Clean Harbors Q2 2025 Earnings Report

Clean Harbors EPS Results

• Actual EPS: $2.36
• Consensus EPS: $2.33
• Beat/Miss: Beat by +$0.03
• One Year Ago EPS: $2.46

Clean Harbors Revenue Results

• Actual Revenue: $1.55 billion
• Expected Revenue: $1.59 billion
• Beat/Miss: Missed by -$43.32 million
• YoY Revenue Growth: -0.20%

Clean Harbors Announcement Details

• Quarter: Q2 2025
• Date: 7/30/2025
• Time: Before Market Opens
• Conference Call Date: Wednesday, July 30, 2025
• Conference Call Time: 9:00AM ET

Clean Harbors (NYSE:CLH) is a leading provider of environmental, energy and industrial services in North America. The company specializes in the collection, transportation and disposal of hazardous and non-hazardous wastes, emergency spill response and remediation, industrial cleaning and on-site field services. Its comprehensive service offering also includes chemical neutralization, drum crushing, high-pressure water blasting, tank cleaning and vacuum services designed to help customers meet stringent environmental regulations.

Founded in 1980 by Alan S. McKim and headquartered in Norwell, Massachusetts, Clean Harbors has grown through organic expansion and strategic acquisitions to establish a network of more than 400 service centers, treatment, storage and disposal facilities and emergency response locations across the United States and Canada. The company’s history of targeted investments has allowed it to broaden its technical capabilities, enhance its service portfolio and integrate specialized businesses that strengthen its position in key end markets such as manufacturing, energy production, healthcare and government.

Clean Harbors employs a workforce of technicians, engineers and environmental specialists who deliver solutions tailored to complex waste management and environmental challenges. Under the leadership of founder and long-time chief executive Alan S. McKim, the company has built a reputation for operational excellence, safety and regulatory compliance. Clean Harbors continues to leverage its expansive geographic footprint and technical expertise to support customers’ sustainability initiatives and lifecycle management of environmental liabilities.

Clean Harbors Q2 2025 Earnings Call Transcript

Key Takeaways

• Positive Sentiment: Record safety achieved with a quarterly TRIR of 0.4 and year-to-date TRIR of 0.45, reinforcing operational excellence and workforce protection.
• Positive Sentiment: Consolidated adjusted EBITDA margin expanded 60 bps to 21.7%, while Environmental Services marked its 13th consecutive quarter of margin growth driven by organic volume gains, pricing and efficiency.
• Positive Sentiment: Safety-Kleen Sustainable Solutions delivered $38 million in Q2 adjusted EBITDA, surpassing expectations with an 11% sequential rise in oil collection and a successful shift to charge-for-oil pricing.
• Positive Sentiment: PFAS remediation poised as a multibillion-dollar opportunity with Clean Harbors’ RCRA-permitted incinerators achieving six-nines destruction efficiency and emissions eight to ten times below the strictest standards.
• Positive Sentiment: Record Q2 free cash flow of $133 million, ~$700 million in cash and net debt/EBITDA near 2x provide strong liquidity and strategic flexibility for growth investments and M&A.

Presentation

[Operator]

Greetings, and welcome to the Clean Harbors Second Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode. A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael McDonald, General Counsel for Clean Harbors. Mr. McDonald, please go ahead.

[Michael McDonald, SVP - General Counsel at Clean Harbors]

Thank you, Christine, and good morning, everyone. With me on today's call are our Chief Co Chief Executive Officers, Eric Gerstenberg and Mike Paddles our EVP and Chief Financial Officer, Eric Dugas and our SVP of Investor Relations, Jim Bodley. Slides for today's call are posted on our Investor Relations website, and we invite you to follow along. Matters we are discussing today that are not historical facts are considered forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Participants are cautioned not to place undue reliance on these statements, which reflect management's opinions only as of today, 07/30/2025.

[Michael McDonald, SVP - General Counsel at Clean Harbors]

Information on potential factors and risks that could affect our results is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision to the statements made today other than through filings made concerning this reporting period. Today's discussion includes references to non GAAP measures. Green Harbors believes that such information provides an additional measurement and consistent historical comparison of its performance. Reconciliation of these measures to the most directly comparable GAAP measures are available in today's news release, on our IR website and in the appendix of today's presentation.

[Michael McDonald, SVP - General Counsel at Clean Harbors]

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

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Thanks, Michael. Good morning, everyone, and thank you for joining us. As always, let me start with our safety results. We achieved our lowest ever quarterly TRIR of 0.4 in Q2, setting a new company benchmark for safety performance. Year to date, our TRIR stands at 0.45, reflecting our ongoing commitment to operational excellence and a culture of continuous improvement.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

This approach delivers significant benefits, including measurable advantages to costs and fewer loss workdays. There are also intangibles like a stronger reputation with our customers, the ability to attract the best people, and most importantly, making sure everyone knows they're protected and valued at work. Turning to our financial performance on Slide three. Our results in Q2 highlighted the sustained profitable growth of Environmental Services and the stabilization of Safety Kleen's sustainable solutions as both segments came in ahead of our expectations. Consolidated adjusted EBITDA margin increased by 60 basis points to 21.7, driven by strong demand of our disposal and recycling assets and lower SG and A costs.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Mike will cover SKSS shortly, but it's clear our waste oil collection strategies in that segment are delivering results. Corporate segment costs were lower year over year due to cost cutting actions and non recurring items that were included in 2024, partly offset by higher insurance, severance costs and technology investments. Overall, our results reflect continued business momentum from late Q1. Turning to our segment reviews, beginning with ES on slide four. Segment adjusted EBITDA margin grew year over year for the thirteenth consecutive quarter.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

The primary drivers were increased volumes combined with pricing and efficiency gains. Segment top line growth was all organic as increases in disposal revenue, waste projects and pricing programs more than offset the fewer large emergency response events in Q2 this year. Looking at revenues by segment components, Safety Kleen Environmental led the growth at 9% driven by pricing gains and growth in core service offerings. The number of parts wash services was down slightly from a year ago due to actions we are taking on the waste oil collection side as well as the more advanced parts wash models we are introducing that generate higher revenue per stop. In addition, the SAFE SK branches continue to drive substantial volumes of containerized waste into our permitted facilities.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

In Technical Services, higher incineration and landfill volumes supported by pricing programs drove a four percent revenue increase. Incineration price rose 7% on a mix adjusted basis. Incineration utilization was 89% versus 88% a year ago. For comparison purposes, this quarter's utilization number excludes the new Killam and Kimbell as we ramp up. With the inclusion of Kimbell, our utilization rate would still be strong at 86%.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We are successfully completing our shakedown process of the new unit, which processed more than 10,000 tons in the quarter. We are also seeing more network efficiency in terms of waste and transportation as Kimbell processes greater volumes and waste types. Even with the tariff uncertainty hitting some of our customers in early April, incineration demand remained high throughout Q2 and continues to show no signs of slowdown with reshoring and manufacturing expansion top of mind for many of our key customers across multiple verticals. At the same time, we still see the potential for captive closures as we continue to have good discussions with several operators. We're looking to cut costs by partnering with a vendor that has the capacity and network redundancy to safely handle and dispose of their incineration waste streams.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Field services revenue was down from a year ago due to fewer large events. However, the team performed very well in Q2 generating strong margins on its base business. Within industrial services, revenue was up slightly year over year reflecting a larger number of turnarounds that carried a lower average spend. Due to these market conditions, we have been enhancing workforce and equipment utilization while taking out costs. We are seeing the benefits of those efforts as margins improve from a year ago despite what has been a challenging environment for customer spending.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We remain cautiously optimistic that the worst of the maintenance deferrals from IS customers is now behind us. Lastly, I wanted to touch on PFAS given investor interest in this topic. The threat of litigation is creating a sense of urgency at the local, state and federal levels to address contamination, either in water supplies or at site locations. Based on our discussions with the federal EPA and supported by their public statements, this administration remains committed to addressing the public health threat from PFAS. In addition, many states are attempting to mitigate the threat of forever chemicals as more than three fifty PFAS related legislative bills have been introduced across 39 states.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

PFAS remediation is rapidly becoming a national priority and we are the only company positioned to offer an end to end solution that includes permitted scalable destruction. With new EPA guidance pending and state level action accelerating, we are prepared to lead in what many expect to be a multibillion dollar opportunity. We believe that our RCRA permitted high temperature incinerators with rigorous pollution controls remain the most viable and commercially scalable option for customers. The data from our last PFAS incineration site, which was performed in conjunction with the EPA, demonstrated that our incinerator achieved six nines of destruction of the key PFAS compounds and with emissions eight to 10 times lower than the most restrictive state or federal standards, very compelling data for any customers or government entities that may have been unsure about the safety or effectiveness of PFAS incineration. At the same time, our PFAS total solution offering continues to gain traction in the marketplace.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

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

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Thank you, Eric, and good morning. Turning to our SKSS results on Slide five. For the past several quarters, the team has done a terrific job shifting our customers to higher charge for oil, CFO, which helped drive our better than anticipated results in this segment. Our revenue decreased year over year as expected, reflecting lower market pricing and reduced volumes sold. The $38,000,000 we delivered in Q2 exceeded our expectations and reflects meaningful progress the team has made across a range of initiatives.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

We continue to aggressively manage our re refining spread while lowering our cost structure and improving the efficiency of our operations. The shift to a CFO position that began in November continued in Q2. In the quarter, we gathered 64,000,000 gallons of waste oil, which is up 11% sequentially. We believe we are achieving a healthy balance between charging appropriately for the used oil collection services we provide against the value of waste oil in the market and the quantities we need to optimally run our plants. We made progress and kept several key initiatives in Q2.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

