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.

Thank you, Mike, and good morning, everyone. Turning to our Q4 and full year results here on slide 9, our quarterly performance came in ahead of expectations we outlined in October, driven primarily by continued strong growth across both technical services and field services. It was especially encouraging to see the underlying strength in our core disposal and recycling volumes as we closed out the year and enlightened some of the challenges we had experienced in some of our key verticals in 2025. As Eric highlighted, we surpassed $6 billion in annual revenue for the first time in the company's history in just three years after surpassing the $5 billion mark in 2022. Q4 adjusted EBITDA increased 8% to $279 million, and full-year adjusted EBITDA reached approximately $1.17 billion. Our Q4 revenue and adjusted EBITDA growth rate were the highest we've seen in fiscal 2025, capping off another year in which we demonstrated our ability to continue to grow the business while expanding margins. And this provides us with positive momentum heading into 2026. Our consolidated Q4 adjusted EBITDA margin was 18.6%, representing a 60 basis point improvement from the prior year period. This margin expansion reflected a combination of disciplined pricing initiatives, volume growth, effective cost control, and continued efforts to maximize efficiencies across our network and transportation fleet. For the full year, we improved consolidated adjusted EBITDA margin by 40 basis points, led by strong performance in our environmental services segment. SG&A expense as a percentage of revenue in Q4 increased slightly from a year ago to 12.9 percent, primarily reflecting third-party transaction-related costs and stock-based compensation. For the full year, however, we improved our SG&A as a percentage of revenue to 12.5 percent as we continued to tightly manage overhead and limit growth in non-billable headcount. Fourth quarter income from operations $158.4 million, up 16% from the prior year. That incoming Q4 was up year over year as we delivered EPS of $1.62. For the full year, EPS was $7.28 a share. Turning to the balance sheet on slide 10, we ended the year with cash and short-term marketable securities of more than $950 million, Throughout 2025, we maintained a sharp focus on working capital management and cash flow generation, which drove record-free cash flow in both Q4 and the full year. Our receivables balances declined by approximately $80 million from September, a testament to the broader team's efforts as collections meaningfully exceeded our expectations in the quarter. We closed the year with a net debt to EBITDA ratio of approximately 1.8 times, which is our lowest leverage in nearly 15 years. Our debt currently carries a blended interest rate of 5.2%. Given our cash balances and low leverage, we have ample flexibility to execute on our capital allocation strategies. Turning to cash flows on slide 11, our Q4 cash flow performance was outstanding. operating cash flow in Q4 grew 17% to a record $355 million. And we also delivered a Q4 record adjusted free cash flow of $261 million. For the full year, adjusted free cash flow was also a record, reaching $509 million, coming in sharply above our guidance, driven in large part by the outstanding collection efforts I just mentioned along with lower cash taxes paid. The $509 million we generated represents nearly 44% of our 2025 adjusted EBITDA in underscoring the highly cash-generative nature of our business. CapEx net of disposals was $115 million in Q4, up from the prior year, reflecting our major growth investment. For the full year, our net CapEx spend was down $20 million as 2024 included the completion of Kimball spending and our Baltimore Hub project. For 2026, excluding an expected $85 million of spend on the SDA unit and $25 million related to our strategic fleet investment discussed earlier, we expect net CapEx to be in the range of $340 million. to 400 million, with a midpoint of 370 million. As it relates to share repurchases, we continue to return value to shareholders in Q4 by repurchasing nearly 600,000 shares for 133 million. For the full year, as Mike mentioned, we returned a record 250 million to shareholders through the repurchase of more than 1.1 million shares. With the recent expansion of our authorization and based on our long-term cash generation and returns profile, we continue to view our shares as attractively valued. Turning to our guidance on slide 12, based on current market conditions and business performance, we are guiding to a 2026 adjusted EBITDA range of $1.20 billion to $1.26 billion with a midpoint of $1.23 billion. At the midpoint, the outlook implies growth of approximately 5 percent versus fiscal year 2025. Looking at our annual guidance from a quarterly perspective, we expect first quarter adjusted EBITDA to grow 4 to 7 percent year-over-year in our environmental services segment, and approximately 1 to 3 percent on a consolidated basis. In terms of the 2026 capital spend we announced today, we are assuming only a few million dollars of annual adjusted EBITDA contribution from the fleet growth expansion in 2026, as those purchases will be phased in over the course of two years. With respect to the DCI business acquisition, our guidance currently incorporates an estimated five to six million of annual adjusted EBITDA reflecting the uncertainty around the exact timing of the close. Looking at how our annual guidance translates into our reporting segments, at the midpoint of our guidance range, we expect our 2026 adjusted EBITDA and environmental services to grow just over 5% for the year, supported by favorable demand trends across our key service pillars, as well as continued growth in PFAS, and remediation projects. This initial 2026 guidance midpoint assumes that our SKSF segment delivers results similar to 2025, and today we are guiding to approximately $135 million of adjusted EBITDA. While we have made great strides on our collection costs in 2025, we have yet to see any improvement in the base oil market. At the midpoint of our guidance, we expect negative adjusted EBITDA to increase by approximately 2% to 4% compared to 2025. This modest increase is primarily driven by costs to support business growth, higher wages and benefits, and a broad-based insurance cost increases. While we continue to experience some inflationary pressure across corporate cost categories, we have numerous cost savings and productivity initiatives underway that are expected to offset a meaningful portion of these headwinds. For 2026, we expect adjusted free cash flow in the range of $480 to $540 million, with a midpoint of $510 million. That level of generation represents a free cash flow conversion of approximately 41% of our expected adjusted new dot In summary, our environmental services segment delivered an exceptional performance in 2025, capped off by a strong Q4. We are well positioned to continue growing the ES business organically and further enhancing its earnings potential. Technical services, SK Environmental, and our base field services business are all expected to generate healthy growth in 2026. with industrial services generating modest work. In addition, the environmental services segment will benefit from the continued ramp-up of Kimball Incinerator as it takes on higher volumes and processes more complex waste streams. Overall, we remain encouraged by the company's growth trajectory. We believe our strategic initiatives, combined with current market conditions, should support the profitable growth embedded in our 2026 guidance. We enter the new year as a stronger company than we were a year ago, safer, more profitable, and generating more cash. And we believe that positions us well for 2026 and beyond. With that, Christine, please open the call for questions.

Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press star 1 on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press star 2 if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment, please, while we poll for questions. Thank you. Our first question comes from the line of Tyler Brown with Raymond James. Please proceed with your questions.

Hey, good morning, guys. Good morning, Tyler. Hey, Eric G., curious if you could maybe talk about and update us on how the conversations are going on the captive side. I know you talked about that in some prior calls, but do you think there'll be any closure developments in 26 and 27, and just any broad thoughts on incineration pricing trends into 26?

Sure, Tyler, thanks. Yeah, the... The captive market continues to be active. We are pursuing opportunities with a couple of key customers across the board, and we think with some changes that they have on their cost structure as well as utilization, that there is a potential clear path here for additional captive closures. As you know, we continue to monitor and work very closely with all the captives across the U.S. and Canada Today there continues to be about 40 different sites that have captive incinerators that are also our customers generating waste streams into our network. So we have some very solid relationships. And again, do anticipate that there will be some captives that come offline in the future. When? Still too early to tell, but discussions are active. That being said, we also have... A lot of opportunity to continue to drive financial performance around incineration pricing across the board in our network. We expect to continue to outpace inflation and drive price improvement into the mid to upper single digits across our network, incineration being a leading indicator there. And we still will continue to push those levers that we've done in the past. So very active network overall, Tyler.

Okay, great, great update. I was a bit curious on the commentary around industrial services. So obviously we got a better ISM print, so maybe we're going to see some improvements in the industrial complex at some point. But what does give you the confidence there? Is that based on some hard plan turnaround work? And kind of, again, Eric Dugas, what is in the expectation there for 26?

In terms of 26, Tyler, and the guide, as I said, some more positive leading economic indicators around ISM and PMI and things of that nature, but the guide really kind of has current market conditions built into it at this point. Yeah, and I would add on to that, Tyler, that when we look at our industrial business, Q4, we began to see some nice momentum in some of our specialty lines of business within industrial services. Our base business has been consistent.

