct our Our flat QX, represents with in expectations. X% were closed-loop our and which

remains direct both blended goal Our on to sides. the [average] wholesale year increase their volumes to this and

seen to EBITDA for business margin the deliver us. year, approximately adjusted and strong free with ROIC this we've expected and this remains XX% in this SKSS, even an is segment a it cash high year generator still declines Overall, flow

Turning X capital Slide strategy. to our and allocation

of Vision multiple part As we Investor out grow we year, at our our XXXX laid this strategy Day company. our avenues to that have earlier

this to in areas. remains incinerator growth opportunities a our hit installed We organic the to quarter on in track half construction facility track invest CapEx build-out the to and continue other in this maintenance our Nebraska drive state-of-the-art for to new critical number on opening shops XXXX. budget and and year. of of evaluate network, particularly on back of on the The plan, milestones We are kill other in early

On the the on our to early are Tonsan proving very and The is M&A should forward. promising. business synergistic acquisition cross-selling front, be Adhesive going support returns

a good see we QX, leases small than closed transactions flow offering bolt-on intermodal that potential a less of added XXX a we in We both or continue million company than more size, In acquisition, to for very segments. $XX containers.

investors opportunities will financial the in us that confident business coming for starting potential allows but strong Eric quarter, activity develop. us online our as newest Dugas remain years remind our with will benefit M&A. and are assets ahead, incinerator flexible with the to sheet to we that I'd PFAS our particularly larger opportunistic like We respect these to balance the grow and to discuss

back network, as towards dynamics spending is of on as the turnaround in make meaningful profitable Industrial offset demand our season. continued remain infrastructure well success business for market our X segment track the half Overall, Strong ES abated our us slowing in project picks units. way supporting our pipeline in backlog as XXXX is the momentum sign and and Growth not segment any government pace our segment we record The its a into to Services starting positions Within to market. the the hit our contributor to be shows our for we -- XXXX ES targets up within no our disposal continued financial the favorable SKSS. growth year. in in to move offsets restoring of declines ES of of fall all to

short nothing ES we our the expect of XXXX, to a Given continue we've seen segment. in year record trajectory through

it's some in pricing that -- market to SKSS, responded Although stabilize not the have some quickly are conditions. we that did driver disappointing are the environment driving

in to continue SKSS. EBITDA guidance We and for slowdown on our maximize the adjusted the we total, the will to business, will supply maintaining costs adjusted offset are output segment In control ES still enough while year re-refineries. flow believe our have particularly as cash at side our that we ensuring free across collection we the

me let it that, CFO, Dugas. to our With turn over Eric

Eric Dugas

Thank and morning, good everyone. you, Mike,

statement Turning Slide to the on income X.

lower global down we from the more for was Adjusted profitable $XX Mike supply segment was to guidance pricing results Eric much line ago our oil from benefited quarter As with line significant delivering us, and EBITDA in outlined, year Total momentum base million segment exiting in QX exhibiting the businesses. for $XX due SKSS. $XXX.X increased figures the revenues ES higher with QX to growth million many and than quarter a offset our for continued but of we million across reported provided when top with exceptional million our service disruptions. with we growing a again a the ES $XXX.X strong May,

in margin line in with a with was realizing offset our percentage increasing SG&A expense XX.X%, as was our increases savings with efficiencies. operational margin Gross and of XX.X% while reflecting cost QX, price EBITDA revenue to inflation gains our and expectations. productivity from adjusted appropriate consistent XX% ability expectations. was Our

low with with pressures For and and and being do consistent in inflation cost QX strategies. the flat XXXX. of Thompson. with full The we year, anticipate to addition million great essentially Depreciation continues mitigation of $XX.X team given a the the amortization job in to expectations XX% offsetting again, range slightly increased wage our