We modestly increased our direct blended sales in the quarter. These sales provide greater stability to our business as pricing tends to be less volatile and they represent our highest margin gallons. During the quarter, we also advanced our partnership with BP Castrol as we support their more circular offering for corporate fleets. This lower carbon footprint solution is attracting more interest in the market with several fleets signed up and more evaluating the offering. We continue to grow our Group III gallons and are on track to add several million gallons of Group III this year versus last year, which should support greater stability in this segment.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Turning to slide six. We continue to evaluate opportunities to execute on various elements of our capital allocation strategy with the goal of generating the best long term returns. In Q2, strong cash flows resulted in higher cash balances and our leverage improved. As a result, our strong balance sheet only got stronger, putting us in the ideal position to grow both internally and externally. On the M and A front, we remain active in evaluating both bolt on transactions and larger transactions that would provide us with more permanent facilities, leverageable assets with high synergy potential or one that support our market position.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Given our expansive network of assets, we believe that the right acquisition affords us the ability to unlock considerable long term value, but we remain selective as always. Internally, we are evaluating additional organic investments to drive shareholder returns. With Kimball now in the path to success, we're looking at ways to increase incineration throughput at other locations in the years ahead. In Q2, we purchased our new Phoenix site where we will replicate the hub concept we're executing in Baltimore. We have other reasons to apply the same playbook going forward as well as adding more processing or recycling capabilities like e waste to other locations.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

We are also addressing the potential for further processing of our re refining byproducts as we believe there's value to be harvested there. With $700,000,000 in cash, low leverage, a strong free cash flow and free cash flow expected in the 2025, we're in an ideal position to accelerate our growth and scale through both organic investments and strategic M and A. The pipeline is strong and we fully expect to deploy significant capital in the quarters ahead in ways that enhance growth and long term margins. As we're entering the 2025 with strong momentum and a high level of confidence in our ability to deliver outstanding results. With the ongoing reshoring trend and substantial planned industrial investments in The U.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

S, our optimism is supported by promising economic outlook. Reshoring is no longer a headline, it is becoming a funded reality. Our customers are breaking ground, expanding production and creating more demand for our services. Although near term trade headwinds persist, we expect that the tangible benefits of the recent tax bill and incentive to invest in America manufacturing will drive greater customer activity. We see no indications that healthy customer demand for our services will slow down anytime soon.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

We have multiple customers with plans to move ahead with remediation projects in the coming quarters, all of which would further support our recycling disposal assets, including Kimball. In SKSS, we remain focused on driving increased returns throughout its value chain through disciplined collection pricing, optimized re refining operations and the expansion of programs like our direct our blended direct sales and cash flow more circular partnership. Our favorable outlook is underpinned by a powerful combination of macro and company specific catalysts. We remain focused on executing our pricing strategies, cost mitigation efforts and operational efficiencies to drive further margin improvement. We anticipate leveraging the strength of both our operating segments to achieve record top line and bottom line results in 2025.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

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

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Thank you, Mike, and good morning, everyone. Turning to the income statement on Slide eight. Our Q2 results came in slightly ahead of the guidance we provided on our Q1 earnings call. Within Environmental Services, we grew revenue and expanded EBITDA margins in that segment despite a challenging comp with prior year and SKSS performed better than we expected. Total company revenue was essentially flat with 2024 as the growth in ES offset the decline in SKSS.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Q2 adjusted EBITDA of $336,000,000 was driven by higher earnings in our ES segment and improvement in corporate costs versus prior year, which more than offset the lower SKSS EBITDA contribution. As Eric mentioned, one of the areas we are especially proud of is our margin performance. Our Q2 adjusted EBITDA margin of 21.7% was up an impressive 60 basis points from a year ago. The team delivered a better than expected margin in Q2 through pricing, greater overall volumes within our disposal and recycling assets, strong labor management and disciplined SG and A cost reductions. SG and A expense as a percentage of revenue decreased 70 basis points from a year ago to 12%.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

For full year 2025, we anticipate SG and A expense as a percentage of revenue will be in the low to mid 12% range. Depreciation and amortization in Q2 came in as expected at 116,000,000 up primarily due to Kimball and increased landfill amortization due to higher landfill volumes. For 2025, we continue to expect depreciation and amortization in the range of $440,000,000 to $450,000,000 Income from operations in Q2 was $210,300,000 down slightly from the same period last year, primarily due to higher depreciation and amortization that I just mentioned. As expected, Q2 net income also declined modestly year over year with earnings per share of $2.36 Turning to the balance sheet on Slide nine. Cash and short term marketable securities at quarter end was nearly $700,000,000 Our strong balance sheet remains a competitive advantage for us and gives us the flexibility to execute the capital allocation strategy that Mike covered.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Our net debt to EBITDA ratio at quarter end was down to approximately 2x with no material debt amounts due until 2027. Overall interest rate at quarter end remained at 5.3%. As I highlighted on our Q1 call, following a Moody's upgrade earlier this year, our overall debt rating is just one notch below investment grade and our secured debt is at an investment grade rating. Turning to cash flows on Slide 10, Net cash from operating activities in Q2 was $2.00 $8,000,000 Adjusted free cash flow was a Q2 record of 133,000,000 up nearly $50,000,000 which is approximately 60% greater than the prior year. CapEx net of disposals was $87,000,000 down substantially from the prior year when our Kimbell construction was still in full swing.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

In Q2 of this year, we purchased the Phoenix property and spent the bulk of the $15,000,000 that we allocated for that project this year. We will be renovating and building out this location to create our next strategic hub facility. For 2025, we continue to expect our net CapEx, excluding the Phoenix growth project to be in the range of $345,000,000 to $375,000,000 During Q2, we bought back approximately 62,000 shares of stock for a total spend of $12,000,000 We currently have $430,000,000 remaining under our share repurchase program authorization. Turning to our guidance on Slide 11. Based on our year to date results, along with current market conditions for both of our operating segments, we are reiterating the midpoint of our 2025 adjusted EBITDA guidance of 1,180,000,000.00 based on a range of $1,160,000,000 to $1,200,000,000 That midpoint represents year over year growth of 6% in adjusted EBITDA.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Looking at our annual guidance from a quarterly perspective, we currently expect adjusted EBITDA for Q3 to grow 9% to 12% compared with the prior year led by a 10% to 14% growth in the ES segment. For full year 2025, adjusted EBITDA guidance will translate to our reporting segments as follows: In Environmental Services, we expect adjusted EBITDA in 2025 at the midpoint of our guidance to increase 6% to 8% from 2024. As highlighted earlier, overall project pipeline is encouraging and should feed good volumes into our facilities network. PFAS and reshoring continue to represent good upside potential for us in the back half of the year and certainly over the longer term. For SKSS, we continue to expect full year 2025 adjusted EBITDA at the midpoint of our guidance to be 140,000,000 We exceeded our expectations in each of the first two quarters due to the terrific work by the SKSS team in improving our collection rates while controlling costs.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

We anticipate growth and profitability in this segment in both the third and fourth quarters. Within corporate, at the midpoint of our guide, we expect negative adjusted EBITDA to now be up 5% to 7% compared to 2024. The year over year increase relates to the company's expected growth, higher wages and benefits, technology investments and rising insurance costs, partly offset by our many cost savings initiatives. For adjusted free cash flow, full year guidance remains in the range of $430,000,000 to $490,000,000 or a midpoint of $460,000,000 which represents nearly a 30% increase from 2024. In summary, our growth in Q2 was a continuation of the momentum we experienced in late Q1.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

The demand environment has held up well for us even in the face of tariff uncertainty that has impacted some of our customers. I share the enthusiasm of our entire executive team about our growth prospects for the 2025 and beyond. One of the hallmarks of Clean Harbors is our consistency and resiliency as evidenced by our financial performance. We see no material changes in our markets today that would prevent us from continuing on our current path of profitable growth. We look forward to the remainder of this year as we execute against our longer term goals.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

And with that, Christine, please open the call for questions.

[Operator]

Thank you. We will now be conducting a question and answer Thank you. Our first question comes from the line of Tyler Brown with Raymond James. Please proceed with your question.

[Tyler Brown, AVP at Raymond James Financial]

Hey. Good morning, guys.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Hey, Tyler.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Good morning, Tyler.

[Tyler Brown, AVP at Raymond James Financial]

Hey. I just wanted to get y'all kind of broad view on the macro. It it sounded like yesterday a competitor was maybe a touch more downbeat on their call, but you guys seem pretty optimistic. I think you used the word enthusiasm. You noted healthy demand.

[Tyler Brown, AVP at Raymond James Financial]

You've got a good pipeline, maybe some reshoring activity. But just any thoughts broadly, do you feel like you're taking share? Or maybe you can help us just appreciate how your diverse portfolio really positions you to win despite what looks like a pretty slow industrial macro.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes, Tyler, this is Eric. I'll begin. And I'm sure these guys will add on. First of all, our volumes into our network continue to be at all time high. Our drummer seats into our processing plants, incinerators, our TSDS, very, very strong.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Our overall pipeline from our sales team in all regions is up year over year, so very strong. The verticals that we're servicing, very strong waste from our verticals as well as our project demands. Our project pipeline that we're seeing going into the Q3, as Eric mentioned in his script, very, very solid driving volumes into our landfills, our incinerators, some into our wastewater treatment plants. So all of our indicators for disposal and recycling assets as we've talked about have been very good and continue. Whether or not we're taking share, we think so.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We absolutely do think that our footprint enables us to leverage better relationships with our customers servicing their national footprints, and that's where we've really seen some strong growth. We also have done a great job of growing with new customers and have had a number of different plans in place with a variety of different types of sales roles, hunters to go get new business to drive into our networks. On the service side of our businesses, our branch offerings, field services, mentioning that, year to date we have opened 13 more field service branches. And what that allows us to do is service more emergency response events. Our goal is to make sure that we are the first call on all of our emergency response events.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

So field service team, industrial service team even with as mentioned in our script, we talk about that and how the refinery business seems to be stabilizing a little bit. Our count of turnarounds is in excess of 15% more than last year, although the revenue was a little bit tampered because they're controlling our costs. But our industrial team has been doing a good job trying to expand our base of facilities we service with our top tier accounts. So very strong in a number of different areas as we enter into Q3. No signs of letting up.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

The only thing I would add to that, Tom, Eric said it well, is around the pipeline. The sales pipeline that we see is very robust across all different regions and across many verticals. One of the things that may differentiate us is we are not tied to any one end market. Our verticals are very broad, as you know, Tyler. And so if there's been slowdowns in certain parts of our business, we've been making it up on other parts of our business because of our very diverse end market approach. So and that's been a competitive advantage for us.