As we enter into 2026, We're working with over 400 customers of assessing their turnaround needs for the year. We're seeing some positive indicators, I would say, as we touch base with every single one of them with face-to-face calls. And we're getting ahead of their opportunities, and there appears to be some indications of momentum here. But we're still, when we look at the overall guidance for 2026 as a We do see, Tyler, that it has kind of turned – we think it might have turned the corner.

You think about the growth, the revenue growth of the business. You look at kind of Q1, Q2, Q3 into Q4 in NIS. If you do the math, it's definitely leveling off. We do see some positive amounts, as Eric G. said, into 2026. Okay, great.

And then my last one here real quick, Mike. Can you guys talk a little bit more about the vac truck and the field investments? And this is really a broader question about all the internal growth investments that you guys have done and you do see. But is this move really more because the acquisitions have gotten so expensive and you've got a great market position, you've got buying power, et cetera, that the reality is that building may simply offer better economics than buying through M&A at this point?

Yeah, Tyler, I'll start. This is Eric. So when we look at our VAC services, our three prominent business units that use VAC services, we have our safety, clean, environmental VAC, our field service VAC, and our industrial VAC. And those opportunities, those collections of VAC waters drive organic waters, contaminated waters and solids and sludges into our great facility network. And that business across the board has been been growing substantially in the 8% to 10% to 14% range. So we've been adding more trucks. We've kind of been keeping up with that pace. We have rented some trucks to fuel that organic growth, but really what we want to do is continue that growth path of greater than 10%, build out more trucks internally, acquire more trucks, eliminate the subcontracting, and just keep pace with those growth rates across all the business units. So it's really been a win-win. And as I said, it's fueling a lot of great water and sludges and solids into our network.

I would add to your question around, hey, is this just a pivot? Is this kind of a better answer? The answer is that our balance sheet allows us to do all these things. Our cash flow generation has allowed us to do everything. M&A, and do capital addition. We signed the P&S for DCI, and there's others out there that we're looking at. So I feel like we can do it all, given our cash flow generation. It's really just based on ROI and what's going on in the market.

Right. Okay. All right. Thank you. Appreciate the time. All right, Todd. Thanks, Todd.

Our next question comes from the line of Adam Bubis with Goldman Sachs. Please proceed with your question.

Hey, good morning. Just picking up on the M&A point, beyond the DCI acquisition, can you just update us on the M&A pipeline in terms of types of opportunities you're looking at and range of outcomes for acquisitions in 2026?

Yeah, this is Mike, and I'll start. We do have a lot of lines in the line, and frankly, we did all through 2025 as well. We weren't as successful, but we do see a lot of opportunities there, mostly in the environmental services business, mostly similar to what we think of DCI, so they have some permanent facilities, they have some, you know, we see those types of opportunities coming to market, and we've been very active. Now, we haven't been as successful in 2025, but we see a lot of good opportunity, and primarily in environmental services, I'd say.

And then I think the 1Q guide implies year-over-year declines in safety, clean EBITDA, and then maybe a recovery in the balance of the year, finishing flattish. So, Can you just talk about the drivers of that improvement in the balance of the years, that coming from incremental charge for oil actions? Are there any assumptions for base oil prices improving in the guide?

Hey, Adam, it's Eric. I'll take that one. And you're absolutely correct. The way we see Q1 right now in SKSS is a little bit down year on year. It is almost all driven through kind of the base oil pricing challenges that we've great oil collection services at the right price there that the market demands. And so as we move throughout the year, you know, things do get a little bit better. Some of that oil collection pricing modification kicks in. But Q1 is kind of the year-on-year low-water mark, if you will.

And, Adam, we do have base oil pricing going down slightly in the guide over the course of the year. We do have that not at the same level that happened in 2025, but we do assume a slight decline in base oil pricing.

Great. Thanks so much.

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

Hey, good morning. Thanks for taking the questions. There was a lot to like, I think, around the capital allocation. I want to get to that in a minute. But just on the core... Field services, you know, you called out the $30 million of emergency response work. It sounds like that basically drove the revenue growth year over year in the quarter. Can you maybe quantify the level of ER work you did total or anything outsized you would call out for 2025 and what you've assumed for ER work for 2026 in the guide?

