Financial Data and Key Metrics Changes - In 2025, shipments improved by 14% year-over-year, indicating a commercial recovery after previous market headwinds [4] - Fourth quarter net sales totaled $267.3 million, a sequential decrease of $38.6 million primarily due to seasonality and slower ramp-up post-maintenance shutdown [13] - The fourth quarter GAAP net loss was $14.3 million, or a loss of $0.34 per diluted share, while adjusted net loss was $7.7 million, or a loss of $0.18 per diluted share [14] - Adjusted EBITDA for the fourth quarter was $2.4 million, below expectations due to lower volumes and compressed raw material spread [8][14] Business Line Data and Key Metrics Changes - VAR sales totaled approximately $28 million, almost doubling from 2024, reflecting strong growth in aerospace and defense [4] - The company is increasing hourly staffing levels in areas with accelerated demand, such as seamless mechanical tube production [6][9] - The order book has increased more than 50% year-over-year, indicating strong demand for domestic steel [9][21] Market Data and Key Metrics Changes - Industrial markets remain soft, but the global trade environment is creating new opportunities as customers reevaluate supply chains [10] - Auto sales and production are expected to be slightly down, with pricing pressure persisting as OEMs prioritize margins [10] - Aerospace and defense outlook remains robust, with strong growth expected through 2026 driven by existing program expansions and new platforms [11] Company Strategy and Development Direction - The company is focused on safety, outstanding customer service, and product development in aerospace and defense, supporting a strategy for sustainable growth [11] - Significant progress has been made in advancing manufacturing capabilities, including the ramp-up of a new automated grinding line [7] - The company aims to strengthen operational foundations and improve execution in 2026 through targeted organizational changes and operational enhancements [8][9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a stronger order book entering 2026, with expectations for improved melt utilization and operational performance [20][34] - The company anticipates a sequential increase in average melt utilization rate and expects first quarter shipments to increase by approximately 10% compared to the fourth quarter [20][21] - Management remains cautious about external variables but expects year-over-year adjusted EBITDA growth in each quarter of 2026 [23] Other Important Information - The company received $4.1 million in government funding as part of a nearly $100 million arrangement to support munitions production [16] - Required pension contributions for 2026 are expected to total approximately $27 million, a nearly 60% reduction from 2025 [17] - Total liquidity remains strong at $389 million as of December 31, 2025, with no outstanding borrowings [18] Q&A Session Summary Question: Inquiry about fourth quarter labor negotiation costs - Management indicated no additional costs were incurred from labor negotiations in the fourth quarter as the agreement was settled in early February [27][30] Question: Expectations for melt utilization improvement - Management stated that improvements in melt utilization are based on both volume and expectations from third-party advisory programs [34] Question: Demand expectations for A&D in 2026 - Management noted that A&D demand is expected to continue growing, with several new customers and programs contributing to this growth [40][41] Question: Status of key capital investments - Management confirmed that the bloom reheat furnace and roller hearth furnace are on track for commissioning in the first half of 2026 [50][51] Question: Share count and depreciation and amortization - Management explained that diluted shares would increase slightly due to net loss positions, while depreciation and amortization are expected to remain flat due to consistent capital spend [52][54]

Financial Data and Key Metrics Changes - In 2025, shipments improved by 14% year-over-year, indicating a commercial recovery after previous market headwinds [4] - Fourth quarter net sales totaled $267.3 million, a sequential decrease of $38.6 million primarily due to seasonality and slower ramp-up post-maintenance shutdown [13] - The fourth quarter GAAP net loss was $14.3 million, or a loss of $0.34 per diluted share, while adjusted net loss was $7.7 million, or a loss of $0.18 per diluted share [14] - Adjusted EBITDA for the fourth quarter was $2.4 million, below expectations due to lower volumes and increased manufacturing costs [8][14] Business Line Data and Key Metrics Changes - VAR sales totaled approximately $28 million in 2025, almost doubling from 2024, reflecting strong growth in aerospace and defense [4] - The company is increasing hourly staffing levels in areas with accelerated demand, such as seamless mechanical tube production [6][9] Market Data and Key Metrics Changes - The order book has increased by more than 50% year-over-year, indicating strong demand for domestic steel [9][20] - Industrial markets remain soft, but favorable trade conditions are creating new opportunities for reliable domestic suppliers [10] - Aerospace and defense outlook is robust, with strong growth expected through 2026, driven by existing program expansions and new platforms [11] Company Strategy and Development Direction - The