GAAP was from our Income in to continue the by amortization range share strong and full in in was figure the we QX per million, of anticipate $X.XX. million, resulting million performance the Services. a largely driven $XXX.X quarter $XXX.X $XXX Net to $XXX year of operations XXXX, Environmental million. in income earnings For for depreciation

on at marketable the decision that were quarter pay to Slide to revolver. XX. sheet and outstanding million Cash our on end entire short-term $XXX of reflecting the million, down securities balance Turning our ABL debt was $XXX.X highlights

thought was current our cash our Given to lower some prudent had of expense on strong financial interest position, it the with hand. we we excess

approximately of remain very debt are number with for coming that due over our of just $X.X of our weighted billion. basis Leverage the portfolio of quarter with our XX As a being cost with a rates. average Xx. was on there debt-to-EBITDA pretax significant QX result debt comfortable XX% a of we as end of at ended of action, We June years. as at just X%, was fixed net approximately the amounts portfolio debt And no over overall

track hit Nebraska for line free million adjusted was Turning right to $XXX.X was a our ago. cash flow flows Cash million expectations second quarter, $XX on in a Slide annual QX from million, of in CapEx in with to QX our net project, million $XXX.X keeping cash CapEx. accounted XX% on of million provided incinerator target. partly was from In was up which our quarter, on internal which year up to us XX. spend $XX and year, our disposals versus $XXX.X the as prior result the of operations

we of the and year to year-to-date net on coming Nebraska to to CapEx range $XXX $XX major to range spent is of million. in planned $XX some $XXX bases $XX expect million the construction continue incinerator months. to our for be million XXXX, be the spend Having million. million our in For Full expected

We and that with rental to to both are spend accommodating growth make the need. aim equipment also the businesses continuing transportation third-party investments in minimize our while an fleet

to bought buyback average of shares million existing $XXX price authorized have stock share cost program. our we back total QX, During under million. remaining at a and We XX,XXX still per close of $X an of $XXX

operating adjusted Slide Based XX. XXXX QX conditions on midpoint of we of to maintaining results a current our $X.XX $X.XX with $X.XX billion range our market billion for and our segments, billion. guidance both are Moving EBITDA of to

our guidance at Looking quarterly a from perspective.

offset a our expect QX X% to for be SKSS continued to our year-over-year ES due comp in We of but positive below to QX adjusted by growth X% XXXX approximately EBITDA challenging segment, segment.

of of year EBITDA EBITDA reporting at adjusted updated breakdown our of a our I'll how to midpoint Demand we for our Disposal translate full continues year very guidance from and now services, expect we XX% particularly Services, in guidance of that our to to increase to range Environmental expect full In Industrial, provide the facilities an XXXX. XX% be to XXXX the adjusted segments. now strong.

ES adjusted guidance attributable includes a reminder, As our the Thompson of full to $XX segment XXXX the year for EBITDA acquisition. million

full of in the base the at anticipate midpoint decrease our oil XX% pricing. now to guidance year we EBITDA SKSS, from to For XXXX year, range XX% adjusted the last on reflecting ongoing pressure

In EBITDA cost and related job in QX, programs higher is like good the with primarily a guide, prior our professional slight from Corporate The occurred the of our guidance insurance negative reflects in to X% Segment, expenses at up we salaries some fees. increase relating insurance Overall, now higher be expect acquisition to to corporate items that offsetting XXXX. midpoint costs adjusted the our Thompson X% expenses, team savings and doing programs. to

to For I to and approximately to cash incinerator everyone adjusted of includes that want flow million deliver the $XXX million XXXX, this this million for new we free guidance million. continue between to $XXX year. $XX remind $XX expect

you adjusted add that guidance the cash our of If would free about back, $XXX midpoint million. spend be flow

In solid summary, both execution by QX was in segments. marked

rapidly did delivered while and segment controlling could. to In they anticipated, a growth responded Mike the conditions were segment, as team expectations. financials less our ES SKSS job Our than the our profitable what market above said, declining nice

our especially Looking numerous there we're the segment, in ahead, are and long-term about enthusiastic near ES where prospects, tailwinds.

core in slowdown business. meaningful a of of seen not our lines any have We

about, it half had the outlook facilities, waste of the PFAS days the for of sit ago. that reasons, We in year multiple streams here of backlog to waste marketplace, Our and a continue enter our that additional going spoke including anticipate the we the is opportunity projects we see commencing schedule emerging commercial second larger sales XX we today the for was healthy forward. than pipeline the Eric as

as to we continue up to downturn towards dynamics impacting SKSS Clean ES factors SKSS market managing while macro we work for achieving year in Harbors through while XXXX goal current in future goals. these Vision business on setting continue growth expect stabilize. Our positive another is our solid XXXX to as for the the capitalize Overall, in

up Christy, for call open With that, please the questions.