Yeah, no, I'll start there. You know, obviously, we had a nice fifth quarter with... $30 million in large-scale emergency responses. If you look at the field services business over the course of the year, and every year prior to it, we have ups and downs in large emergency response events, but throughout the course of the year, we drive some large events. We did over 22,000 emergency response events last year. You can really consider that a good baseline business that continues in that core base FS for utility customers, manufacturing, rail, all those types of things. And then we also see good incremental events that will continue to happen. When in the quarter they will or will not, it's to be determined. But that's been a core part of our field services business for the past 20 years, those things happen. So we have that. factored into growth of field service year over year, being in that mid-single digits as a baseline?

I would say, Noah, that when you look at the 22,000 events that Eric mentioned, I mean, that's up like 5% from last year. So we still see a fair amount of events happening in the country, in North America, and we've been there, and we've been winning our fair share. And You know, when these large events happen, the company's built for that. It was built on emergency response. That's part of the business model. And because it's such a big business now with the acquisition of Hesco, it's been a great winner for us. Yeah, Noah, just one last point on that. I think when you think about our network, what we build with field services branches, last year we added an additional 18 field service branches to our network. And as you know, our strategy is to make sure that we have an operating branch of every business unit in all the key geographies throughout North America. And that presence, when we think about field service, that presence allows us to be the first call when emergencies happen and leverage through the rest of the network, people and equipment, to be able to grow with those emergencies

our field services operations team, they are out there pounding the streets to make sure that for every customer who needs a facility response plan with an emergency response provider, that we are the number one call when things go wrong. And we've done a good job of that. We'll continue to exercise that

very helpful um you know i think just on the one cube guide uh just how much of a headwind will will weather be i mean last year i know it was a 10 to 12 million ebita headwind we're obviously between fern and some other events have had a rough uh start to the year you know some other players in the space have talked about it so just where do you kind of think that ends up for one cue

You know, it's Eric Dugas here. I think when we looked at, when we think about weather year on year, I mean, we're, I think we've heard from some other folks that have come out and we're seeing the same thing. Weather impacts us in these winter months, January, early February here, seemingly kind of every year. And so when we think about our guide here in Q1, I would say the weather impact is flattish. We talked about SKSS assumptions in Q1. That's really the lighter side of our guy here in Q1. You look at the ES business, we're still growing 5% to 7% year on year. A lot of the great things that we did throughout 2025 and in Q4 that we just talked about kind of continue into Q1.

Yeah, we haven't seen, with all the nasty weather we've had, we've had some delays, but no plan upsets. No plan upsets, which I think is an important point.

Yep, yep. Very good. All right, you know what? I'll turn it back over. Take the rest offline. Thank you.

Thanks, Joe. Hey, Noah.

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

Hi. Good morning, everyone. My first question, a clarification here. I missed what you said about corporate expense for 2026. What was that growth rate?

Two to four. Two to four percent.

Two to four. Okay. So... Looking at 2025 as a whole, if Clean Harbors was able to grow EBITDA by roughly 5% in 2025, and that's in the face of, you know, field and industrial being down and a 10 million headwind from SKSS EBITDA. And then in 2026, you're saying that each of those things are going flat or positive, and then you've got Kimball ramping and all these other growth initiatives. I'm not being critical here. I'm just asking, when you look at all of those things, I'm wondering which one or what segment are you seeing that's going to be a drag to 2026 EBITDA growth? Because it feels like everything in 2026 is either the same or better than it was in 25, and you're guiding for the same level of EBITDA growth. If you could help me understand the bridge there.