[Tyler Brown, AVP at Raymond James Financial]

Yes, excellent. That is excellent color. So I wanna I do wanna come back, though, because I get this question a lot from investors around the refinery turnarounds. So it it sounds like that's maybe showing some signs of life, but how how much of the back half ES guidance is really predicated on a ramp in those refinery turnarounds? And how much of a risk is that if it doesn't materialize?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes. Tyler, just to begin, the back half doesn't have a significant ramp at all, isn't dependent on IS turnaround. So overall for the year, continue to say that the count turnarounds we're servicing is up 15% year over year. We but our back end guidance really is not dependent on a significant ramp of IS turnarounds. What we're really focusing on IS is making sure we're servicing the best customers with the best margins and efficiently managing our labor and how we service those turnarounds in just the base industrial holistically.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We've been making sure that we implement a new service platform for that, which really enhances our margin improvement. But just to come back around to your full question, we don't anticipate a major ramp up. Our back half guidance is not dependent on a significant IS ramp up.

[Tyler Brown, AVP at Raymond James Financial]

Okay. That's extremely helpful. And my last one, Eric Dugas, can you shape the benefit from bonus depreciation here in '25? And this is maybe just big picture, but do those changes possibly make some other, let's say, investments organically more attractive in the coming years?

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Yes, Tyler. Great question. When you look at the enactment of the most recent act there, we do believe that here in 2025, we'll see some incremental cash tax savings from that. We've estimated that at somewhere between 10,000,000 and $15,000,000 of incremental cash this year and some more in 2026, still refining those estimates, but that's what we're looking at. But I think you touched on something that's probably even more important and we're more excited about as it relates to the act is, I think it's just another step to drive companies and further investment in The U.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

S, which is certainly a good thing for Clean Harbors on balance. So I think we're even starting to see with some of the discussion we're seeing with customers today around some movement and some activity and incremental investment and build out, which has come from a lot of different factors, but I think the recent tax law changes are driving that as well. So we're really excited about manufacturing in The U. S, and we think it's a continued tailwind for us.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

But Tyler, to your point, though, I don't think that, that changes our view on capital deployment. We have been very aggressive in capital deployment for CapEx, and we will continue to do that. We do it based on return on invested capital, and the cash flows on that change doesn't really impact that as much.

[Tyler Brown, AVP at Raymond James Financial]

Okay. Yes. No, that's very helpful. Thanks, guys.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Thanks, Thanks, Tyler.

[Operator]

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

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Hi, guys. Good morning. First off, you've reported just under half of your full year guidance in SKSS through the first half of the year. And given that the fourth quarter sometimes has negative seasonality, what gives you confidence in seeing an uptick in the third quarter from the second quarter in SKSS EBITDA? And then related, you made a comment about improvement in the third and fourth quarter.

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Could you clarify and say, did you mean that EBITDA margin or EBITDA dollars would be better in 3Q and 4Q in SKSS?

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Dave, this is Mike. I'll take it. When think about SKSS, we are seeing if you remember last year was a tough kind of tough comp for SKSS. They had a pretty bad Q3, if you recall. So the comps on that get a lot better here in 2025.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

And so we are seeing kind of we are forecasting positive EBITDA growth kind of year on year in Q3 versus Q3 last year. And the two busiest quarters are Q2 and Q3 for the oil business. And so we see a good kind of positive momentum in that business. Really, Dave, it comes down to the shift we made really in Q3 last year and early Q4, where we moved away from our pay for oil to a charge for oil and focused on the pricing we are charging to pick up the oil versus feeding our plants. And as you know, we closed the plant in Q3 and Q4 last year.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

And so those costs are there, so it should help from a profitability standpoint year on year. And so really, that's what's driving the how we get to the $140,000,000 through the first half of the year. And so really, we feel very confident, as we sit here today, better than ever, from a reset perspective as far as how we feel about our ability to charge for used more oil and our ability to leverage that in the marketplace. And let that be the driver of profitability versus feeding our plants.

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Okay. Thank you. And I'm also interested in your outlook for turnaround activity and major projects in the back half. You said that turnarounds are up 15% in the second quarter, and you also said that you have confidence that the maintenance deferrals are behind us. If I put those two together, even though that's not in your guidance, if that level of activity continued, would it represent an acceleration in the back half of the year?

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Is that potential upside? I'm not trying to bake it in, but it sounds like if I put those two things together, the outlook is pretty good and you're saying it's not in your current outlook.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Hey, Dave. Eric Dugas here. I think you got it right. As Eric said, when we look at the back half for Industrial Services, our guidance does not necessarily depend upon a great comeback there. We are cautiously optimistic that we'll see a better back half with the turnaround schedule we have here.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

And we do feel like we're starting to come out of the maintenance deferrals. So I think any kind of significant upside in the back half would be upside to our current guidance as well.

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Got it. Thanks so Dave, much,

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

just to clarify one key point. The overall turnaround count that we're servicing in 2025, that's up about 15% compared to 2024. And the average spend, the average revenue that we're invoicing on the turnaround is down roughly about 10%, 15%. So the turnarounds have obviously been compacted a little. They're not doing as much specialty services.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

However, we really see that we are turning the corner as mentioned here. There's not a lot in our guidance around it, but the team is doing a great job servicing the turnarounds ahead of us.

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Okay. Thanks for that clarification, Eric.

[Operator]

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

[Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities]

Good morning, guys. I guess just in that same vein, you talked about the tariff uncertainty starting probably in April. Has that persisted? Has that changed at all? And is that kind of tied into some of these delays on remediation projects you spoke about?

[Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities]

I guess that's a separate kind of subject from the industrial turnarounds, right?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes. Larry, I wouldn't correlate our growth in projects and remediation and stuff to anything going on with tariffs. I think that we've just been doing a solid job of looking out and servicing our customers and making sure that we're ahead of any of their remedial projects. The spending is clear. The pipeline is up.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We have some that have already begun into the Q3. So we there's a lot of activity across the board. But we've also been doing a good job of getting ahead of those projects and those events. And now we see them starting to take hold and have a real, real solid project pipeline here.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Yes. When you look at the project work that's feeding our landfills, Larry, this is work that started. It's there. So it's not some of it is Eric said, the pipeline is very strong. We feel good about the back half of the year as our sales.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

But that's work that hasn't been executed yet. This work is either signed, sealed, delivered or started already.

[Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities]

Got you. Okay. And then just switching gears on the PFAS. I appreciate some of the update. And looks like you're a little more push from the state side.

[Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities]

Just any update, I know you guys were presenting or had this incineration study, DoD and EPA, I think that was gonna be presented soon. Any update there and just thoughts on when we might get, you know, some guidelines from the EPA or more guidelines and maybe I know that's important, but I guess maybe with the states pushing harder, maybe you have all to you know, other paths to get customers to drive not just orders but revenue?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Larry, sure. So as mentioned earlier, we completed our PFAS study at our incinerator at Utah. And the results of those, that study was excellent. Just a real strong performance across the board proving that high temperature RCRA thermal incineration is the preferred method for destruction of PFAS compounds. That being said, the EPA participated actively with us.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

And, we've been working with them on obviously pushing to get their announcement out, and backing that. But, with what's been going on with

[Eric Dugas, Executive VP & CFO at Clean Harbors]

the EPA, it's been a

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

little bit delayed. We expect that and anticipate that hopefully here in the third quarter. But the evidence is clear. That being said also, the market is acting as if regulations are in place. And that's evidence of how our pipeline is growing and some of the projects that we're doing, the amount of business that we're servicing on the PFAS side into our network has been growing.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

So there's indications I mean, we all know it's a bad material and it affects human health and environment. And even without those changes, the administration is clear and they've said that they continue to want to act on it. And we are. We're seeing that discipline from our customers.

[Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities]

Got it. Thanks, Eric.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Sure. Thanks, Larry.

[Operator]

Our next question comes from the line of James Ricchiuti with Needham and Company. Please proceed with your question.

[James Ricchiuti, Senior Analyst at Needham & Company]

Thanks. Good morning. Just a couple of questions. I think in the you had talked about your expectations for Kimball, I think, in previous quarters. I don't know.

[James Ricchiuti, Senior Analyst at Needham & Company]

You may have given some broad guidance on it in the call this morning and I may have missed it. But I'm just wondering how we should think about the scale up in the back half and then looking out to next year in terms of how we might think about the EBITDA contribution?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes, James. I'll begin and then Eric will add on. The scale up from a tonnage standpoint, we're ahead of track. We had talked about pushing 28,000 tons through that unit through 2025, and we're meeting that objective. Also the benefit that we looked at from an EBITDA perspective to our network overall, talked about the $10,000,000 number in the past.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We continue to ramp up. We see strong volumes and into and through the next three to four years ramping up to more full scale production.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Yes. The only thing I would add to that, Jim, well, as Eric said, still confident around the incremental EBITDA from bringing this unit online across the network. But also, point in mind, kind as we move throughout the year, with more production, more EBITDA coming through that unit, right now, it is a little bit of a drag to our margins. So the incremental margin that we produce in ES this quarter, there was a little drag from the start up. You have a full allocation of costs, but not a plant running at its full capacity yet. So that is kind of some upside that we'll continue to see as Eric mentioned going forward over the coming quarters and years as the plant rolls up.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

But I think to reiterate Eric's point, really happy with production so far and the volumes that we're getting through there. Yes, nothing has changed, Tim, in our view of the long term view of chemical.

[James Ricchiuti, Senior Analyst at Needham & Company]

Good. Thanks. The follow-up question I have is a little bit more longer term. I'm just going back to the analyst event that you guys held back in March, I guess, 2023. And, obviously, there's been a lot of been a lot of changes certainly in the political environment.

[James Ricchiuti, Senior Analyst at Needham & Company]

But I'm wondering if if your view of the m and a opportunities out there has changed. I almost get the sense that you're looking at more organic investment opportunities. So maybe you could talk a little bit about the way you're thinking about the business longer term.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Jim, this is Mike. I appreciate the question. When we think about M and A, the pipeline is very full of opportunities, some small, some medium. But we are focused on making sure we get a good return for our shareholders. And we are very disciplined around that.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

It's got to make kind of cultural fit, financial sense. We've to see a path to synergy, the path to value. We're trying to improve our get our ROIC up and get that business kind of contributing at the rates that we think is important to us. At the same time, to your point, there are a lot of internal investments that are out there, whether they be the Phoenix hub we talked about, the Baltimore hub, the investment in Kimball. There's more out there.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

And we and those are terrific investments as well. They take longer to execute on, but frankly, they don't come with a lot of goodwill, if you will. So I think that's really I think we are measuring all those things. We think that those are all great uses of our capital. We look at we share that, but it's all based on returns.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

And so whether that's M and A that's in our swim lane or capital projects that drive long term value, there's I think there's as you can see from the balance sheet and the cash flow generation, there's going be plenty of opportunity to do all of that going forward.