Operator

Stifel. question Michael the Our comes with [Operator Instructions] first Hoffman from of line

Michael Hoffman

all and just concentrated well? in saw incineration, And not So remarks. the you ES. disposal? them all make technical And of just on said or as this the services your spread in call prepared growth across of sure it, I to we is not want emphasize just in it is that lines pricing, just business, all

Eric Gerstenberg

question. this across of Michael, all the is Eric. is Yes, lines for pricing business. the Thank you Yes,

continue price transportation, that to for of across and We disposal, our labor to areas effect. businesses push take all continues

Mike Battles

what this on said. to going Mike is Michael, add to back, Eric

a you years, was few incineration If think back it scarce.

And switch in be that's have it prepared on of whether facilities, very also getting so compliant pricing getting Eric termite you equipment of in mentioned we us bugs and and past that a drive that a been couple incineration, TSDS, and you. And is years that happened they've over the very also get pricing the safe qualified just trucks field results What's see this allowed in remarks. is beyond landfill, incineration, And what tough, labor with his terrific the to price facilities. industrial quarter difficult. that side beyond kind our

Michael Hoffman

turnaround in me reversed asked Or that you half. Is holding? a helping half directionally. the -- first it give business more the second much pattern totally stronger that the little Historically, there And is is about is confidence than that's and

Eric Gerstenberg

turnaround strong for more season had was us It half the traditional. very But our first yes, industrial gives that turnarounds services. than confidence. year of certainly the We

and the to business. that reflective numbers of continue, really it's expect that in We

Michael Hoffman

won't one, you do to first bottom, to the SKSS question, goods good got partly make think are sure. influencing this I to everybody's need it, there's buy is on about can't goods? that this bottom the I side enough in confidence course, of the tell market problem. I'm blenders to blend is just data? can you then, -- is done finished there when find is ask We finished correction don't going. the too whether the be give of you And the Okay. think market which oil and and out to a finished How what There's you there much

Mike Battles

over it's term. over prices little assuming we the the the year, hopeful base decreases and coming base with for pricing and half Yes, Michael, the costs flat. day, answer back we mid purposes drive price the business everything we're of first that short And on back the we prices plants Xs, year. the high the kind blended pricing, down end of the if in a to and At today question. costs, of half XXXX it XXX that range, after March. think few remain end Hard feel of ran the back this of I'm could the in Start answer X-plus are of And the is decreasing, control past modeling bit -- bottom? -- Mike. our oil the did drive say. the as I'll prices the see we in I oil we're the weeks, of executing price ones high that just midpoint really at we guide that with back talked to -- our X increasing And the is crude about to Vision guidance, of PFO a it's to the the the that's the well. strategy presentations pricing increasing, if CFO starts in control business midpoint is Was over

[indiscernible]. prices hopeful back, I've numbers most crude base X weeks maybe increase, so help given us coming I'm kind certainly to back of we couple heard And that there's kind a would talked of get the price of about oil the in around which

Michael Hoffman

at SKSS ES puts all so corporate overhead. that on that somewhere Okay. X.XX X.XX X.XX did landing around to alluded you And math. XXX, if midpoint you're at just We to like

Mike Battles

all have can will. we incredibly so probably business day answer happy your to we're -- -- continues we ES questions to really about Michael, to point, do the But SKSS to And well.