Yeah, Dave, this is Mike. I'll start. You know, I think that our goal is to make sure that we provide a balanced view as we go into the year. I mean, there's a lot of, I think, to your point, there's a lot of positive momentum. You certainly see some of the Solways guys talking about that momentum, and we see it as well. You know, January, as Eric said, was a rough month from a weather-wise standpoint. We want to see it. We want to see it. And my hope is we come back in a couple months and talk about a great Q1 and a great Q2 and Q3 as well. But, you know, you want to be thoughtful as you set expectations for the year. I think that a 5% growth, as Eric laid out in his script, is a reasonable growth, is a good starting point. And certainly in the face of, you know, what we see just, you know, You know, when you look at industrial production, we had a great January, but, you know, once is not a pattern. And so let's have a few quarters, a few months of this type of growth before we start claiming victory here. So that's kind of our view, and we want to be thoughtful about this, and we're hopeful that we come back here in a couple months and say how great the quarter was and how great Q2 and Q3 are going to be.

Yeah, yeah, got it. And on the first quarter, first quarter EBITDA as a percentage of full year has been about, I don't know, 20.6% for the last three years on average, and this year you're sort of saying 19.5% based on the guidance midpoints. Did you quantify the weather? Is that the reason that we're down? It's only representing that smaller percentage overall?

David, it's Eric. I think a couple of things. As I said before, I would think weather impacts kind of flattish year on year. a little bit of year-on-year decline in SKSS. And then, you know, just to go back to the beginning, your corporate question of 2% to 4% for the full year, corporate is a little bit heavier in Q1 the way we've got it laid out. There's some natural inflation, but also a little bit of incentive comp timing, a little bit more incentive comp in our guide for Q1 this year versus last year. We had some backup just because of the performance in Q1 last year. So that's probably the piece you're missing. But, you know, I...

The whole year, it calendarizes out pretty similarly. Yeah, it's more of a Q1 corporate item, I think, Dave, when you look at it. And SKSS, as you saw, it's going to be a little soft in Q1, and that's really driven by some PFO pricing we still had a year at and still on the balance sheet that kind of ran into Q1. So Q1 was a bit of a rough quarter.

Perfect. Thank you.

Our next question comes from the line of Brian Bergmeyer with Citi. Please proceed with your question.

Good morning. Thanks for taking the question. Maybe just on safety clean, the charge for oil opportunity has been pretty compelling and successful. Just curious to characterize how much room to run there is there. Do you maybe still feel Clean Harbors isn't getting proper value, or is it maybe mostly about just kind of compounding at these levels now?

I think, Dave, excuse me, Brian, I think that our ability to continue to charge for dirty motor oil has been a differentiator, and I believe that we haven't really lost a lot of gallons in this process. So I feel like this has been a hugely successful endeavor and really has been able to offset the base oil pricing that we see. I feel like we've kind of taken a good step forward and really made some real changes, and I feel like that's going to continue to pay off. We're not, as you saw from Eric Dugas' comments around the year for 2026, we're not assuming that that gets a lot better, but we're hopeful that if oil prices stabilize, even recover, that could be a huge winner for us.

Got it. Got it. Thank you for that. And then just one follow-up is maybe just on the Group 3 oil production. Just, you know, again, from like a high level, if you can maybe frame that sort of size, the opportunity for clean harbors. Is there any a material contribution to 26. Yeah, that would be really helpful. Thanks. I'll turn it over.

Yeah, Brian, Eric here. So when we look at our run rate of our Group 3 production, we're in the neighborhood of 4 to 6 million gallons increasing year over year. And that differentiation between the Group 2 is about a buck a gallon more. So it's meaningful. But what also is important here is that When we blend that oil, we also have an opportunity to really offset some of that Group 2 Plus that we've been selling. So it will continue to ramp up year over year. The traction of the products and the blended products that we're making with our Group 3 has been excellent, and we're really excited about that continuing to –

have a meaningful contribution to EBITDA improvement within our SKSS business in the coming years.

Our next question comes from a line of Jerry Ravitch with Wells Fargo. Please proceed with your question.

Hi, this is Jake Wayman on for Jerry. Thank you for taking our question.

The technical services segment saw good acceleration in the fourth quarter. Can you walk us through the key drivers of that acceleration, whether it was project activity, pricing, mix, volume, and how much of that momentum carries into the first quarter? Thank you.