[James Ricchiuti, Senior Analyst at Needham & Company]

Got it. Thank you.

[Operator]

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

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

Hey, guys. Thanks for taking the questions. Can we talk about Environmental Services margins? Because you entered the quarter with a very tough comp from last year. You didn't have as much ER revenue.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

You had the drag from Kimball, and you still expanded 30 bps year over year. So can we we first unpack the puts and takes of getting that expansion? And then can you share with us quantitatively, if possible, how we should think about margin trends in ES for the balance of the year?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes. So Noah, just to begin, yes, we've talked about before, our goal is to get the overall Environmental Services business to close to those 30% EBITDA margins. And as you know, over the past few years, we've really been executing on that plan. In the second quarter, we saw strong margin improvement from all the service businesses. Our Safety Kleen, environmental branch business, very strong margin improvement on the lines of business that drive waste into our plants, but also parts, washers, vacs, material as well driving that into our facilities, we saw margin expansion.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

On the field services side, as pointed out, yes, we were down on large emergency response events last year. We did about $24,000,000 this year, about $10,000,000 But our base business and how we've tried to driven efficiencies in the business, the number of overall ERs, we've had a lot of base business ERs and base business from our customers, and our team has done a great job managing labor and efficiencies on how we dispatch our crews. So there was margin improvement in field services, which is great to see. Industrial services as well, we talked about that, our industrial services margins. We saw improvement even with the flat line we've seen in overall revenue or just slightly ahead of last year.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We've driven margin improvement through managing labor tightly of our crews on how we respond year. To base business customers. And then of course, our technical services price growth, volume growth driving that material more volume of waste into our facilities, we saw margin group. So really pleased overall with how each of the different business units have driven cost efficiencies in our business, how we've been driving price, how we've been driving volume, managing our labor properly, all those things really came to fruition here in the second quarter as we continue down that path of driving towards that 30%. So good stuff.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

Appreciate it. And the second part of the question around how to think about margins for the second half of the year in ES?

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Yes. No, I think all the progress that Eric just articulated around pricing, labor management, cost efficiencies, transportation, I mean, those continue. As you know, the comp in Q3 gets a lot easier because there's not the there's not that large of that work that Eric mentioned earlier. So I think that the margin progression that we're going to see for Q3 and Q4, our 13 consecutive quarters, think, is going to expand based on kind of how we're looking at our own internal models. And so I'm of the view that we're going to have and this trend continues, especially around all the things we're talking about when we talk about pipeline and the view we see around our sales pipeline, our ability to execute against that.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

So I'm very bullish on the back half of the year margin expansion in Environmental Services and in 2026. None of these I don't think anything is one of these. I think they are clearly long term structural changes we're making in the organization to drive profitable growth.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

Right. I think the comps do get easier in the back half as well. So it's fair to think about expansion probably at a higher rate, right, in the back half. I mean, that seems to be implying Very

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

so. Very much so.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

Okay.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

But you're right. We came into the quarter with a view that came into the quarter with a view that perhaps Q2 would be a margin contraction given all the event work we had last year. But as Eric said, every one of our businesses did very well from a margin expansion standpoint.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

Thanks, Mike. I just want to pick up on the M and A question and maybe try to put a little bit of meat on the bone here as net leverage continues to trend down. Anything you can share on LOIs, size of targets? I mean you're talking about a very full pipeline here. Just help us understand a little bit more what you're looking at.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Real tough to get very specific as to the target because we want to make sure we're disappointed. We get we sometimes go very late in the process and don't go further. So it's really hard to say, what's going close, when is it going to close? We get questions like that all the time, like what's your view over the next twelve to eighteen months? It's very difficult to give that answer.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

I'd rather talk about our process, which I think is incredibly disciplined but incredibly robust. We have a team of people who've done over 75 acquisitions in our history. And I do think that we have an incredible talented team of people who can execute on not just on the diligence side, but on the integration synergy capture side. But we really especially businesses that we bought last year like Kepco, we are seeing terrific returns on that. And Eric articulated in the margin story around field service, that's internalizing those emergency response callouts has been a huge win for us.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

So I think that the engine is very strong, and we're getting a lot a good pipeline of things to look at, both large and medium and some small and medium, some large. And so and we'll be very we'll continue to be very active with our strong balance sheet.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

All right. Well, stay tuned. Thank you.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Thanks, Noah.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Thanks, Noah.

[Operator]

Our next question comes from the line of James Schum with TD Cowen. Please proceed with your question.

[James Schumm, Senior Analyst at TD Cowen]

Hey, good morning, guys.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Morning.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Good morning. Hey, Jim.

[James Schumm, Senior Analyst at TD Cowen]

So on the SKSS guidance, you guys sound very confident in the 140,000,000 this year. But if we just look at the numbers, I know you were asked this before, but if you just look at the first half and then 3Q, you know, supposed to be up year over year, but that could be $42,000,000 it's still I don't think that gives investors a ton of confidence, like, you know, because April could be weak. So I I just wanted to ask, is there something else? Wanted to it it is FIFO accounting. Right?

[James Schumm, Senior Analyst at TD Cowen]

So if your pricing has been going up, are we working through the the backlog of pricing from six months ago that was lower than you know? So so maybe you have something in hand that we can't see that we're not aware of, but maybe you could just talk to, you know, the the charge for oil pricing that maybe has gone up. And so 3Q could look a lot stronger than 2Q based on what you already have in the system? Any help you could give there would be great.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Sure, Jim. This is Eric Dugas. So I'll take that. I think a lot of what you said there is right on. But just to talk about the second half and the growth prospects there that Mike touched on.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Certainly, we see sequential growth in SKSS from Q2 to Q3. And one of the primary drivers of that is, in fact, the lower cost inventory that is now in the system. So we sold through under a FIFO basis. We sold through that higher cost inventory from last year. That's all gone now.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

That gives us comfort into Q3 and Q4 here that we're going to expand the profitability of the business. We will we do expect to continue to see kind of the seasonality, typical seasonality from Q3 to Q4, but probably not as deep as last year. So like we said in our prepared comments, we've been very happy with the first half of the year. Each Q1 and Q2, we've exceeded expectations in this business a little bit. We're almost 50% to our full year goal, and we anticipate greater profitability in the back half here.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

So very, very good. Again, I would just emphasize that the team has done a phenomenal job here, transforming the economics and changing to a charge for oil position. And I think the market has followed. And that's been great. And that's probably the single biggest driver of the change here and our comfort in our guidance this year.

[James Schumm, Senior Analyst at TD Cowen]

Okay. Great, Eric. Thanks for that. And then I just wanted to ask in Environmental Services, can you talk about like your pricing and contract structures, how they vary? Do you have how many of your contracts are long term contracts?

[James Schumm, Senior Analyst at TD Cowen]

And then if you could just like specifically address like are there long term group price agreements for your incinerator volumes?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes, James. This is Eric here. I'll start with that. Most of our contracts with our larger customers are in the one to three year area where we have a very, very disciplined price improvement plan with our contracts, with our customers. Every time they get reviewed, our cadence is such that we're reviewing prices across the board and do that on a cadence a couple of times a month, go through every single different business unit, the whole breadth of customers, see what contracts are getting renewed.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

So we continue to have opportunity there. We all know that our price improvement has continued to outpace inflation. And so overall, we continue to have opportunity to drive price improvement. We're doing it. We're outpacing inflation. And we see more opportunity.

[James Schumm, Senior Analyst at TD Cowen]

Okay. Thank you for that. And then just on the incinerator part, is that what you're referring to, typically a one to three year agreement there? Is that the same throughout ES?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes. It's really our top tier customers across the board. It's not related just specifically to incineration. It's really all the waste streams, all the services, whether it's labor, equipment, materials, disposal pricing, that's across the board in the ES side.

[Operator]

Our next question comes from the line of Tobey Sommer with Truist. Please proceed with your question.

[Tobey Sommer, Managing Director at Truist Securities]

I wanted to start out and see if you could provide us some additional color on strategic and financial advantages of the hub concept that you talked about in your prepared remarks that you're sort of proliferating throughout the system?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes, Tobey. I'll begin. So when we think about and how we talk about Phoenix and Baltimore and some of the other major hubs, Chicago as an example, that's where we're getting leverage across the different business units. We combine multiple types of businesses that we have within the organization at one location. They're working off the same customers.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

They're cross selling. They're sharing people, assets. The cost that we feed of supplies and transportation through our network gets leveraged. So it's really a it's an entire mix of driving efficiencies, driving cross sell, working together as a team, collaborating on how we better serve our customers and really meeting those needs across all the different businesses. So it's that sub concept.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

And also I can't fail to mention from a distribution side, we're selling a lot of products as well, whether it be oil, whether it be materials and supplies. How we get back calls on our transportation through those hubs and a spoke network, very important for us. So we really look at that as an opportunity. We also consolidate real estate costs as well. When we find a good hub, get out of all of the smaller branches, get everybody in a big location, and we get leverage off of that.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Yes. So the real dollar location dollar savings that Eric articulated around cross selling, around logistics, around maintenance, kind of all those kind of these larger hubs. I think this is important. It provides an opportunity for our employees to develop and grow without having them to have to move. So when you have a larger hub like that, when you get a smart young person, he or she can move around in the site and do different things, it's different parts of the business, whether it's distribution or maintenance is there, gets articulated.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Oil and refining, all those types of services we provide in these hubs gives people an opportunity to grow and develop without having to leave the company or move. And so really that I think from a turnover standpoint, and our turnover is very, very low, but our turnover standpoint, and we've been able to keep good people in the company because they can grow and develop in the site, the much larger site.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you for that. From a competitive behavior perspective within ES, what does it look like, from a pricing vantage point? Are are are you seeing any any players out in the market nip at, at business, at at prices that don't generate the kind of returns that you want and therefore, you're kind of foregoing some business because of that?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Toby, I would say more now than ever, what there is, very disciplined competitors in our space, and that's improved substantially over the past couple of years. So it's I think most for the most part, when we're getting our margin improvements, we're really we are driving price, but we're also driving efficiencies across the board. And there's a disciplined environment out there now. We as we know, what we do and the waste streams that we handle, it's difficult. And we should get paid accordingly for those services.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

And I think the investments that different companies have made into the ES space shows that discipline and higher multiples are being paid. So there is there has to be price discipline there.