Eric April the incinerators prepared As the business. ES May. challenges in margin still points into we in you said and in Again, And of if delivered look basis had expansion XXX remarks, his revenue, to at for ES margins year our the of better an XXX prior the be in half guide and back XXX the business make year. estimate will the than basis for points

now in pipeline are our I'm about ago. really I gave front Vision of and our front of talked business, make And more on the that community XXXX, And was to has sit not call XX this future. -- on importantly, it. as and the we about want Vision sit XXX point is about Eric very investor I the days we that such, bullish in has bullish I And the than more changed. excited

stronger Our XX was today pipeline than days is really excited it still ago, I'm about. again, which

Operator

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

Noah Kaye

and a of or little was more pre-corporate Yes, XX% EBITDA going year, this XX%, last ES just expense more. be bit that to year, math it's right,

different of different think guidance? I'll how for I government, for break big just around the kind Can potential how with then start XXXX into could for what's time? commentary, DoD that much over our just heads can and PFAS level on wrap revenue you Maybe us or you you chunks? revenue this PFAS set And up to opportunity the can seen in us the with maybe talk year-to-date focus ways you've remediation So PFAS we can you the XX%. about be

Eric Gerstenberg

No, is take that question. I'll this Eric. Yes.

solutions provide you We're industrial confidently disposal comprehensive of treatment not full treatment continues that really that like opportunity us. seeing and water suite able have of board remediation We're I'm the provide PFAS we And we to of capabilities landfill doing is talk a opportunities sites for going from can of the we a we're grow. the to revenue First, of that sampling. number large number treatment, transportation across opportunities to of any can solutions doing put groundwater, I'd closed-loop we to say the it, we're total our exact obviously of on -- tell full about. but with for managing landfill [indiscernible]. analysis and a customers, remediation our pipeline

that to that lift about. really moratorium. phenomenal And then incineration talked by came we great finally, the out, That's the release DoD obviously, the study

our to for as opportunity effect And come and continues continue there. a has opportunities waste We're of from The all us year team year. areas. is prospect regulations will it throughout customers be of a the So solution and different look of in to this a number lot really continues of us. And into next for unmatched to we course total into like optimistic. think our industry, the good in the seen

Noah Kaye

some that. appreciate you can but a that time, over around beat. put I Hopefully, sounds numbers it

yes, You reference, also ahead. think go made I --

Mike Battles

year. this small pretty It's

put per in not needle Clean. year. opportunity remarks, As prepared a It's the $XX this as million EPA how has $XX guardrails kind more kind million, a to Eric of But mover the se. said of to Clean is it's

Noah Kaye

environmental the then that. Appreciate of think, for come IIJ starting of money $XX was, right, through. to funding to And billion, appropriated you reference I some remediation. made That

time much to this think out just coming when But of some year captures just frame. over what a the for of you funding that announcements frame? outlook Harbors how the do understand So kind mean, the and of we kind want potentially see multiyear of I of impacts time how Clean maybe I over and EPA. already

Eric Gerstenberg

that $XX us be part of characteristics. perform our years, course depending landfills get on to of spending large the the of billion and the to incinerators able that was X over that Yes. think a services feed for volume No, of be is I our able into the to and remediation projection go

$XX good be go to with well us, have chunk part billion, get the billion we're in infrastructure great a we a that that. get So and participate for substantial able of of that the and of go positioned to for industry, is $XX all assets

Operator

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

Tyler Brown

tough on awfully was I'm a G. comp. pricing incineration, it Eric not And it really good. mistaken, was if

the about of talk Because just volume you aren't terms in the best. in weakness industrial can some and heard Chem the that So outlook we price the markets markets, in about exactly have market?

us is So smoothing color but the give there? backlog just maybe you any that can out,

Eric Gerstenberg

Yes. That's right, Tyler.

Our mix to XX-XX. price be continues and about

to have the continuing quarter seeing backlog improves. as to our not generation We fourth that or pricing bring [indiscernible] see on up -- slowing and feeding of of incinerators we're our to into the that built any in our second And third the we're taking continue handle incinerators. been waste more handle be amount our of burn and trend we've direct quarter incineration pricing, drums it volume our lot to the volume of utilization of of increasing streams. and tremendous advantage we difficult the into a a opportunity there. streams to also the But chemical throughout that no leveraging quarter for We're prep TSDF

to be bullish we and us it. mix in continue area, to But well. be that price XX-XX about continues helping that's So

