Clean Harbors (CLH) Conference Summary Industry Overview - Clean Harbors is the largest hazardous industrial waste service company in North America, focusing primarily on hazardous waste with some medical waste services due to incineration capabilities [4][10] - The waste industry is becoming more integrated, covering solid, industrial, and medical waste [4] Macroeconomic Outlook - The macroeconomic outlook has improved since the beginning of the year, with a strong pipeline and growth observed in April [7][8] - Despite concerns about cyclicality, Clean Harbors has shown resilience, with no signs of customers reducing demand [8][20] Business Segments Environmental Services - The Environmental Services segment has improved margins by 500 basis points over the last six to eight years, attributed to new incinerator capacity, better pricing strategies, and operational efficiencies [10][11] - The company has experienced 12 consecutive quarters of year-over-year EBITDA margin growth in this segment [17] Used Oil and Safety Clean Solutions - The used oil segment has faced profitability challenges post-pandemic, but a shift in strategy to prioritize pricing over volume has led to improved stability [81][86] - The company processes approximately 250 million gallons of used motor oil annually, converting it into base oil [82] Capacity and Market Dynamics - There is ample landfill capacity, but incineration capacity is constrained due to the complex nature of waste streams [28][30] - Clean Harbors has added new incineration capacity and expects this to be absorbed by the market due to ongoing demand [30][34] Regulatory Environment and PFAS - Clean Harbors has introduced a total PFAS solution, which includes testing, remediation, and disposal services, with projected revenue growth of 10% to 20% in this area [64][70] - The company is actively involved in addressing PFAS issues, with a long-term view on regulatory developments and market needs [68][69] Mergers and Acquisitions - The company has expanded its market share through acquisitions, allowing for better pricing discipline and stability in the Environmental Services segment [50][52] - Future M&A strategies will focus on geographic expansion and enhancing capabilities in waste management [53] Conclusion - Clean Harbors is positioned well within the hazardous waste industry, demonstrating resilience against macroeconomic challenges and adapting its business strategies to maintain profitability and growth [17][19][88]

Financial Data and Key Metrics Changes - Company revenue increased by 4% in Q1, totaling $55 million, with the Environmental Services (ES) segment accounting for two-thirds of that growth [23][6] - Adjusted EBITDA for Q1 was $235 million, with a margin of 16.4%, down year over year but in line with expectations [24][29] - Net income for Q1 was down compared to the same period last year, with earnings per share of $1.09 [25][29] - Cash and short-term marketable securities approached $600 million at quarter-end, with a net debt to EBITDA ratio of approximately 2.1 times [26][27] Segment Performance Changes - In the ES segment, adjusted EBITDA increased by 4% with a 3% revenue increase, resulting in a 10 basis point margin improvement [7][24] - The Safety Kleen Environmental Services (SKSS) segment saw revenue growth year over year, driven by higher volumes and a shift to a higher charge for oil, despite lower base oil pricing [13][14] - Industrial Services revenue decreased by 10% year over year due to refinery customers delaying spending and maintenance [10][11] Market Data and Key Metrics Changes - The total recordable incident rate (TRIR) was 0.46 in Q1, marking the best quarter in the company's history [5] - Incineration utilization was 88% in Q1, up from 79% in Q1 2024, with incineration pricing rising more than 5% on a mix-adjusted basis [8][9] - The company gathered 58 million gallons of waste oil in Q1, compared to 55 million gallons a year ago [14] Company Strategy and Industry Competition - The company is focused on internal and external growth opportunities, with a strong cash balance and low leverage to support its growth strategy [18][20] - The company is optimistic about its prospects for 2025, citing strong demand for disposal services and a robust pipeline of remediation and waste projects [20][22] - The company is committed to further adjusting pricing and reducing costs to offset inflation and tariff impacts [12][20] Management's Comments on Operating Environment and Future Outlook - Management noted that weather negatively impacted Q1 performance, estimating a loss of $10 million to $12 million in EBITDA due to weather conditions [36][37] - The company remains optimistic about the demand environment, particularly in the ES segment, and expects continued strong growth despite potential economic slowdowns [20][66] - Management emphasized the resilience of the ES segment, stating it is recession-resistant and has a strong backlog of waste and project opportunities [45][66] Other Important Information - The company plans to continue its buyback program, having repurchased nearly 260,000 shares for a total of $55 million in Q1 [28][29] - The company expects adjusted free cash flow for 2025 to be in the range of $430 million to $490 million, representing a nearly 30% increase from 2024 [32] Q&A Session Summary Question: Impact of weather on ES segment performance - Management acknowledged that weather had a significant impact in January, estimating a loss of $10 million to $12 million in EBITDA due to adverse conditions, but noted strong recovery in March [36][37] Question: Expectations for refinery turnarounds in Industrial Services - Management indicated that over 150 turnarounds are planned for the second half of the year, expecting a better performance in that segment [40][41] Question: Cyclicality of the ES segment - Management stated that the ES segment is recession-resistant, with continued strong growth expected in the second and third quarters [44][66] Question: Update on PFAS revenue growth - Management expressed confidence in achieving 15% to 20% revenue growth for PFAS-related services this year, supported by a strong regulatory framework [54][55] Question: Base oil pricing and inventory status - Management noted that base oil pricing has been under pressure but highlighted successful pricing initiatives that have offset some of the challenges [94][96]