[Tobey Sommer, Managing Director at Truist Securities]

You very much.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Thank you, Toby.

[Operator]

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

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Christine, and thanks, everyone, for joining us today. Our next investor event will be at the Raymond James Virtual Industrial Showcase in mid August, followed by more IR activity in the September time frame. Have a great safe day and enjoy the rest of your summer.

[Operator]

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day. Greetings, and welcome to the Clean Harbors Second Quarter twenty twenty five Financial Results Conference Call. At this time, all participants are in a listen only mode.

[Operator]

A brief question and answer session will follow the formal presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael McDonald, General Counsel for Clean Harbors. Mr. McDonald, please go ahead.

[Michael McDonald, SVP - General Counsel at Clean Harbors]

Thank you, Christine, and good morning, everyone. With me on today's call are our Chief Co Chief Officers, Eric Birstenburg and Mike Paddles our EVP and Chief Financial Officer, Eric Dugas and our SVP of Investor Relations, Jim Bodley. Slides for today's call are posted on our Investor Relations website, and we invite you to follow along. Matters we are discussing today that are not historical facts are considered forward looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Participants are cautioned not to place undue reliance on these statements, which reflect management's opinions only as of today, 07/30/2025.

[Michael McDonald, SVP - General Counsel at Clean Harbors]

Information on potential factors and risks that could affect our results is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision to the statements made today other than through filings made concerning this reporting period. Today's discussion includes references to non GAAP measures. Green Harbors believes that such information provides an additional measurement and consistent historical comparison of its performance. Reconciliation of these measures to the most directly comparable GAAP measures are available in today's news release, on our IR website and in the appendix of today's presentation.

[Michael McDonald, SVP - General Counsel at Clean Harbors]

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

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Thanks, Michael. Good morning, everyone, and thank you for joining us. As always, let me start with our safety results. We achieved our lowest ever quarterly TRIR of 0.4 in Q2, setting a new company benchmark for safety performance. Year to date, our TRIR stands at 0.45, reflecting our ongoing commitment to operational excellence and a culture of continuous improvement.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

This approach delivers significant benefits, including measurable advantages to costs and fewer loss workdays. There are also intangibles like a stronger reputation with our customers, the ability to attract the best people, and most importantly, making sure everyone knows they're protected and valued at work. Turning to our financial performance on Slide three. Our results in Q2 highlighted the sustained profitable growth of Environmental Services and the stabilization of Safety Kleen's sustainable solutions as both segments came in ahead of expectations. Consolidated adjusted EBITDA margin increased by 60 basis points to 21.7%, driven by strong demand of our disposal and recycling assets and lower SG and A costs.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Mike will cover SKSS shortly, but it's clear our waste oil collection strategies in that segment are delivering results. Corporate segment costs were lower year over year due to cost cutting actions and non recurring items that were included in 2024, partly offset by higher insurance, severance costs and technology investments. Overall, our results reflect continued business momentum from late Q1. Turning to our segment reviews, beginning with ES on Slide four. Segment adjusted EBITDA margin grew year over year for the thirteenth consecutive quarter.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

The primary drivers were increased volumes combined with pricing and efficiency gains. Segment top line growth was all organic as increases in disposal revenue, waste projects and pricing programs more than offset the fewer large emergency response events in Q2 this year. Looking at revenues by segment components, Safety Kleen Environmental led the growth at 9% driven by pricing gains and growth in core service offerings. The number of parts wash services was down slightly from a year ago due to actions we are taking on the waste oil collection side as well as the more advanced parts wash models we are introducing that generate higher revenue per stop. In addition, the SAFE SK branches continue to drive substantial volumes of containerized waste into our permitted facilities.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

In Technical Services, higher incineration and landfill volumes supported by pricing programs drove a 4% revenue increase. Incineration price rose 7% on a mix adjusted basis. Incineration utilization was 89% versus 88% a year ago. For comparison purposes, this quarter's utilization number excludes the new Killam and Kimbell as we ramp up. With the inclusion of Kimbell, our utilization rate would still be strong at 86%.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We are successfully completing our shakedown process of the new unit, which processed more than 10,000 tons in the quarter. We are also seeing more network efficiency in terms of waste and transportation as Kimbell processes greater volumes and waste types. Even with the tariff uncertainty hitting some of our customers in early April, incineration demand remained high throughout Q2 and continues to show no signs of slowdown with reshoring and manufacturing expansion top of mind for many of our key customers across multiple verticals. At the same time, we still see the potential for captive closures as we continue to have good discussions with several operators. We're looking to cut costs by partnering with a vendor that has the capacity and network redundancy to safely handle and dispose of their incineration waste streams.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Field services revenue was down from a year ago due to fewer large events. However, the team performed very well in Q2, generating strong margins on its base business. Within Industrial Services, revenue was up slightly year over year, reflecting a larger number of turnarounds that carried a lower average spend. Due to these market conditions, we have been enhancing workforce and equipment utilization while taking out costs. We are seeing the benefits of those efforts as margins improve from a year ago despite what has been a challenging environment for customer spending.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We remain cautiously optimistic that the worst of the maintenance deferrals from IS customers is now behind us. Lastly, I wanted to touch on PFAS given investor interest in this topic. The threat of litigation is creating a sense of urgency at the local, state and federal levels to address contamination, either in water supplies or at site locations. Based on our discussions with the federal EPA and supported by their public statements, this administration remains committed to addressing the public health threat from PFAS. In addition, many states are attempting to mitigate the threat of forever chemicals as more than three fifty PFAS related legislative bills have been introduced across 39 states.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

PFAS remediation is rapidly becoming a national priority and we are the only company positioned to offer an end to end solution that includes permanent scalable destruction With new EPA guidance pending and state level action accelerating, we are prepared to lead in what many expect to be a multibillion dollar opportunity. We believe that our RCRA permitted high temperature incinerators with rigorous pollution controls remain the most viable and commercially scalable option for customers. The data from our last PFAS incineration site, which was performed in conjunction with the EPA, demonstrated that our incinerator achieved six nines of destruction of the key PFAS compounds and with emissions eight to 10 times lower than the most restrictive state or federal standards. Very compelling data for any customers or government entities that may have been unsure about the safety or effectiveness of PFAS incineration. At the same time, our PFAS total solution offering continues to gain traction in the marketplace.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

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

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Thank you, Eric, and good morning. Turning to our SKSS results on Slide five. For the past several quarters, the team has done a terrific job shifting our customers to higher charge for oil, CFO, which helped drive our better than anticipated results in this segment. Our revenue decreased year over year as expected, reflecting lower market pricing and reduced volumes sold. The $38,000,000 we delivered in Q2 exceeded our expectations and reflects meaningful progress the team has made across a range of initiatives.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

We continue to aggressively manage our re refining spread while lowering our cost structure and improving the efficiency of our operations. The shift to a CFO position that began in November continued in Q2. In the quarter, we gathered 64,000,000 gallons of waste which is up 11% sequentially. We believe we are achieving a healthy balance between charging appropriately the used oil collection services we provide against the value of waste oil in the market and the quantities we need to optimally run our plants. We made progress in several key initiatives in Q2.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

We modestly increased our direct blended sales in the quarter. These sales provide greater stability to our business as pricing tends to be less volatile and they represent our highest margin gallons. During the quarter, we also advanced our partnership with BP Capital as we support their more circular offering for corporate fleets. This lower carbon footprint solution is attracting more interest in the market with several fleets signed up and more evaluating the offering. We continue to grow our Group III gallons and are on track to add several million gallons of Group III this year versus last year, which should support greater stability in this segment.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Turning to slide six. We continue to evaluate opportunities to execute on various elements of our capital allocation strategy with the goal of generating the best long term returns. In Q2, strong cash flows resulted in higher cash balances and our leverage improved. As a result, our strong balance sheet only got stronger, putting us in the ideal position to grow both internally and externally. On the M and A front, we remain active in evaluating both bolt on transactions and larger transactions that would provide us with more permanent facilities, leverageable assets with high synergy potential or one that support our market position.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Given our expanded network of assets, we believe that the right acquisition affords us the ability to unlock considerable long term value, but we remain selective as always. Internally, we are evaluating additional organic investments to drive shareholder returns. With Kimball now in the path to success, we're looking at ways to increase incineration throughput at other locations in the years ahead. In Q2, we purchased our new Phoenix site where we will replicate the hub concept we're executing in Baltimore. We have other reasons to apply the same playbook going forward as well as adding more processing or recycling capabilities like e waste to other locations.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

We are also addressing the potential to further for further processing of our re refining byproducts as we believe there's value to be harvested there. With $700,000,000 in cash, low leverage, a strong free cash flow and free cash flow expected in the 2025, we're in an ideal position to accelerate our growth and scale through both organic investments and strategic M and A. The pipeline is strong and we fully expect to deploy significant capital in the quarters ahead in ways that enhance growth and long term margins. As we're entering the 2025 with strong momentum and high level of confidence in our ability to deliver outstanding results. With the ongoing reshoring trend and substantial planned industrial investments in The U.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

S, our optimism is supported by promising economic outlook. Reshoring is no longer a headline, it is becoming a funded reality. Our customers are breaking ground, expanding production and creating more demand for our services. Although near term trade headwinds persist, we expect that the tangible benefits of the recent tax bill and incentive to invest in America manufacturing will drive greater customer activity. We see no indications that healthy customer demand for our services will slow down anytime soon.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