Tyler Brown

like Okay. margins Perfect. looks were And it ES up. then

think year-over-year. were that tougher take drivers key that I XXX to Because you're particularly given we now very bridge it then points but lap but if you were out solid, there? the a I and dilutive actually basis guys to mean, called to a maybe that's fuel would starting I was was assume that good guide. basis what points, Thompson XXX in margins, walk comps

pricing you it by little on Just thoughts cost more kind or got of driven both? control was any bit there? And then or of a how

Eric Gerstenberg

of driven my on. was number by Tyler, points I'll and XXX start, I'm a things. then add The basis will here colleagues sure

out our We're on industrial, taking also assumption business have one of -- little a costs your But dilutive single that. in every on and of for steadfast lines bit focused we're labor, about we correct You're equipment about that. in of driving the materials business. price

a discussion in the system hours the of industrial we're expand process to the get services to paid on on billable in margin earlier that's our more and that $XXX of target million for going margins. new of there. worksheets our have in continue cost squeeze also get and and in of mentioned out better help we business more to support savings, services a We're platform call, our putting to that executing As

labor our powerful. what sharing done cumulated legacy as to continue things we And really Thompson the see. on all our outlook within what which has execute The on on together saw And core in I team we execute and work. help a efficiencies well business, from our support think great bullish into industrial that is played we resources to be, again, those pricing, to QX, of we leverage job have industrial has cost team services the their programs, execute continue on network,

So sharing both of have all the that sharing of increase. to assets, people, contributed the

Eric Dugas

And we and just mentioned. on a to of add anti-dilutive right, is Again, But probably platform, think some that lot that. of acquisition this I Eric think out we're a Thompson, the the Eric's little into I comments, hydrochem D. the really better think integrate about you're this I seeing from year, if I cost-cutting to that some to continue Eric think, and margins management labor of business that did that to

ES certainly, that one So have the for rather rental us are will continue Reduction proving in certainly, to well. But business. parties. a to growth been that to is third from good contributing than margin in better the internal that this folks use point. And to the costs synergies of at drive acquisition as

Mike Battles

is points we that XXX is from labor thing basis The And year-over-year. XXX I'd down made us coming turnover points something money well. that is organization, made and it the said benefits proud year Only our impact some the basis investment add. other thing beginning in really I'd the turnover people, people direct of. add of is think, in thing those that's down in Eric is happened we the because a investments margin turnover because -- I and dividends, costs and to we're of a and that only turnover really starting our on is lot down that pay material

Tyler Brown

And just one my last here.

when you XX% the strong and So much of this think was I and think field didn't were as is have Industrial that I at lower in work. quarter, but I XXXX margin it, best a seasonally kind Service you ES, get since

XX% consistent mean " business So longer percent were this a the if why dream margin or XX-plus couldn't I we business of to a term? Kind be dream."

Eric Gerstenberg

on and continue towards -- going positions have Yes, Tyler. execute to execute we field in continue the market will with industrial We're businesses programs our Clean across we we XX%, be. can and the large the it and We're path. with in all our that customers to that on Safety-Kleen and and drive Environmental and that Harbors large, see and to small Small think

Operator

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

Jerry Revich

a 'XX this should timing of we about or standpoint conceptually a around 'XX. if flow the an I'm free where availability year the we about think the has we're wonder improvement map, talk et over seeing equipment environment could over the to wondering this and earnings the think from cash ultimately, could. flow takes all been of Obviously, free versus and if compared How 'XX course bridge outside free 'XX flow how opportunities and 'XX cash year? cash versus just puts about cadence any you to I cetera. either standpoint what

Eric Dugas

despite year. I I Yes, Jerry, year of Nebraska year's to some thing And increased real this headwinds cash which think $XX last that point is profitable project. the I'll is taxes it's the also some flow earnings. with nearly we pointed on of to, were far here. million or of a Eric And cash CapEx last which Dugas, We're strong we the really to paid ahead out first kind where of free so we related lot would start

with year this where we happy are. really So

year. way well hitting I next our think for we're to target on the

about puts obviously, think think, Kimball we'll the incinerator. I bit and on takes, less, spent I in little a When being XXXX have