Yeah, I'll begin. Really was, as we said in the script, it was really a combination of multiple different things when you look at it. Our TS business had really great volumes across the board. We saw about 8% increase in overall containerized waste volumes. In our safety, clean environmental business, strong waste collection along with back services, we highlighted that. When we look at the field services business, lots of ERs, large and small, good, strong base business. And then finally, our project business was very strong as well, drove some nice volumes into our landfills, into our incinerators, and the momentum in the project business around PFAS. So it was multiple different things that contributed to the success of ES. And that was a great, great fourth quarter. It was a great year with our environmental services. We fully anticipate that momentum to continue here into Q1 and 2026 in all those areas that I just spoke about.

And, Jake, the great thing about what Eric said is that this doesn't include any cap disclosures. It doesn't include, you know, no large ERs. You know, we're not assuming that there's going to be a large bounce back in the chemical or the refining area. And we're not assuming a base oil recovery. I mean, so, you know, we have a lot of good opportunity there. So we feel like this growth that we're talking about this morning is a reasonable assumption. But, you know, those things do turn around.

And I think that we'll be in incredibly good shape in 2026 and beyond.

Fantastic. Thank you very much. Very helpful.

And then just as a follow up, I know you provided, I was just hoping you could speak on the moving pieces of the environmental services 5% growth guide for 2026 and any cadence on the quarters outside of the one queue that you already provided.

Thank you.

And, yes, you know, we talked in our script, you know, it's year two of the Kimball incinerator, so I talked about an incremental kind of $10 million to $15 million of EBITDA there across the network by continuing to ramp up that facility. PFAS opportunities and the growing pipeline there, a 20% increase into 2026 is in our guide. And so those are probably two meaningful, discrete pieces, you know, continued – field services growth and some of the new branches and new agreements we're getting into with existing customers that Eric highlighted a moment ago. And then you really have all those great things that we continue to do in technical services and safety clean branch around growing volumes and pricing strategies and being diligent around those. And that's all wrapped with continuing to provide just great service to all our customers. So, you know, I would say those are the big drivers in EF. In terms of, you know, calendarizing out the quarters, I would say that, you know, it very much kind of calendarizes out, you know, kind of 5% growth roughly in each quarter year on year. So hopefully that answers and clarifies your question. With the acquisition done in the back half of the year, that would be one thing I can do then.

Yes, fantastic. Thank you very much.

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

Great. Thank you. Good morning, guys. First, congrats on the cash flow, on the quarter and really for the year. I can remember, I don't know, 10 years ago when cash flow was a sore thumb, but now it's a real highlight. So I commend you for that.

Thanks, Larry. Good to hear it, man.

Yeah, absolutely. Been around, but too long. So I guess my first question, Eric, Eric, gee, just on the – I really appreciate the PFAS, a lot of good stuff. I like the picture on the slide, too. It feels like, you know, operationally regulatory, the momentum is really stronger than it's ever been. It sounds like you can do about 150 this year, plus or minus. But, you know, are we getting closer to an inflection point where – I don't know where that inflection point takes us, but where we could really see an acceleration in revenue growth over the next few years?

Yeah, it's a great point, Larry. I think we do believe that, that we're getting closer. You know, having the opportunity to go down and talk to the Senate Committee on Public Works was a great opportunity for us to not only share what our total PFAS solutions are, but more so to talk to them about that there is capacity and infrastructure to handle PFAS remediation and cleanup, and that there is existing technologies and capacity to handle the growth and deal with this significant issue. I think the other key point, too, is that during those discussions, we laid out very clearly, based on our experience of managing the cleanups that we've already been doing and the treatment that we've already been doing, we laid out what we thought regulatory parameters should be. And we've gotten some great feedback on that. Those regulatory parameters, we've been communicating those to the EPA, but also we've been communicating those to our customers. And the way we got to the revenue that we are today is by saying to our customers, hey, to limit your risk, to manage it properly, these are some thresholds and parameters that we can help you employ with our total PFAS solutions. and make sure you don't have any long-term liability. So I think all that put in together, I really do think, and I think we all believe that the momentum of getting some really defined thresholds with the EPA is in sight. We're hopeful about that. We continue to drive that. But we also see our customers acting very disciplined today, even without that in place.

I guess the question for Eric Dugas, doesn't the three-year contract that you signed, doesn't that almost get you to that 20% growth by itself this year? Kind of busting chops a little bit on that one, but isn't that kind of fair, or is that all not incremental, that 110 over three years?

