Clean Harbors, Inc.

Greetings, and welcome to the Clean Harbors Fourth 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. Mr. McDonald, 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, February 18, 2026. 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 of the statements made today other than through filings made concerning this reporting period. Today's discussion includes references to non-GAAP measures. Clean Arms believes that such information provides an additional measurement 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 investor relations website, and in the appendix of today's presentation. Let me turn the call over to Eric Restenberg to start. Eric. Thanks, Michael. Good morning, everyone, and thank you for joining us. Starting off with safety, we concluded a record year of safety in 2025 by delivering a total recordable incident rate of 0.49, which is well below the prior year in industry lead. Safety underpins everything we do at Clean Harvest, and I've outlined the many benefits on prior calls, such as reputation, teamwork, employee retention, and cost savings. Most importantly, though, it is about sending our team home safe to their families at the end of each day. To everyone on the team listening today, We appreciate all that you did this year and every day to keep yourself and your colleagues safe. Turning to a summary of our results on slide three, we are pleased to report another outstanding year where, in addition to a strong safety record, we also delivered record levels of revenue, adjusted EBITDA, adjusted free cash flow, and saw our adjusted EBITDA margin increase by 40 basis points. We capped off 2025 with a strong Q4, as we exceeded the guidance we provided in late October. Our performance was driven by profitable growth in both of our operating segments, with our environmental services segment delivering its 15th straight quarter of year-over-year growth in adjusted EBITDA margin. This run of nearly four years of consistent margin expansion against a challenging industrial backdrop reflects the successful delivery of our essential services to customers in execution of our growth strategy along with discipline in pricing, cost management, workforce productivity, and network efficiency. Turning back to our annual results, in 2025, we topped $6 billion in revenues for the first time in our history, while increasing our adjusted EBITDA by 5%. Our performance was led by our ES segment, which delivered adjusted EBITDA growth of 6%, while increasing its segment adjusted EBITDA margin by 60 basis points. Our 2025 results also included a record $509 million in annual adjusted pre-cash flow. We also achieved several notable operational milestones this past year, including the successful first-year ramp-up of our new Kimbell incinerator, creation of our Phoenix hub, handling nearly 22,000 emergency response events, the issuance of our PFAS incineration study with the EPA, and the reduction of voluntary turnover by 150 basis points to a five-year low. Turning to the segments, beginning with ES on slide four, we grouped Q4 revenue by 6%, our largest quarterly increase of the year, based on the strength and demand for disposal and recycling services, project volumes, growth in PFAS services, and emergency response work. Technical services rose 8%, and safety clean environmental services revenue grew 7%, driven by pricing and higher volumes within its core offerings, particularly vacuum services. Incineration utilization, excluding the new Kimball incinerator, was 87%, consistent with our expectations. At the same time, landfill volumes increased more than 50% in Q4, largely due to project volumes. For the full year, incineration utilization including Kimball, was 89% versus 88% in 2024. Field services revenue grew 13% in the quarter, aided by large-scale emergency response projects that generated approximately $30 million in revenue. Overall, despite some stubborn near-term market headwinds, our ES segment delivered strong Q4 results, which underscores the resiliency of our business model, our broad range of service offerings, and the diverse industry verticals we served. Adjusted EBITDA for the segment was up 8% in the quarter, with Q4 margin up 50 basis points based on discipline pricing, higher overall volumes, mix of work, and workforce management initiatives. Overall, Q4 was another impressive quarter for our largest operating segment. Turning to slide five, I wanted to take a moment to highlight the considerable momentum we are seeing around PFAS as we head into 2026. The PFAS incineration study we completed in partnership with the EPA as well as the Department of War was released in September and is generating inbound discussions with customers and key stakeholders. In November, I had the honor of speaking at a hearing before the U.S. Senate Committee on Environmental and Public Works about PFAS to raise awareness of our capabilities and the need for establishing regulatory thresholds. In December, we announced a three-year, $110 million contract related to our ongoing PFAS water filtration work at the Pearl Harbor base that demonstrates the effectiveness of our carbon filtration system that has been in use there since 2022. This was followed by the finalization of the National Defense Authorization Act, which included language requiring the Pentagon to return to Congress within 180 days with recommendations for how the military will address PFAS removal and destruction in more than 700 U.S. military installations. In addition, the EPA is expected to develop and publish a regulatory framework for impacted soil and solids, update their water guidelines, and finalize new manufacturing rules. At the same time, state governments are moving forward and create their own rules and are evaluating take-back programs. All of these developments represents sizable growth opportunities for Clean Harbors. Even without new rules in place, we are seeing each element of our total PFAS solution grow and our pipeline expand. The guidance that Eric will share with you only assumes a 20% growth rate for our PFAS business in 2026, which is consistent with the past several years. With that, let me turn things over to Mike to discuss SKSS and capital allocation. Mike?