So above long-term the is we're when long-term talked kind number, term. you to I really look tailwinds at the we kind and seeing think expansion term, the kind look today, of that business and but we flow of many targeting up. we of we think with other CapEx, excluding about targets. that like our continue conversion about to in and the that low long free we've that's But cash talk where of range long go margin And are to that's always why XX%

Jerry Revich

if the but Solutions and Sustainability performance performance Can business margin And consistent for your is might that outlook, like continues, be pretty about sequentially, think. took I corner know bottoming should X stabilizing. you And EBITDA there. better like seasonality. Okay. based than Safety-Kleen just turning that had good looks XQ you be on the talk It sequentially, good it just the business you're separately, normal seeing. what that down versus with I feels up are XQ, things points

Eric Dugas

Yes.

tested I profitability. think ability team to I -- that which and our PFO And think record a their gallons. and really had on that shift collect you're quarter, that amount drive impact right, to Jerry. in a We of did from make the the a dramatic CFO still large

great talked probably it the stabilizing kind to the if half it good hopeful and that I'm guide in the really as we quarter a by Certainly, of we're model oil that as a back raises of them. us prices base there. So year. about earlier,

Jerry Revich

to of the them. than just of Mike, And paying people a think, the more quarter initiatives, exit take these I positive full given just charging Is implement. average characterization? fair significantly complexity from to transitioning types rate the Was time that because

Mike Battles

with started we the started in mid-teens and charge They quarter quarter. in oil, at did. the a absolutely -- They the for of end kind pay they -- of the ended we oil started

Operator

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

David Manthey

disaggregated ES markets? your continue Industrial from Clean is you The below now years to reason months and got trends business. end excellent for the in second into of see the Has X you've exposure. yet And it's on half the today last ISM, but ask Harbors question PMI the decelerating I trends been XX X.X industrial in

cyclicality on of past? in thoughts the business Just today the you what versus had

Mike Battles

Mike. is Yes, Dave, this

to -- down. I where see that factors are your market tend I definitely go think concern there

being them. I able us into network, more think waste results handle more there's to coming in charge complex the which and streams

so say electric Industrial battery of I chemicals conditioning of is the weighted And all advent equally. complex other that other chemicals and not would production of types sets around air and manufacturing waste seeing be in the kind production macro in marketplace driving into as able may more that Industrial trends to network are you counterbalance of complex our being the such, really environment.

David Manthey

hear. enforceable Yes. landfills the PFAS. signaling and that's may I That's PFAS receivers And it municipal and mandate they outlook, not EPA the airports second, of against to like sounded is to And see systems the this great a enforcement you realize and in self-policing Are water the parties in you opportunity industry, situations and that on here. of that are front today? will potential enough passive the of guess on that go those lot

Eric Gerstenberg

what here. needs that, a putting of aside, to answer past The treatment the opportunity and Eric enforcement, remediation. happen, I'll is, that treatment is enforcement, Dave. is regardless the I think there Yes. that

And that's obviously, to and they're discharge material treatment standards fuel So is. lower opportunity our is to the groundwater our and of going have where for into into and landfills. industrial incinerators the And remediation streams water streams. the going sites

So the opportunity. that's where see we really

Operator

the with [Operator line Tobey Instructions] Our next question from Sommer of comes Truist.

Jasper Bibb

Bibb This how the up is you for revenue was with you do there? and share build margin as that pricing Longer market to Services Industrial address on for XX% Tobey. outlook Jasper your through term, Thompson. continue business

Eric Gerstenberg

here. Yes, Josh. Eric

rolling be to and platform We we're any set continue deliver have see a Thompson that electronic we help new us the the Industrial And business. to able out combine worksheets that in Industrial drive in as we business. capture systems the customers also both of price really leakage cadence to for across on will and that a those might earlier, systems us all allow pretty with our mentioned the to

combined that, together we'll business the stock, people to continue. leveraging assets, working the rolling business realizing margin the the in efficiencies the we're is So that expansion, the by leveraging with the contributing headcount expansion that and all the combined of together,

new So business about that combining businesses of cross-selling. as and through margins increasing Thompson selling There go the that forward our we lines of couple acquired legacy to was we're we and the getting bullish by more the we're customers. stickier acquisition a HPC

from business can whole the there. Industrial Group And cross-sell well. that sales as customers also powerful team lines of environmental we the recognizes that's Thompson into the that So