We have multiple customers with plans to move ahead with remediation projects in the coming quarters, all of which would further support our recycling disposal assets, including Kimball. In SKSS, we remain focused on driving increased returns throughout its value chain through disciplined collection pricing, optimized re refining operations and the expansion of programs like our direct our blended direct sales and cash flow more circular partnership. Our favorable outlook is underpinned by a powerful combination of macro and company specific catalysts. We remain focused on executing our pricing strategies, cost mitigation efforts and operational efficiencies to drive further margin improvement. We anticipate leveraging the strength of both our operating segments to achieve record top line and bottom line results in 2025.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

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

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Thank you, Mike, and good morning, everyone. Turning to the income statement on Slide eight. Our Q2 results came in slightly ahead of the guidance we provided on our Q1 earnings call. Within Environmental Services, we grew revenue and expanded EBITDA margins in that segment despite a challenging comp with prior year and SKSS performed better than we expected. Total company revenue was essentially flat with 2024 as the growth in ES offset the decline in SKSS.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Q2 adjusted EBITDA of $336,000,000 was driven by higher earnings in our ES segment and improvement in corporate costs versus prior year, which more than offset the lower SKSS EBITDA contribution. As Eric mentioned, one of the areas we are especially proud of is our margin performance. Our Q2 adjusted EBITDA margin of 21.7% was up an impressive 60 basis points from a year ago. The team delivered a better than expected margin in Q2 through pricing, greater overall volumes within our disposal and recycling assets, strong labor management and disciplined SG and A cost reductions. SG and A expense as a percentage of revenue decreased 70 basis points from a year ago to 12%.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

For full year 2025, we anticipate SG and A expense as a percentage of revenue will be in the low to mid 12% range. Depreciation and amortization in Q2 came in as expected at $116,000,000 up primarily due to Kimball and increased landfill amortization due to higher landfill volumes. For 2025, we continue to expect depreciation and amortization in the range of $440,000,000 to $450,000,000 Income from operations in Q2 was 210,300,000.0 down slightly from the same period last year, primarily due to higher depreciation and amortization that I just mentioned. As expected, Q2 net income also declined modestly year over year with earnings per share of $2.36 Turning to the balance sheet on Slide nine. Cash and short term marketable securities at quarter end was nearly 700,000,000 Our strong balance sheet remains a competitive advantage for us and gives us the flexibility to execute the capital allocation strategy that Mike covered.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Our net debt to EBITDA ratio at quarter end was down to approximately 2x with no material debt amounts due until 2027. Our overall interest rate at quarter end remained at 5.3%. As I highlighted on our Q1 call, following a Moody's upgrade earlier this year, our overall debt rating is just one notch below investment grade and our secured debt is at an investment grade rating. Turning to cash flows on Slide 10. Net cash from operating activities in Q2 was $2.00 $8,000,000 Adjusted free cash flow was a Q2 record of 133,000,000 up nearly $50,000,000 which is approximately 60% greater than the prior year.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

CapEx net of disposals was 87,000,000 down substantially from the prior year when our Kimbell construction was still in full swing. In Q2 of this year, we purchased the Phoenix property and spent the bulk of the $15,000,000 that we allocated for that project this year. We will be renovating and building out this location to create our next strategic hub facility. For 2025, we continue to expect our net CapEx, excluding the Phoenix growth project to be in the range of $345,000,000 to $375,000,000 During Q2, we bought back approximately 62,000 shares of stock for a total spend of $12,000,000 We currently have $430,000,000 remaining under our share repurchase program authorization. Turning to our guidance on Slide 11, Based on our year to date results, along with current market conditions for both of our operating segments, we are reiterating the midpoint of our 2025 adjusted EBITDA guidance of 1,180,000,000.00 based on a range of $1,160,000,000 to $1,200,000,000 That midpoint represents year over year growth of 6% in adjusted EBITDA.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Looking at our annual guidance from a quarterly perspective, we currently expect adjusted EBITDA for Q3 to grow 9% to 12% compared with the prior year led by a 10% to 14% growth in the ES segment. For full year 2025, adjusted EBITDA guidance will translate to our reporting segment as follows: In Environmental Services, we expect adjusted EBITDA in 2025 at the midpoint of our guidance to increase 6% to 8% for 2024. As highlighted earlier, overall project pipeline is encouraging and should feed good volumes into our facilities network. PFAS and reshoring continue to represent good upside potential for us in the back half of the year and certainly over the longer term. For SKSS, we continue to expect full year 2025 adjusted EBITDA at the midpoint of our guidance to be 140,000,000 We exceeded our expectations in each of the first two quarters due to the terrific work by the SKSS team in improving our collection rates while controlling costs. We anticipate growth and profitability in this segment in both the third and fourth quarters. Within corporate, at the midpoint of our guide, we expect negative adjusted EBITDA to now be up 5% to 7% compared to 2024. The year over year increase relates to the company's expected growth, higher wages and benefits, technology investments and rising insurance costs, partly offset by our many cost savings initiatives.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

For adjusted free cash flow, full year guidance remains in the range of $430,000,000 to $490,000,000 or a midpoint of $460,000,000 which represents nearly a 30% increase from 2024. In summary, our growth in Q2 was a continuation of the momentum we experienced in late Q1. The demand environment has held up well for us, even in the face of tariff uncertainty that has impacted some of our customers. I share the enthusiasm of our entire executive team about our growth prospects for the 2025 and beyond. One of the hallmarks of Clean Harbors is our consistency and resiliency as evidenced by our financial performance.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

We see no material changes in our markets today that would prevent us from continuing on our current path of profitable growth. We look forward to the remainder of this year as we execute against our longer term goals. And with that, Christine, please open the call for questions.

[Operator]

Thank you. We will now be conducting a question and answer session. Our first question comes from the line of Tyler Brown with Raymond James. Please proceed with your question.

[Tyler Brown, AVP at Raymond James Financial]

Hey. Good morning, guys.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Hey, Tyler.

[Michael McDonald, SVP - General Counsel at Clean Harbors]

Good morning, Tyler.

[Tyler Brown, AVP at Raymond James Financial]

Hey. I just wanted to get y'all kind of broad view on the macro. It it sounded like yesterday, a competitor was maybe a touch more downbeat on their call, but you guys seem pretty optimistic. I think you used the word enthusiasm. You noted healthy demand.

[Tyler Brown, AVP at Raymond James Financial]

You've got a good pipeline, maybe some reshoring activity. But just any thoughts broadly, do you feel like you're taking share? Or maybe you can help us just appreciate how your diverse portfolio really positions you to win despite what looks like a pretty slow industrial macro.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes, Tyler. This is Eric. I'll begin. And I'm sure these guys will add on. First of all, our volumes into our network continue to be at all time high.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Our drummer seats into our processing plants, our incinerators, our TSDS, very, very strong. Our overall pipeline from our sales team in all regions is up year over year, so very strong. The verticals that we're servicing, very strong waste from our verticals as well as our project demands. Our project pipeline that we're seeing going into the Q3, as Eric mentioned in his script, very, very solid driving volumes into our landfills, our incinerators, some into our wastewater treatment plants. So all of our indicators for disposal and recycling assets as we've talked about have been very good and continue.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Whether or not we're taking share, we think so. We absolutely do think that our footprint enables us to leverage better relationships with our customers servicing their national footprints, and that's where we've really seen some strong growth. We also have done a great job of growing with new customers and have had a number of different plans in place with a variety of different types of sales roles, hunters to go get new business to drive into our networks. On the service side of our businesses, our branch offerings, field services, mentioning that we year to date we have opened 13 more field service branches. And what that allows us to do is service more emergency response events.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Our goal is to make sure that we are the first call on all of our emergency response events. So field service team, industrial service team even with as mentioned in our script, we talk about that and how the refinery business seems to be stabilizing a little bit. Our count of turnarounds is in excess of 15% more than last year, although the revenue was a little bit tampered because they're controlling our costs. But our industrial team has been doing a good job trying to expand our base of facilities we service with our top tier accounts. So very strong in a number of different areas as we enter into Q3. No signs of letting up.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

The only thing I would add to that, Tom, Eric said it well, is around the pipeline. The sales pipeline that we see is very robust across all different regions and across many verticals. One of the things that may differentiate us is we are not tied to any one end market. Our verticals are very broad, as you know, Tyler. And so if there's been slowdown in certain parts of our business, we've been making it up on other parts of our business because of our very diverse end market approach. So and that's been a competitive advantage for us.

[Tyler Brown, AVP at Raymond James Financial]

Yes, excellent. That is excellent color. So I wanna I do wanna come back, because I get this question a lot from investors around the refinery turnarounds. So it it sounds like that's maybe showing some signs of life, but how how much of the back half ES guidance is really predicated on a ramp in those refinery turnarounds? And how much of a risk is that if it doesn't materialize?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes, Tyler. Just to begin, the back half doesn't have a significant ramp at all, isn't dependent on IS turnaround. So overall for the year, continue to say that the count turnarounds we're servicing is up 15% year over year. But our back end guidance really is not dependent on significant ramp of IS turnarounds. What we're really focusing on IS is making sure we're servicing the best customers with the best margins and efficiently managing our labor and how we service those turnarounds in just the base industrial holistically.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We've been making sure that we implement a new service platform for that, which really enhances our margin improvement. But just to come back around to your full question, we don't anticipate a major ramp up. Our back half guidance is not dependent on a significant IS ramp up.

[Tyler Brown, AVP at Raymond James Financial]

Okay. That's extremely helpful. And my last one, Eric Dugas, can you shape the benefit from bonus depreciation And this is maybe just big picture, but do those changes possibly make some other, let's say, investments organically more attractive in coming years?

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Yes, Tyler. Great question. When you look at the enactment of the most recent act there, we do believe that here in 2025, we'll see some incremental cash tax savings from that. We've estimated that at somewhere between 10,000,000 and $15,000,000 of incremental cash this year and some more in 2026, still refining those estimates, but that's what we're looking at. But I think you touched on something that's probably even more important and we're more excited about as it relates to the act is, I think it's just another step to drive companies and further investment in The U.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

S, which is certainly a good thing for Clean Harbors on balance. So I think we're even starting to see with some of the discussion we're seeing with customers today around some movement and some activity and incremental investment and build out, which has come from a lot of different factors. But I think the recent tax law changes are driving that as well. So we're really excited about manufacturing in The U. S, and we think it's a continued tailwind for us.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

But Tyler, to your point, though, I don't think that, that changes our view on capital deployment. We have been very aggressive in capital deployment for CapEx, and we will continue to do that. We do it based on return on invested capital, the cash flows on that change doesn't really impact that as much.

