Clean Harbors, Inc.

Good day ladies and gentlemen and welcome to Clean Harbor's first quarter 2023 earnings call. All lines have been placed on a listen-only mode and the floor will be open for questions and comments following the presentation. If you should require assistance throughout the conference, please press star zero to reach a live operator. At this time, it is my pleasure to turn the floor over to your host, Michael McDonald, General Counsel for Clean Harbors. Sir, the floor is all yours.

Thank you, Karen, and good morning, everyone. With me on today's call are our co-chief executive officers, Eric Gerstenberg and Mike Battles, and our EVP and chief financial officer, Eric Dugas, and SVP of Investor Relations, Jim Buckley. 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, May 3, 2023. 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. Clean Harvest believes that such information provides an additional measurement and consistent historical comparison of its performance. Reconciliations of these measures to the most directly comparable GAAP measures are available in today's news release, on our website, and in the appendix of today's presentation. Let me turn the call over to Eric Gerstenberg to start.

Eric? Thanks, Michael. Good morning, everyone, and thank you for joining us. Our first quarter results demonstrates the execution of our growth strategy and the resilience of our diversified business model. We delivered broad-based growth across our environmental services segment. In addition to the favorable market conditions, those results were driven by cross-selling and capitalizing on our platform of over 700 service branches while sharing our unique assets and our 22,000 employees. Before we dive into the numbers, let me first highlight our outstanding safety performance. The team got us off to a terrific start at 2023, delivering a first quarter best TRIR of .61, which is well below our ambitious goal of .70. The first quarter can always be a challenge from a safety perspective, given the frequency of icy surfaces, which increase the potential for slips, trips, and falls. So hats off to the team on keeping yourself and your colleagues safe. Keep up the great work. Turning to our Q1 financial results on slide three, we had a solid start to the year, led by our environmental services segment, which again generated strong, profitable growth. Overall, we achieved a 12% top-line increase to $1.31 billion. That helped drive our adjusted EBITDA by 19%, which was in line with our guidance for the quarter. Eric Dugas will talk a bit more about our margins, but those rose from a year ago as we continued to offset inflation through price and cost initiatives while maximizing the utilization of our people and equipment. Our results this quarter continue to demonstrate the considerable leverage inherent in our business model as we grow. We continue to see great momentum in the environmental services segment. Despite some weather-related challenges in the network, demand remains strong, supported by the growth drivers we detailed at our investor day in March. Within SKSS, we experienced a difficult macro environment as the base oil market has gotten off to a slow start. That business experienced lower profitability, which Mike will talk more about in a moment, due to a decline in base oil pricing to start the year, resulting in short-term margin compression. Meanwhile, our corporate segment was down year over year as a cost management effort in better health care costs more than offset inflation. We are proud of our efforts to bring this number down, even with revenues up 12% from a year ago. Turning to our environmental services segment on slide four, the 13% growth in revenue was driven by a combination of volume and pricing with growth in each of the four business units within environmental services. We continue to see considerable demand across the board for our services. Industrial services revenue grew 9% as we continue to see the benefits of the HPC acquisition in late 2021 and move forward under a unified brand throughout the U.S., Revenues in Safety Clean Environmental grew an impressive 18%, led by its core offerings, such as parts wash services, which increased to $250,000 in the quarter, up 7% from a year ago. At the same time, our field services revenue was up 12% on the strength of pricing, cross-selling, and branch growth initiatives. Technical services revenue was up 13%, despite an increased level of unplanned outages at some of our disposal facilities, primarily caused from weather-related challenges. As a result, utilization at our incinerators in the quarter was lower than we expected, coming in at 80% this quarter versus 85% a year ago. We expect that utilization to move back into the mid-'80s here in Q2 after a couple of tough quarters. In fact, as we sit here today, all of our incinerators are running well. Average incineration pricing was up 15% year-over-year in Q1, demonstrating the success of our strategy to focus on higher-value waste streams and remain price competitive while offsetting rising costs. Landfill volume was up 8% from a year ago due to severe flooding at our site in Buttonwillow, California. Excluding that site, landfill volumes are up year-over-year. Landfill price per ton was 17% higher in the quarter, reflecting strength in the base business along with a healthy mix of waste projects. Looking at segment profitability, adjusted EBITDA growth again outpaced our top line, increasing by 24% and illustrating the leverage of our business model as demand for our services continue to be strong. We are also benefiting from a number of productivity programs and cost reduction efforts in recent quarters. As a result of these factors, we achieved 190 basis point increase in ES margins from a year ago. Mike Battles will now take you through SKSS and our capital allocation strategy. Mike?