So customers all and to those with those margins improving improving contribute our our board. and things the stickiness growth combined across

Jasper Bibb

adjusted makes continue for oil with now July out would sense. to based guide, pricing? I think or to you there with then And That demand to have those metering on conditions just you clarify, fully expect in SKSS you've what respect to charge saw to align the your charges

Mike Battles

a pricing stays have we our set same. our I -- think of in half and we ourselves for decent in up solid, Josh, loan our year. yield back We're pricing stay stays pricing model, Yes, the assuming guide, the

So of year. like half we we'll we're then in adjust yield the so not on pricing that did -- the first

to on to of assuming stable of So us, we've done front deliver in the we kind numbers I that oil price. and opinion, all actions think the my need base do, in are

Jasper Bibb

of it. PFAS. question Got the on authorization DoD me for Last for incineration

a do guess, is might Or Just from time sense of you more on disposal EPA? that, for on federal contracts when RFPs timing, for any what materialize? I dependent have out line comes PFAS

Eric Gerstenberg

year We collectively think, think over Josh, different working or that opportunities grow number of to the in DoD. them that of we'll with the number We're we see a and here. X, continue different next will opportunities, a that with already sites,

Operator

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

Jim Ricchiuti

having you. in effect customers, Thank does date the bodies? you be conversations market government you may How announcement other with commercial

Eric Gerstenberg

and strong I think preferred manufacturing DoD a compounds that our it really are be has thermal customers involved interactions think as that here. high preferred these contamination. they that PFAS -- reference some I well method that And with our high say to DoD Thermal on the there were would seems set into in that with the I a and of incineration, incineration incineration there's based in Jim, method AFFF is temperature of shown there the customers those temperature, resonates chemical in well of DoD, that a experience concentrations. concentration know temperature,

for out time. great that that for that, that's that with That's through effectively stray think our we technology contamination. wanted us. incinerators to that we solid we a concentrated is why that a back method to our best audience an highly prove a opportunity is we contamination and is XXs audience, in recognizes really And to testing disposal good there go the think so

Mike Battles

Jim, that the add, validated our would study. kind the lifting of moratorium I DoD

substantiate these kind put really to But it is believe it that long-term said to that. continues really remarks, our I effective of incineration means Eric XXXX, the business finger forever half his in way And so of the what safe model prepared year that to just handle as in a and a on compounds. back in

Jim Ricchiuti

Got it.

Thompson driving Now with And it. contribution missed in was I Did the may provide that. I that's quarter? you just have why the --

Eric Dugas

the it didn't provide In we quarter, mid-single-digit it's millions.

Jim Ricchiuti

the the cost be the in second that, the first year, just And half of have in half cost the alluded business. turnover. versus benefits you're side, of at the more to think then half? How pricing of in in moderation is ES the just it. you Got pressures about other on the to second much some on improvement going side, related some as all the to some tailwind you we And a seen seeing

Eric Gerstenberg

seen the really certainly workforce the Yes, Jim, on we've salary across side that's moderation moderating.

to Our inflation. pricing efforts will continue outpace

to continue on We execute that. well

business So to continuing we'll out with as of that -- to get we taking units the on continue business price our have mentioned a across all to efficient. drive and efforts earlier cost along of program comprehensive more the

that on execute So we plan. will continue to

Operator

turn floor I would have to to Mr. for we no the at back time. Gerstenberg, over like further questions this comments. now closing you

Eric Gerstenberg

look joining to the a further with in for us events those of events. coming rest enjoy interacting you number of some of months. be will IR And your please at forward summer. the in everyone, We participating today. Thanks, Management

Operator

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

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

Clean Harbors (CLH) 2 Aug 232023 Q2 Earnings call transcript