Clean Harbors, Inc.

Greetings, and welcome to the Clean Harbors third quarter 2025 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. Thank you, sir. You may begin.

Thank you, Christine, and good morning, everyone. With me on today's call are our co-chief executive officers, Eric Gerstenberg and Mike Battles, our EVP and chief financial officer, Eric Dugas, and our 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, October 29, 2025. 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 in consistent historical comparison performance. Reconciliations of these measures to the most directly comparable gap measures are available in today's news release, on our IR 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. As always, let me start with our safety results. Through September 30th, we were at a TRIR of 0.49, putting us on a track record for another record year. We are extremely proud of that performance. The only way you achieve this level of excellence is with constant operational focus from the whole team to protect themselves and each other. Safety performance delivers measurable benefits across multiple dimensions, from enhanced operational efficiency and productivity to stronger employee retention and company reputations. For any team members listening, congratulations on these great safety results, and let's finish strong in Q4. Turning to a summary of results on slide three, our Q3 performance reflected year-on-year growth from an increase in overall waste volumes into our network. Pricing gains and increased productivity, even in an environment where softer conditions resulting from macroeconomic factors, have impacted some customers. Our ES segment grew on strength in technical services and SK branch. Our safety clean sustainable solution segment performed in line with expectations, mainly due to our charge for oil program and product mix. Driving margin growth continued to be a focus for us as we were pleased to see our consolidated adjusted EBITDA margin increase by 100 basis points from a year ago to 20.7%, demonstrating the effectiveness of our pricing, the leverage in our network of permitted facilities, and cost-saving strategies. Within all of the underlying ES businesses, we drove pricing gains and improved productivity while lowering costs, driving better margin contributions. Corporate segment costs were up from a year ago, primarily due to higher insurance expenses and healthcare increases, offsetting partially by cost-cutting actions. Overall, Q3 results fell slightly short of our expectations, due primarily to slowness in field services and industrial services, combined with some higher than anticipated employee health care costs. We remain optimistic with the continued growth in momentum in our waste collection and disposal assets. We believe that the productivity and margin enhancement initiatives undertaken throughout 2025 and across our businesses put us in a position to benefit as some Turning to our segments, beginning with ES on slide four. Segment-adjusted EBITDA margin grew year-over-year for the 14th consecutive quarter, with revenue up 3% and adjusted EBITDA up 7%. Our waste volumes, PFAS work, remediation projects, and pricing grew over our revenue increase, as that more than offset the slowdown in industrial and field services. Looking at revenue by the segment components, Technical services led this quarter with 12% growth as demand was steady. Incineration utilization remained high, and our landfill volumes were up 40% from a year ago. Incineration utilization was 92% versus 89% in the same period of 2024. For comparison purposes, our utilization excludes the new unit in Kimball as we continue to ramp up. With Kimball included, our utilization rate was still high at 88%. As we've seen in the past several quarters, incineration demand has remained high due to the diversity of our end markets, as well as projects underpinning our growth. Our sales teams have done an excellent job winning volumes in an environment where some of our customers have been impacted by current economic conditions. That sales effort includes our SK branches. who have consistently driven significant containerized waste volumes into our network. In Q3, safety clean environmental services rose 8% through a combination of pricing gains and growth in our core service offerings. The number of parts washed services was 249,000 in the quarter, with a larger average service ticket per stock. The consistency of that business has been a key element to our profitable growth over the past five years. Field services revenue declined 11% from a year ago, more than we anticipated in our guidance. This shortfall reflects the absence of median to large response projects. While we responded to more than 5,900 ER events, demonstrating consistent baseline demand, the revenue impact came from having no substantial projects. Within industrial services, we continue to see customers in both the chemical and refining verticals limit their spending on turnarounds, as they remain under significant cost pressure. As a result, revenue was down 4% from a year ago. In light of these market conditions, we focused on cost management, including workforce and equipment utilization. While we are hopeful that maintenance deferrals from IS customers we've seen for the past few years improves, we do not expect any meaningful recovery in revenue opportunities for chemical and refining customers before the spring turnaround season. Based on our service platform, In extensive lines of business we provide, we are focused on growing our wallet share with these customers. Turning to slide five, we want to highlight our recent successful PFAS incineration study done in partnership with the EPA as well as the DOD. This study, which we completed in late 2024 in our Utah facility, was a milestone achievement for the company. The study, published by the EPA in September, provided the type of scientific data sought by customers and regulators. The study was conducted using the EPA's most recent and rigorous emission standards. The study confirmed what we already know. Our record-permitted high-temperature incinerators can not only safely destroy these forever chemicals in various forms, but can do so at a cost-effective commercial scale. In addition, our total PFAS solution has continued to gain traction in the marketplace, with offerings ranging from lab analytics to water filtration to site remediation to to disposal. We are in active discussions with customers on projects across many of these fronts and expect PFAS to generate 100 to 120 million in revenue this year, up 20 to 25 percent from a year ago. Moreover, based on our pipeline and our momentum in the marketplace, we expect PFAS-related sales to further accelerate in the years ahead. With that, let me turn things over to Mike to discuss SKSS and capital allocation. Mike?