[Tyler Brown, AVP at Raymond James Financial]

Okay. Yes. No, that's very helpful. Thanks, guys.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Thanks, Thanks, Tyler. Tyler.

[Operator]

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

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Hi, guys. Good morning. First off, you've reported just under half of your full year guidance in SKSS through the first half of the year. And given that the fourth quarter sometimes has negative seasonality, what gives you confidence in seeing an uptick in the third quarter from the second quarter in SKSS EBITDA? And then related, you made a comment about improvement in the third and fourth quarter.

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Could you clarify and say, did you mean that EBITDA margin or EBITDA dollars would be better in 3Q and 4Q in SKSS?

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Yes, Dave, this is Mike. I'll take it. The when think you about SKSS, we are seeing if you remember, last year was a tough kind of tough comp for SKSS. They had a pretty bad Q3, if you recall. So the comps on that get a lot better here in 2025.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

And so we are seeing kind of we are forecasting positive EBITDA growth kind of year on year in Q3 versus Q3 last year. And the two busiest quarters are Q2 and Q3 for the oil business. And so we see a good kind of positive momentum in that business. Really, Dave, it comes down to the shift we made really in Q3 last year and early Q4, where we moved away from our pay for oil to a charge for oil and focused on the pricing we are charging to pick up the oil versus feeding our plants. And as you know, we closed the plant in Q3 and Q4 last year.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

And so those costs are there, so it should help from a profitability standpoint year on year. And so really, that's what's driving the how we get to the $140,000,000 through the first half of the year. And so really, we feel very confident, and as we sit here today, better than ever from a reset perspective as far as how we feel about our ability to charge for used motor oil and our ability to leverage that in the marketplace. Let that be the driver of profitability versus feeding our plants.

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Okay. And I'm also interested in your outlook for turnaround activity and major projects in the back half. You said that turnarounds are up 15% in the second quarter. And you also said that you have confidence that the maintenance deferrals are behind us. If I put those two together, even though that's not in your guidance, if that level of activity continued, would it represent an acceleration in the back half of the year?

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Is that potential upside? I'm not trying to bake it in, but it it sounds like if I put those two things together, the outlook is pretty good and you're saying it's not in your current outlook.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Dave. Eric Dugas here. I think you got it right. As Eric said, when we look at the back half for Industrial Services, our guidance does not necessarily depend upon a great comeback there. We are cautiously optimistic that we'll see a better back half with the turnaround schedule we have here.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

And we do feel like we're starting to come out of the maintenance deferrals. So I think any kind of significant upside in the back half would be upside to our current guidance as well.

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Got it. Thanks so Dave, much,

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

just to clarify one key point. The overall turnaround count that we're servicing in 2025, that's up about 15% compared to 2024. And the average spend, the average revenue that we're invoicing on the turnaround is down roughly about 10%, 15%. So the turnarounds have obviously been compacted a little. They're not doing as much specialty services.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

However, we really see that we are turning the corner as mentioned here. There's not a lot in our guidance around it, but the team is doing a great job servicing the turnarounds ahead of us.

[David Manthey, Senior Research Analyst at Robert W. Baird & Co]

Okay. Thanks for that clarification, Eric.

[Operator]

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

[Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities]

Good morning, guys. I guess just in same vein, you talked about the tariff uncertainty starting probably in April. Has that persisted? Has that changed at all? And is that kind of tied into some of these delays on the remediation projects you spoke about?

[Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities]

I guess that's a separate kind of subject from the industrial turnarounds, right?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes. Larry, I wouldn't correlate our growth in projects and remediation and stuff to anything going on with tariffs. I think that we've just been of doing a solid looking out and servicing our customers and making sure that we're ahead of any of their remedial projects. The spending is clear. The pipeline is up.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We have some that have already begun into the Q3. So we there's a lot of activity across the board. But we've also been doing a good job at getting ahead of those projects and those events. Now we see them starting to take hold and have a real, real solid project pipeline here.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Yes. When you look at the project work that's feeding our landfills, Larry, this is work that started. It's there. So it's not some of it is certainly, as Eric said, the pipeline is very strong. We feel good about the back half of the year as our sales.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

But that's work that hasn't been executed yet. This work is either signed, sealed, delivered or started already.

[Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities]

Got you. Okay. And then just switching gears on the PFAS. I appreciate some of the update. And it looks like you're getting a little more push from the state side.

[Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities]

Just any update I know you guys were, I think, presenting or had this incineration study. DOD and EPA, I think, were were were that was gonna be presented soon. Any update there and just thoughts on when we might get, you know, guidelines from the EPA or more guidelines and maybe I know that's important, but I guess maybe with the states pushing harder, maybe other paths to get customers to drive not just orders but revenue.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Larry, sure. So as mentioned earlier, we completed our PFAS study at our incinerator at Utah. And the results of those that study was excellent. Just a real strong performance across the board proving that high temperature REGRA thermal incineration is the preferred method for destruction of PFAS compounds. That being said, the EPA participated actively with us.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

And we've been working with them on obviously pushing to get their announcement out and backing that. But with what's been going on with the EPA, it's been a little bit delayed. We expect that and anticipate that hopefully here in the third quarter. But the evidence is clear. That being said also, the market is acting as if regulations are in place.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

And that's evidence of how our pipeline is growing and some of the projects that we're doing. The amount of business that we're servicing on the PFAS side into our network has been growing. So there's indications. I mean, we all know it's a bad material, and it affects And human health and even without those changes, the administration is clear and they've said that they continue to want to act on it. And we are. We're seeing that discipline from our customers.

[Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities]

Got it. Thanks, Eric.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Sure. Thanks, Larry.

[Operator]

Our next question comes from the line of James Ricchiuti with Needham and Company. Please proceed with your question.

[James Ricchiuti, Senior Analyst at Needham & Company]

Thanks. Good morning. Just a couple of questions. I think in the you had talked about your expectations for Kimball, I think, in previous quarters. I don't know.

[James Ricchiuti, Senior Analyst at Needham & Company]

You may have given some broad guidance on it in the call this morning and I may have missed it. But I'm just wondering how we should think about the scale up in the back half and then looking out to next year in terms of how we might think about the EBITDA contribution?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes, James. I'll begin and then Eric will add on. The scale up from a tonnage standpoint, we're ahead of track. We had talked about pushing 28,000 tons through that unit through 2025, and we're meeting that objective. Also the benefit that we looked at from an EBITDA perspective to our network overall, talked about the $10,000,000 number in the past.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We continue to ramp up. We see strong volumes and into and through the next three to four years ramping up to more full scale production.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Yes. The only thing I would add to that, Jim, well, as Eric said, still confident around the incremental EBITDA from bringing this unit online across the network. But also, point in mind, kind of as we move throughout the year with more production, more EBITDA coming through that unit, right now, it is a little bit of a drag to our margins. So the incremental margin that we produced in ES this quarter, there was a little drag from the start up. You have a full allocation of costs, but not a plant running at its full capacity yet.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

So that is kind of some upside that we'll continue to see, as Eric mentioned, going forward over the coming quarters and years as the plant rolls up. But I think to reiterate Eric's point, really happy with production so far and the volumes that we're getting through there.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Yes, nothing has changed, Tim, in our view of the long term view, Kimmel.

[James Ricchiuti, Senior Analyst at Needham & Company]

Good.

[James Ricchiuti, Senior Analyst at Needham & Company]

The follow-up question I have is a little bit more longer term. And I'm just going back you know, the analyst event that you guys held back in in March, I I guess, 2023. And, obviously, there's been a lot of been a lot of changes certainly in the political environment. But I'm wondering if if your view of the m and a opportunities out there has changed. I almost get the sense that you're looking at more organic investment opportunities.

[James Ricchiuti, Senior Analyst at Needham & Company]

So maybe you could talk a little bit about the way you're thinking about the business longer term.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Jim, this is Mike. I appreciate the question. When we think about M and A, the pipeline is very full of opportunities, some small, some medium. But we are focused on making sure we get a good return for our shareholders. And we are very disciplined around that.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

It's got to make kind of cultural fit, financial sense. We've got to see a path to synergy, the path to value. We're trying to to improve our get our ROIC up and get that business kind of contributing at the rate that we think is important to us. At the same time, to your point, there are a lot of internal investments that are out there, whether they be the Phoenix Hub we talked about, the Baltimore Hub, investment in Kimball. There's more out there.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

And we and those are terrific investments as well. They take longer to execute on, but frankly, they don't come with a lot of goodwill, if you will. So I think that's really I think we are measuring all We think that those are all great uses of our capital. We look at we share that, but it's all based on returns.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

And so whether that's M and A that's in our swim lane or capital projects that drive long term value, There's I think there's as you can see from the balance sheet and the cash flow generation, there's going be plenty of opportunity to do all of that going forward.

[James Ricchiuti, Senior Analyst at Needham & Company]

Got it. Thank you.

[Operator]

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

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

Hey, guys. Thanks for taking the questions. Can we talk about Environmental Services margins? Because you entered the quarter with a very tough comp from last year. You didn't have as much ER revenue.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

You had the drag from Kimball, and you still expanded 30 bps year over year. So can we first unpack the puts and takes of getting that expansion? And then can you share with us quantitatively possible how we should think about margin trends in ES for the balance of

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes. So Noah, just to begin, yes, we've talked about before, our goal is to get the overall Environmental Services business to close to those 30 EBITDA margins. And as you know, over the past few years, we've really been executing on that plan. In the second quarter, we saw strong margin improvement from all the service businesses. Our Safety Kleen, Environmental Branch business, very strong margin improvement on the lines of business that drive waste into our plants, but also parts, washers, vacs, material as well driving that into our facilities, we saw margin expansion.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

On the field services side, as pointed out, yes, we were down on large emergency response events last year. We did about $24,000,000 this year, about 10,000,000 efficiencies in the business, the number of overall ERs. We've had a lot of base business ERs and base business from our customers, and our team has done a great job managing labor and efficiencies on how we dispatch our crews. So there was margin improvement in field services, which is great to see. Industrial services as well, we talked about that, our industrial services margins.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

We saw improvement even with the flat line we've seen in overall revenue or just slightly ahead of last year. We've driven margin improvement through managing labor tightly of our crews on how we respond to base business customers. And then of course, our technical services price growth, volume growth, driving that material more volume of waste into our facilities, we saw margin growth. So really pleased overall with how each of the different business units have driven cost efficiencies in our business, how we've been driving price, how we've been driving volume, managing our labor properly, all those things really came to fruition here in the second quarter as we continued down that path of driving towards that 30%. So good stuff.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

Appreciate it. And the second part of the question around how to think about margins for the second half of the year in ES?

