Financial Data and Key Metrics Changes - Total revenue for Q3 increased to $1.55 billion, reflecting growth in environmental services and a diversified customer base [20][21] - Adjusted EBITDA rose 6% to $320 million, with a consolidated adjusted EBITDA margin expanding to 20.7%, driven by pricing initiatives and cost reduction efforts [20][21] - Net income grew modestly year over year, delivering earnings per share of $2.21 [23] Business Line Data and Key Metrics Changes - Environmental Services (ES) segment revenue increased by 3%, with adjusted EBITDA margin growing for the 14th consecutive quarter [5][6] - Technical services within ES saw a 12% revenue growth, while Safety-Kleen Environmental services rose 8% [8][20] - Field services revenue declined by 11% due to the absence of medium to large response projects [8][9] Market Data and Key Metrics Changes - Incineration utilization was high at 92%, with landfill volumes up 40% from a year ago [7][20] - PFAS-related sales are expected to generate $100 to $120 million in revenue this year, up 20% to 25% from the previous year [10][11] - The company anticipates that spending constraints in industrial services will loosen as economic conditions improve [18] Company Strategy and Development Direction - The company is focused on margin growth and productivity enhancements, with plans for significant internal investments exceeding $500 million over the next several years [16][17] - A new state-of-the-art processing plant (SDA unit) is planned, expected to generate annual EBITDA of $30 million to $40 million upon completion [15] - The company remains active in evaluating M&A opportunities while maintaining a disciplined approach to capital allocation [16][80] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing strong momentum in waste collection and disposal assets despite current macroeconomic challenges [5][18] - The company expects to navigate current economic turbulence and anticipates a recovery in industrial services and field services in the coming quarters [29] - Management highlighted the importance of ongoing cost management and operational efficiency to mitigate rising healthcare costs [33][40] Other Important Information - The company reported a record level of free cash flow in Q3, with cash and short-term marketable securities totaling $850 million [24][25] - SG&A expenses as a percentage of revenue increased to 12.2%, reflecting higher healthcare costs and professional fees [22] - The company has raised its full-year adjusted free cash flow guidance to a midpoint of $475 million, representing over 30% growth from 2024 [28] Q&A Session Summary Question: What were the main factors behind the $15 million guidance reduction? - The reduction was primarily due to shortfalls in industrial services ($7 million) and field services ($4 million), along with elevated healthcare costs impacting the overall company by about $6 million [33][34] Question: What is the outlook for EBITDA growth in 2026? - Management expects to target a 5% EBITDA growth based on cost-cutting initiatives and volume growth in waste businesses, despite not anticipating a rebound in industrial turnarounds until spring [41][42] Question: What is the company's M&A outlook? - The company is actively looking at both larger and smaller deals, maintaining a disciplined approach to ensure good returns on shareholder investments [44][80] Question: What is the expected range for SKSS EBITDA this year? - Management expressed high confidence in achieving the $140 million EBITDA mark for SKSS, with a potential range of a few million on either side [72][73] Question: How does the SDA unit investment relate to M&A strategy? - The SDA unit investment does not reflect a change in M&A appetite; it has been a planned investment for years, and the company remains open to various capital allocation opportunities [79][80]