Keep in mind that we do some work there today, Larry, and so that 110 is the total. It's increasing... you know, 15 to 30 million, I think, in any given year over that three-year period from what we do today. So there's still room to run that.

That's fair. I guess my second question, Eric, just on the margin improvement, again, also really nice. And we don't need to call it the streaks, but, you know, you may not be able to predict it continuing every single quarter, but up to 26% EBITDA margin, as you look out three to five years later, Could this continue to expand, and could we be talking about a 30% EBITDA margin business when we reach 2030?

Yeah, Larry, we think 30% is certainly kind of in the future for us, and internally that's the target, the reset target that maybe we have now, but it's 30% and beyond. Now, what year we hit that, I mean, I think we're going to continue to strive to expand margins at a minimum of 30 to 50 basis points a year. That's what we said. achieve on that. So, you know, exactly what year we're going to be above 30%, I can't tell you, but that's the internal goal. I guess just one thing that I'd like to share relative to that is, you know, with our margins in environmental services here, you know, just about 26% for the year, we're exceeding those margins that we had assumed in our Vision 2027 a couple of years ago in fiscal 2027. So call it, you know, two years ahead. But certainly, you know, we see a lot of runway in margins. continue to grow margins through volume, pricing initiatives, internalization of costs, greater use of technologies, all those things, holding on to our people and reducing kind of turnover. That's been a great thing for us the last couple of years. So we're going to keep doing those things, and we'll see margins expand. Yeah, Larry, just to build on that, our aspirational goal is really to get to those 30% margins by 2030, 2032. And when you look at the past four or five years, everything that we've been driving, there's a clear path to get there.

We have a number of opportunities that Eric just articulated. We're going to continue to get more efficient. We're going to continue to route our trucks well. We're going to continue to lower turnover. All those things and driving pricing ahead of inflation will drive our margins and continue to expand as we build the platform of the business and leverage disposal network?

Yeah, Larry, the last thing I'd say to that answer is that we have in every single manager's compensation a margin as part of their targets, and I think that's really helped drive behavior. I think, and we can talk about what year we hit 30%. I don't think that's a goal. That's just a stopping point. I'm of the view that we can continue to expand margins even beyond that 30. I mean, you can pick a date when you want to hit that, but I think I'm of the view that that's not a goal. That's just a good way to measure ourselves.

Sure. Okay, great. I appreciate all the color. Thanks, guys. Thank you.

Our next question comes from the line of James Shum with TD Cowan. Please proceed with your question.

Hey, good morning, guys. Mike, can we just talk about SKSS a little bit? You gave some breadcrumbs, but where are you for leading edge pricing? Are we like 50 cents a gallon or are you above that? And then just where are you in terms of utilization of your refineries? Um, any thoughts to closing another refinery or, or, you know, do you feel good about where you are now? And then just any color on the, or update on the, uh, Castrol partnership?

Sure. Sure. I'll take care of all of the, uh, The first of which is that we are north of 50 cents as we get into 2026 here. I think we've done a good job of driving price improvements in our UMO pricing, and I feel like the team has done an excellent job of really changing the marketplace, kind of where we were a year ago to kind of where we are now. It's really unbelievably good, and the team has done a nice job of really holding the line. And the good news is that we haven't really seen – we have lost some gallons, but we haven't lost nearly as many gallons as we thought. And as such, we haven't had the need to – as we sit here today, to close any more re-refineries, and I think we've been able to feed our network. As I said in my prepared remarks, we've been able to feed our refineries with the used motor oil we've been able to collect at really good pricing. You know, when I think about the future in our capital partnership, it's been successful. We've had some good wins there. Has it been as successful as we thought it would be? Probably need some more work there, but it's a long selling cycle. We understand that. The team at Castle has done a good job of driving that. We've been good partners with them. We have had A couple of good wins, but that hasn't been as big of a needle mover as we probably thought when we went into this.

Okay, great. Thanks, Mike. And then just in terms of the pricing, it's kind of hard to get base oil pricing. Can you help us understand where your average sales price was or is now? Is there any help you can give there?