Thank you, Eric, and good morning, everyone. Turning to SKSS on slide six, this segment delivered results in the third quarter that were in line with our expectations. Despite pricing headwinds in the base oil market all year, we effectively managed our re-refining spread and drove value from other initiatives. During the quarter, we dramatically lowered our waste oil collection costs versus a year ago as we advanced our CFO program. It is clear that our used oil customers understand that we are collecting a waste from them and providing value and reliable services. The team continues to manage costs while still collecting the volumes we need to run our plants. In Q3, we gathered 64 million gallons of waste oil, which is consistent with the second quarter. On the top line, our revenue decreased as expected. In terms of profitability, our adjusted dividend was essentially unchanged. The result was 100 basis point margin improvement, largely stemming from the CFO increase, cost reduction initiatives, and efficiency gains. We also increased our direct lubricant sales, which are among our highest margin gallons, to 9% of our total volumes, which also contributed to that margin improvement. During the quarter, we continued our partnership with BP Castrol to support their more circular offering for corporate fleets. Additionally, we are growing our Group 3 production as those gallons carry a premium to our traditional Group 2 volumes, and we remain on track to add several million gallons of Group 3 this year. Turn to slide seven. Today we announced plans to construct a state-of-the-art processing plant that we refer to internally as the SDA unit. By using an industry-proven solvent de-asphalting process and combining it with our existing hydro-treating capabilities, we can unlock incremental value from an everyday product, VTAE, generated today in our re-refinements. This new plant will upgrade BTAE into a high volume 600N base oil. 600N neutral is a high purity base oil that is typically used in heavy duty industrial applications due to its durability and high performance characteristics. Total spend on the SDA unit is expected to be 210 to 220 million with commercial launch anticipated in 2028. We spent approximately 12 million on this project year to date with a total of approximately $30 million expected in 2025. As a result of the project, we expect to generate annual EBITDA in the range of $30 to $40 million, a six- or seven-year payback on the investment, once completed. Such a return will rival what we've seen from similar-sized incineration projects and represent an additional growth opportunity for SKSS. Turning to capital allocation on slide 8, we remain active in seeking opportunities to generate strong returns for shareholders. We also remain well-positioned to execute our strategy with record cash flows in Q3, low leverage, and a terrific balance sheet. On the M&A front, we're evaluating both non-transactions and larger acquisitions that would provide leverageable assets with high synergy potential that support our market position in a particular business or geography. We believe that in our space, it's best to be patient and prudent in pursuing the right transaction. We've also been evaluating a series of internal investments, including today's announcement of the FDA unit. Including that facility, we currently see a path to potentially investing over $500 million in internal projects over the next several years, ranging from greater processing capabilities within our network, additional hub locations, fleet expansions, and additional incineration capacity. We look forward to sharing more of these plans with you in the coming quarters as plans for individual projects get finalized. We also view share repurchases as an attractive capital allocation opportunity to generate strong shareholder returns, as demonstrated by our $15 million in repurchases in Q3. Looking ahead, while we believe that the challenges we face in Q3 are temporary and market-driven, with year-over-year growth illustrating our resiliency, we expect our incinerators to run strong through year-end and waste projects to continue to feed our entire disposal and recycling network. Tariff-related uncertainty and other macro factors in the North American economy have ripple effects through some of our customers over the past two quarters, but we believe the overall economic outlook remains promising. Based on conversations with customers, we anticipate incentives to reshore and the benefits of the recent U.S. tax bill will drive meaningful lift in American manufacturing and continue to support remediation and waste projects. We expect that spending constraints related to industrial services and field services in our key verticals including chemicals and refineries, will loosen in the coming quarters as economic conditions improve. Overall, our project pipeline remains substantial, with growing PFAS opportunities expected to contribute meaningfully to future activity. We also remain excited about the steady ramp-up in production and mix in our new Kimball incinerator as it works toward full capacity. For SKSS, we believe we've stabilized this business with our efforts around CFO, partnerships, and Group 3 production, and are looking forward to the new SDA unit. We expect to achieve our profitability targets for this business in 2025. And with that, let me turn it over to our CFO, Eric Dukes.