Thanks, Eric, and good morning, everyone. Turning to SKSS on slide 6, the base oil pricing environment continued to weaken in Q4, and as expected, segment revenue was down slightly. In terms of profitability, segment adjusted EBITDA was $30 million, a 22% increase from the fourth quarter of 2024. For the full year, adjusted EBITDA for this segment was $137 million. Despite difficult macro conditions, the team continued to execute well on our oil collection services and related pricing, which drove the increase in year-over-year Q4 adjusted EBITDA and a 310 basis point improvement in margins. We increased our charge for oil pricing, or CFO, in Q4, raising rates roughly 50% above our Q3 average, managing the pricing associated with these oil collection services and substantially lowering our overall waste oil collection costs, remain the primary levers to offset continued decline in base oil pricing. Even with higher CFO, we collected 56 million gallons of waste oil to feed our re-refining network and keep our plants running efficiently. In addition, we once again delivered incremental growth in our direct lubricant gallon sold, which further supported our margin improvement. During the quarter, we also continued to grow our Group 3 production as those gallons carry a premium to our conventional Group 2 volumes. For SKSS in 2026, we will continue to proactively manage our re-refining spread through providing consistent, reliable, and high-quality collection services at appropriate CFO rates supported by market conditions. We will also prioritize expanding direct blended sales, increasing Group 3 production, and pursuing partnership opportunities. Turning to capital allocation on slide 7, we continue to seek opportunities to generate strong returns for shareholders through all elements of our capital allocation framework. We remain well positioned to do so, supported by strength of our balance sheet and our robust cash generation profile. On the M&A front, we announced today the signing of a purchase and sale agreement to acquire environmental businesses from Depot Connect International for approximately $130 million. These businesses are carve-outs of DCI and will be integrated into our facilities network within tech services as well as our field services business. This acquisition is expected to generate annual revenue of approximately $40 million, with $11 million of annual adjusted EBITDA, or roughly at 12 times multiple pay. We see a great strategic fit given their five locations in Ohio, Louisiana, and Texas, and their fleet of trucks and other equipment. DCI currently offers waste handling, tank cleaning, and rail car cleaning to its customers. Additionally, two of their facilities have wastewater treatment and solidification capabilities. We expect the acquisition to close in the first half of the year, subject to customary closing conditions. We expect to remain active in the acquisition front in 2026, and we plan to continue to make strategic internal investment to accelerate our growth. Today, we announced a $50 million targeted expansion of our vacuum truck fleet, aimed at capitalizing on growth opportunities we are seeing through our SK branch business. Due to the limited availability of these specialized assets, this fleet expansion will occur over the course of 2026 and 2027. This fleet growth program, which we anticipate will generate an incremental adjusted EBITDA of $12 to $14 million in 2028 once fully ramped, is another element within the $500 million of internal investments we mentioned in our Q3 call. We anticipate that each of these projects will generate attractive returns for our shareholders. We also continue to view share repurchases as an attractive way to generate strong shareholder returns, as evidenced by our 133 million of repurchases executed in Q4. We bought back a record number of shares this year, and we recently received board approval to expand our existing authorization by 350 million, providing a total of 600 million of remaining capacity and giving management significant flexibility to return capital to shareholders going forward. On the debt side, we refinanced a portion of our debt in 2025 at favorable terms with longer maturity. We're pleased to be entering 2026 having taken concrete actions across all elements of our capital allocation strategy. Looking ahead, we enter 2026 with momentum in our large core hazardous waste collection businesses. We expect our incinerator to run strong in 2026, and waste projects and PFAS to continue to feed our disposal and recycling network. We expect to deliver growth of revenue and adjusted EBITDA that will culminate in enhanced company margins against this year. Our positive outlook is grounded on modest economic assumptions with additional upside potential. Overall, we expect another strong year of financial performance in 2026. And with that, let me turn it over to our CFO, Eric Dukes.