company is focused on safety, operational enhancements, and strategic investments to support long-term growth [5][7] - A new four-year labor agreement was reached, emphasizing safety, innovation, and long-term competitiveness [6] - The company is investing in new manufacturing capabilities, including a new automated grinding line and other state-of-the-art assets scheduled for commissioning in 2026 [7] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a stronger operational foundation and improved execution for 2026, despite fourth quarter performance being below expectations [8][13] - The company anticipates a slight increase in first quarter shipments by approximately 10% compared to the fourth quarter, supported by a solid order book [20] - Management expects year-over-year adjusted EBITDA growth in each quarter of 2026, driven by strong demand and operational improvements [23] Other Important Information - The company generated $16 million of operating cash flow in 2025, with operational cash generation exceeding $80 million for the second consecutive year [15] - Planned capital expenditures for 2026 are expected to be approximately $70 million, including government-related expenditures [16] - The company repurchased approximately 71,000 shares of common stock for $1.2 million in the fourth quarter, reflecting confidence in cash flow generation [18] Q&A Session Summary Question: What were the costs incurred from labor negotiations in Q4 and Q1 2026? - Management indicated no additional costs were incurred in Q4 due to the labor agreement being settled in February, but a $2 million payment is due in Q1 [27][30] Question: How does the company expect melt utilization to improve? - Management stated that improvements are expected from both volume increases and third-party advisory programs, with a stronger order book entering 2026 [34] Question: What is the status of A&D sales expectations for 2026? - Management believes they are on target to hit a $250 million run rate in A&D sales, contingent on the ramp-up of munitions manufacturing capacity [48] Question: What is the status of key capital investments? - Management reported that the bloom reheat furnace is expected to be operational in the next month, with both the bloom and roller hearth furnaces ramping up by late Q2 or early Q3 [50][51] Question: What is the outlook for lead times and sales? - Management expects lead times to improve as new assets ramp up, which will also help maintain competitive lead times [63][66]

Financial Data and Key Metrics Changes - In 2025, shipments improved by 14% year-over-year, indicating a commercial recovery after previous market headwinds [4] - Fourth quarter net sales totaled $267.3 million, a sequential decrease of $38.6 million primarily due to seasonality and slower ramp-up post-maintenance shutdown [12] - The fourth quarter GAAP net loss was $14.3 million, translating to a loss of $0.34 per diluted share, while adjusted net loss was $7.7 million or a loss of $0.18 per diluted share [13] - Adjusted EBITDA for the fourth quarter was $2.4 million, below expectations due to lower volumes and compressed raw material spreads [8][13] Business Line Data and Key Metrics Changes - VAR sales reached approximately $28 million, nearly doubling from 2024, driven by increased demand in aerospace and defense [4] - The company is increasing hourly staffing levels in areas with accelerated demand, particularly in seamless mechanical tube production [6][9] Market Data and Key Metrics Changes - The order book has increased by more than 50% year-over-year, reflecting growing demand for domestic steel [9][19] - Industrial markets remain soft, but the global trade environment is creating new opportunities as customers reevaluate supply chains [10] - Aerospace and defense outlook is robust, with strong growth expected through 2026, driven by existing program expansions and new platforms [11] Company Strategy and Development Direction - The company is focused on safety, customer service, and product development in aerospace and defense, alongside ongoing government-funded capital investments [11] - A new four-year labor agreement was reached, emphasizing safety, innovation, and long-term competitiveness, with annual wage increases and competitive benefits [6][21] - The company is investing in operational capabilities through a standardized efficiency initiative aimed at enhancing throughput and improving steel output quality [9] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in a stronger operational foundation for 2026, despite fourth quarter performance being below expectations [8] - The company anticipates a slight usage of free cash flow in Q1 2026, with expectations for positive free cash flow for the remainder of the year [18] - Demand for solutions is expected to remain strong, with a typical seasonality reflected in first quarter shipments projected to increase by approximately 10% compared to Q4 [18][22] Other Important Information - The company generated $16 million of operating cash flow in 2025, with operational cash generation exceeding $80 million for the second consecutive year [14] - Capital expenditures for 2026 are expected to be approximately $70 million, including government-related expenditures [15] - The company repurchased approximately 71,000 shares of common stock for $1.2 million in Q4, reducing diluted shares outstanding by 25% since Q4 2021 [17] Q&A