Yeah, James, it's hard. We have a lot of different customers at a lot of different price points, but it has been down. I mean, just cutting through it all, there has been a fair amount of base oil pricing declines kind of all through 2025. And I think it's been in the mid-teens range as far as the overall base oil pricing. But remember, we are managing a spread, and so that really forced us as an organization to drive that U of O pricing up, to manage that spread, to deliver U The number that we told you back last February, we told you we're going to deliver the number for SKSS, and we're right there. So it's something we're really proud of, frankly. And James, just to build on that, just to build on Mike's comments a little bit further, you know, one of our key goals that we've mentioned multiple times is to really drive our direct blended sales growth.

And that's the most stable pricing that we can do and work with our customers to not only – pick up their UMO, but deliver to them really high-quality direct blended oil into their network. And we're successfully beginning to grow that. It's not as fast as we would all like, but that's our really true north across our business is growing that direct blended, getting stabilization on that back-end price while we continue to improve our UMO pricing. And the market today has really accepted that UMO is really a hazardous waste and it needs to be collected, managed, and we do a nice job across our network of customer service and collecting the gallons when their tanks are full, and we'll continue to drive those opportunities.

Great. Thank you for that. And just lastly for me, Veolia bought Clean Earth, as you're fully aware. Do you expect to lose a certain amount of volumes or EBITDA with that transaction? Is there any impact to 2026 that you guys are contemplating?

Not at all, James. Yeah, they were obviously the successful acquirer of that, but we do not anticipate losing any volumes to what they have going on there. In fact, we overall think there's opportunities there. to continue to grow our services with our customers, and we're not concerned about that in the least.

Okay, great. Thanks, guys. Appreciate it.

As a reminder, if you would like to ask a question, press star 1 on your telephone keypad. Our next question comes from the line of Toby Somer with Truist. Please proceed with your question.

Thanks. It's been so long since we've had sort of a good industrial economy. Maybe could you remind us what your growth in revenue and EBITDA would look like in a good industrial economy year and maybe contrast that with the guide?

Thanks. Yeah, Toby, I'm happy to answer that. It's kind of tough to prove it. We haven't had it in such a long time. It's tough to remember. But if you remember some years we were growing, We were growing ES revenue, you know, double digits. There was years when industrial production grew, and we were growing, you know, that ES business at really good rates. And that kind of began the 15 straight quarters that Eric mentioned earlier of evident growth. So tough to see what good looks like. I'm telling you right now it's going to be good, but it does have to happen. And so if it does happen, I think it will in 2026. We start seeing that certainly in our pipeline. I'm hopeful that we have kind of four good quarters of beat and raise and come back in and say how great it was because of great industrial production.

Right. And what parts of the business of the portfolio do you think would see it first so that, you know, as we work our way through the reported quarters this year, if we start to see improvements in what areas would that lead to greater confidence in the industrial recovery? Thanks.

I mean, you'd see it in environmental services. I mean, it's hard to say. I think you see it in all four parts of the lines of business that would make up environmental services, whether it be TS, FS, IS, or SK branch. You'd see all four of those with increased industrial production. I feel like they would all be the beneficiary of that, maybe TS more so, TS and IS more so, but I see all four of those lines of business which make up the environmental services segment improving because of that. Of course, if base oil pricing improves, as we talked about earlier, I think we'd see some real good embedded growth in the SKSS business.

Thanks. Last one for me. If you dream the dream for PFOS, what's the best catalyst that you could think of in terms of the regulator, perhaps the DOD? What kind of event could transpire that would really catalyze growth there?

Yeah, Toby, I'd really say we point to regulatory framework around thresholds of PFAS contamination and clearly articulating it for industrial waters, soils, solids, and driving remediation of those with those thresholds. And we're getting there. The market is disciplined. However, we really would like those in places. on steroids so to speak thank you very much thank you we have no further questions at this time Mr. Gerstenberg I'd like to turn the floor back over to you for closing comments thanks Christine and appreciate everyone joining us today our next investor event will be at the Raymond James conference in Orlando in a few weeks we hope to see some of you there and at other events

Have a great rest of your week, and please keep it safe out there.

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.