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Yes. No, I think all the progress that Eric just articulated around pricing, labor management, cost efficiencies, transportation, I mean, those continue. As you know, the comp in Q3 gets a lot easier because there's not the large event work that Eric mentioned earlier. So I think that the margin progression that we're going to see for Q3 and Q4, our thirteen consecutive quarters, think, is going to expand based on kind of how we're looking at our own internal models. And so I'm of the view that we're going to have and this trend continues, especially around all the things we're talking about when we talk about pipeline and the view we see around our sales pipeline, our ability to execute against that.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

So I'm very bullish about the back half of the year margin expansion in Environmental Services and in 2026. None of these I don't think anything is a one off piece. I think they are clearly long term structural changes we're making in the organization to drive profitable growth.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

Right. I think the comps do get easier in the back half as well. So it's fair to think about expansion probably at a higher rate, right, in the back half. I mean, that seems to be implied by Very so. Okay.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

But you're right. We came into the with a view that came into the quarter with a view that perhaps Q2 would be a margin contraction given all the event work we had last year. But as Eric said, every one of our businesses did very well from a margin expansion standpoint.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

Thanks, Mike. I just want to pick up on the M and A question and maybe try to put a little bit of meat on the bone here as net leverage continues to trend down. Anything you can share on LOIs, size of targets? I mean you're talking about a very full pipeline here. Just help us understand a little bit more what you're looking at.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Real tough to get very specific as to the target because we want to make sure we're disappointed. We get we sometimes go very late in the process and don't go further. So it's really hard to say, what's going to close, when they're going close. We get questions like that all the time, like what's your view over the next twelve to eighteen months. It's very difficult to give that answer.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

I'd rather talk about our process, which I think is incredibly disciplined but incredibly robust. We have a team of people who've done over 75 acquisitions in our history. And I do think that we have an incredible talented team of people who can execute on not just on the diligence side, but on the integration synergy capture side. But we really especially businesses that we bought last year like Kepico, we are seeing terrific returns on that. And Eric articulated in the margin story around field service, that's internalizing those emergency response callouts has been a huge win for us.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

So I think that the engine is very strong, and we're getting a lot a good pipeline of things to look at, both large and medium, and some small and medium, some large. And so and we'll be very we'll continue to be very active with our strong balance sheet.

[Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.]

All right. Well, stay tuned. Thank you.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Thanks, Noah.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Thanks, Noah.

[Operator]

Our next question comes from the line of James Schum with TD Cowen. Please proceed with your question.

[James Schumm, Senior Analyst at TD Cowen]

Hey, good morning, guys. Morning, James. Good morning. Hey, Jim.

[James Schumm, Senior Analyst at TD Cowen]

So on the SKSS guidance, you guys sound very confident in the 140,000,000 this year. But if we just look at the numbers, I know you were asked this before, but if you just look at the first half and then 3Q, you know, supposed to be up year over year, but that could be $42,000,000 it's still I don't think that gives investors a ton of confidence, you know, because April could be weak. So I I just wanted to ask, is there something else? Wanted to it it is FIFO accounting. Right?

[James Schumm, Senior Analyst at TD Cowen]

So if your pricing has been going up, are we working through the the backlog of pricing from six months ago that was lower than you know? So so maybe you have something in hand that we can't see that we're not aware of, but maybe you could just talk to, you know, the the charge for oil pricing that maybe has gone up. And so 3Q could look a lot stronger than 2Q based on what you already have in the system? Any help you could give there would be great.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Sure, Jim. This is Eric Dugas, so I'll take that. I think a lot of what you said there is right on. But just to talk about the second half and the growth prospects there that Mike touched on. Certainly, we see sequential growth in SKSS from Q2 to Q3.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

And one of the primary drivers of that is, in fact, the lower cost inventory that is now in the system. So we sold through under a FIFO basis. We sold through that higher cost inventory from last year. That's all gone now. That gives us comfort into Q3 and Q4 here that we're going to expand the profitability of the business.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

We will we do expect to continue to see kind of the seasonality, typical seasonality from Q3 to Q4, but probably not as deep as last year. So like we said in our prepared comments, we've been very happy with the first half of the year. Each Q1 and Q2, we've exceeded expectations in this business a little bit. We're almost 50% to our full year goal, and we anticipate greater profitability in the back half here. So very, very good.

[Eric Dugas, Executive VP & CFO at Clean Harbors]

Again, I would just emphasize that the team has done a phenomenal job here, transforming the economics and changing to a charge for oil position. And I think the market has followed. And that's been great. And that's probably the single biggest driver of the change here and our comfort in our guidance this year.

[James Schumm, Senior Analyst at TD Cowen]

Okay. Great, Eric. Thanks for that. And then I just wanted to ask in Environmental Services, can you talk about like your pricing and contract structures, how they vary? Do you have how many of your contracts are long term contracts?

[James Schumm, Senior Analyst at TD Cowen]

And then if you could just like specifically address like are there long term group price agreements for your incinerator volumes?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes, James. This is Eric here. I'll start with that. Most of our contracts with our larger customers are in the one to three year area, where we have a very, very disciplined price improvement plan with our contracts, with our customers every time they get reviewed. Our cadence is such that we're reviewing prices across the board and do that on a cadence a couple of times a month, go through every single different business unit, the whole breadth of customers, see what contracts are getting renewed.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

So we continue to have opportunity there. We all know that our price improvement has continued to outpace inflation. And so overall, we continue to have opportunity to drive price improvement. We're doing it. We're outpacing inflation, and we see more opportunity.

[James Schumm, Senior Analyst at TD Cowen]

Okay. And then just on the incinerator part, is that what you're referring to, typically a one to three year agreement there? Is that the same throughout ES?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes. It's really our top tier customers across the board. It's not related just specifically to incineration. It's really all the waste streams, all the services, whether it's labor, equipment, materials, disposal pricing, that's across the board in the ES side.

[Operator]

Our next question comes from the line of Tobey Sommer with Truist. Please proceed with your question.

[Tobey Sommer, Managing Director at Truist Securities]

I wanted to start out and see if you could provide us some additional color on the strategic and financial advantages of the hub concept that you talked about in your prepared remarks that you're sort of proliferating throughout the system.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Yes, Tobey, I'll begin. So when we think about and how we talk about Phoenix Baltimore and some of the other major hubs, Chicago as an example, that's where we're getting leverage across the different business units. We combine multiple types of businesses that we have within the organization at one location. They're working off the same customers. They're cross selling.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

They're sharing people, assets. The cost that we feed of supplies and transportation through our network gets leveraged. So it's really a it's an entire mix of driving efficiencies, driving cross sell, working together as a team, collaborating on how we better serve our customers and really meeting those needs across all the different businesses. So it's that subconcept. And also I can't fail to mention from a distribution side, we're selling a lot of products as well, whether it be oil, whether it be materials and supplies.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

How we get back calls on our transportation through those hubs and a spoke network, very important for us. So we really look at that as an opportunity. We also consolidate real estate costs as well. When we find a good hub, get out of all of the smaller branches, get everybody in a big location, and we get leverage off of that.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

Yes.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

So the real dollar location dollar savings that Eric articulated around cross selling, around logistics, around maintenance, kind of all those kind of these larger hubs. I think this is important. It provides an opportunity for our employees to develop and grow without having them to have to move. So when you have a larger hub like that, when you get a smart young person, he or she can move around in the site, do different things, it's different parts of the business, whether it's distribution or maintenance, articulated. Oil and refining, all those types of services that we provide in these hubs gives people an opportunity to grow and develop without having to leave the company or move.

[Michael Battles, Co-CEO & Co-President at Clean Harbors]

And so really that, I think, from a turnover standpoint, and our turnover is very, very low, but our turnover standpoint, we've been able to keep good people in the company because they can grow and develop in the site, this much larger site.

[Tobey Sommer, Managing Director at Truist Securities]

Thank you for that. From a competitive behavior perspective within ES, what does it look like, from a pricing vantage point? Are are are you seeing any any players out in the market nip at, at business, at at prices that don't generate the kind of returns that you want and therefore, you're kind of foregoing some business because of that?

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Toby, I would say more now than ever, what there is very disciplined competitors in our space, and that's improved substantially over the past couple of years. So it's I think most for the most part, when we're getting our margin improvements, we're really we are driving price, but we're also driving efficiencies across the board. And there's a disciplined environment out there now. We as we know, what we do and the waste streams that we handle, it's difficult. And we should get paid accordingly for those services.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

And I think the investments that different companies have made into the ES space shows that discipline and higher multiples are being paid. So there is there has to be price discipline there.

[Tobey Sommer, Managing Director at Truist Securities]

You very much.

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Thank you, Toby.

[Operator]

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

[Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors]

Christine, and thanks, everyone, for joining us today. Our next investor event will be at the Raymond James Virtual Industrial Showcase in mid August, followed by more IR activity in the September time frame. Have a great safe day and enjoy the rest of your summer.

[Operator]

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank Thank you for your participation and have a wonderful day.

Participants

Executives

• Michael McDonald, SVP - General Counsel
• Michael Battles, Co-CEO & Co-President
• Eric Dugas, Executive VP & CFO

Analysts

• Eric Gerstenberg, Co-CEO & Co-President at Clean Harbors
• Tyler Brown, AVP at Raymond James Financial
• David Manthey, Senior Research Analyst at Robert W. Baird & Co
• Larry Solow, Partner & Managing director - Equity Analyst at CJS Securities
• James Ricchiuti, Senior Analyst at Needham & Company
• Noah Kaye, Senior Research Analyst at Oppenheimer & Co. Inc.
• James Schumm, Senior Analyst at TD Cowen
• Tobey Sommer, Managing Director at Truist Securities