Session Summary Question: Labor negotiations costs in Q4 and Q1 2026 - Management indicated no additional costs incurred from labor negotiations in Q4, with a $2 million payment due in Q1 [25][26] Question: Expectations for Melt Utilization improvement - Management expects improvements in Melt Utilization to be volume dependent and influenced by a stronger order book entering 2026 [32] Question: Demand expectations for A&D in 2026 - Management believes A&D sales will meet the previously expected run rate of over $250 million, contingent on new capacity ramping up [48] Question: Status of key capital investments - The bloom reheat furnace is expected to be operational in the next month, with both the bloom and roller hearth furnaces ramping up by late Q2 or early Q3 [50][51] Question: Share count and depreciation and amortization - Management noted a slight increase in diluted shares due to net loss, with depreciation and amortization expected to remain flat due to consistent capital spend [52][54] Question: Customer growth in VAR and lead times - Management highlighted new customer acquisitions in VAR, with expectations to improve lead times as new assets ramp up [60][64]

Clean Harbors (CLH) FY Conference Summary Company Overview - **Company**: Clean Harbors (CLH) - **Event**: Oppenheimer's 20th Annual Industrial Growth Conference - **Date**: May 08, 2025 Key Points Industry Insights - **Safety Culture**: Clean Harbors emphasizes a strong safety culture, reporting a record low Total Recordable Incident Rate (TRIR) in Q1. The company believes that safety improvements can lead to long-term financial benefits, although the financial impact may take time to materialize due to the lag in incident reporting and treatment costs [3][4][6][7]. - **Healthcare and Legal Costs**: Rising healthcare costs and legal judgments are significant concerns for the industry. Clean Harbors aims to offset these costs through improved safety measures, which can reduce the frequency and severity of incidents [6][7][8]. Financial Performance - **Margin Targets**: The company aims for a 22% margin by 2027, with a current target of 19% by the end of 2024. Environmental services have shown consistent margin expansion over the past 12 quarters, with a goal of reaching 30% margins [13][19][21][22]. - **Revenue Composition**: Environmental services account for 91% of the company's EBITDA, indicating a strong focus on this segment for future growth [20][21]. Capital Allocation Strategy - **Return on Invested Capital (ROIC)**: Clean Harbors prioritizes capital allocation based on ROIC, focusing on organic growth, mergers and acquisitions (M&A), and returning capital to shareholders. The company has $430 million remaining under its buyback program and no debt due until 2027 [24][25][29][30]. - **M&A Landscape**: The environmental services industry remains fragmented, presenting opportunities for acquisitions, particularly in areas where Clean Harbors holds a smaller market share [31][32][33]. Operational Developments - **Tech Services Growth**: The captive market for hazardous waste management is expected to shrink, providing growth opportunities for Clean Harbors as competitors close operations. The company is well-positioned to capture market share from these closures [36][37][38]. - **New Capacity**: The company is ramping up operations at its new facility, expecting to process 28,000 tons of waste this year. The demand pipeline appears strong, with significant waste streams from various industries [40][41][49]. PFAS Incineration - **EPA and DOD Collaboration**: Clean Harbors is conducting tests with the EPA and DOD for PFAS incineration, which could unlock significant opportunities for the company, particularly in military installations where PFAS contamination is prevalent [52][54][57][58]. Industrial Services Outlook - **Deferred Maintenance**: Customers are deferring maintenance and turnaround work, which may lead to increased spending in the latter half of the year. The company anticipates modest growth in industrial services despite a challenging start to the year [59][60][61][62]. Technology and Safety Innovations - **Automation and Safety**: Clean Harbors is investing in technology to enhance safety and efficiency in its operations, including the use of drones for inspections and advanced water jetting techniques [66][67][69][70]. Field Services Expansion - **New Locations**: The company plans to open approximately 30 new field service branches this year, significantly increasing its footprint in the market. This expansion is aimed at capturing more business in a fragmented industry [75][76][78]. Containerized Waste Services - **Demand Growth**: The containerized waste services segment is performing well, driven by route density and entrepreneurial efforts from the team to capture more business [82][84]. Cross-Selling Opportunities - **Integrated Services**: Clean Harbors is leveraging its integrated service model to cross-sell between its various service lines, enhancing customer engagement and operational efficiency [86][88][90]. Conclusion Clean Harbors is strategically positioned for growth in the environmental services industry, focusing on safety, margin expansion, and capital allocation. The company is actively pursuing opportunities in M&A, technology advancements, and expanding its operational footprint to enhance its market presence and financial performance.