Clean Harbors (CLH) Q1 2026 Earnings Transcript

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Date

May 6, 2026 at 9 a.m. ET

Call participants

• Chief Executive Officer — Eric Gerstenberg
• Co-Chief Executive Officer and President — Michael Battles
• Chief Financial Officer — Eric Dugas

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Takeaways

• Total Revenue -- $1.46 billion, representing an increase of 2%, driven by gains in both core segments.
• Adjusted EBITDA -- $248 million, up 6%, with consolidated margin expanding 60 basis points to 17%.
• Environmental Services segment adjusted EBITDA margin -- Achieved the 16th consecutive quarter of year-over-year improvement, and a 50 basis point margin increase for the segment.
• Environmental Services segment revenue -- Grew by over $40 million, with Technical Services revenue up 5%, and Safety-Kleen Environmental Services revenue up 7%, attributable to pricing and higher volumes.
• Incineration utilization rate -- Reported at 80%, inclusive of the new Kimball incinerator, compared to 81% for the prior year period, both reflecting scheduled maintenance and weather impacts.
• Landfill volumes -- Increased 34%, driven by project work, especially with PFAS-related activity.
• Field service revenue -- Rose 7%, including approximately $10 million from a large-scale emergency response event.
• Safety-Kleen Sustainable Solutions (SKSS) adjusted EBITDA -- Increased 17% to $33 million, with a 320 basis point margin improvement, benefiting from late-quarter base oil price increases and higher charge-for-oil (CFO) revenue.
• Waste oil collection -- Collected 53 million gallons for re-refining efficiency at SKSS.
• March revenue growth in Environmental Services segment -- Reached approximately 10% higher versus the same month last year.
• SG&A expense as a percentage of revenue -- Rose to 14.2%, affected by increased incentive compensation and insurance costs.
• Depreciation and amortization -- $116 million, slightly above the prior year.
• Income from operations -- $119 million, a 7% increase.
• Net income -- Up 8%, with earnings per share reported at $1.19.
• Cash and short-term marketable securities -- Totaled approximately $670 million at quarter end.
• Net debt-to-EBITDA ratio -- Approximately 2 times, with a blended interest rate of 5.2% on debt.
• Cash provided from operations -- $6 million; net CapEx was $97 million, down roughly $20 million, with $15 million invested in strategic growth projects.
• Adjusted free cash flow -- Negative $76 million, consistent with typical seasonal patterns.
• Share repurchases -- 87,000 shares bought back for $25 million at an average price of $287 per share; $575 million remains under repurchase authorization.
• Revised 2026 adjusted EBITDA guidance -- Increased to a range of $1.24 billion to $1.30 billion, midpoint $1.27 billion (9% growth), reflecting a $40 million raise from prior guidance.
• Environmental Services segment 2026 EBITDA guidance -- Anticipates 5%-8% growth at the new guidance midpoint.
• SKSS 2026 EBITDA guidance -- Raised to approximately $165 million, up 20% due to higher base oil prices (versus $135 million in previous guidance).
• 2026 adjusted free cash flow guidance -- Range of $490 million to $550 million, midpoint $520 million; this is a $10 million increase over prior guidance.
• PFAS-related revenue pipeline -- Management reports activity entering the year in the "25% to 35%" growth range, citing increasing customer projects and regulatory momentum.
• M&A activity -- DCI acquisition closed at quarter end; multiple "smaller deals, tuck-ins type of transactions" in Environmental Services are in the pipeline.
• AI deployment -- Used in waste classification, invoicing, document processing, and logistics; management expects "meaningful financial returns for us in the years ahead."
• Kimball incinerator ramp-up -- "we exceeded our EBITDA expectations," with 2026 EBITDA contribution guided to add $10 million–$15 million over 2025 results.

Summary

Clean Harbors (NYSE:CLH) provided a data-rich update revealing raised full-year guidance on adjusted EBITDA and free cash flow for both reporting segments, driven by higher base oil prices, elevated project volumes, and expanding PFAS-related demand. Strategic initiatives, including new field service branch openings and disciplined capital allocation, are delivering operational efficiencies and margin expansion. Management emphasized a scalable, end-to-end PFAS remediation framework, now validated by explicit Department of Defense and EPA guidance favoring the company’s core technologies. Share repurchase activity remained active, and the balance sheet reflected substantial liquidity and low leverage, positioning the company to continue both internal investments and M&A pursuits.

• Management reported a record-low total recordable incident rate of 0.39 for the quarter, highlighting safety improvements.
• March performance in the Environmental Services segment signaled accelerating momentum, with "Revenues were approximately 10% higher than the same month a year ago."
• Management raised full-year capex guidance by $10 million, due to additional investments targeting immediate market opportunities.
• Expansion of the capital return program was supported by $575 million remaining authorization after $25 million in Q1 buybacks.
• Regulatory developments around PFAS were described by management as causing an "accelerated pipeline," with guidance suggesting ongoing market tailwinds.
• AI integration is targeted at operational productivity, compliance, and financial performance, with multiple in-use applications producing measurable benefits according to management.
• Segment guidance highlights substantial visibility into sequential and year-on-year EBITDA growth, with Environmental Services and SKSS both forecasted for above-average expansion.
• Industrial Services is expected to remain "flattish year-on-year," based on current customer turnaround patterns and management's updated projections.
• Management sees additional M&A as likely, with a focus on smaller, network-accretive targets in Environmental Services.
• SG&A as a percent of revenue increased due to incentive and insurance expense, but management expects this ratio to decrease to the high 12% range for the full year.

Industry glossary

• PFAS: Per- and polyfluoroalkyl substances; persistent man-made chemicals targeted for remediation in environmental services.
• Charge-for-oil (CFO): A business model in re-refining in which customers are charged to dispose of used oil, rather than being paid for it.
• SKSS: Safety-Kleen Sustainability Solutions; the company’s segment focused on parts washing, re-refined oil products, and related waste management services.
• DCI acquisition: Clean Harbors' recently announced acquisition of an environmental services provider with facility and collection assets.

Full Conference Call Transcript

Eric Gerstenberg: Good morning, everyone, and thank you for joining us. Before we move into the results, I want to recognize our General Counsel, Michael McDonald, who will be retiring next month. Michael has been a trusted colleague and an integral part of the Clean Harbors team for more than 25 years, and his judgment and perspective have been invaluable. We thank him for his many contributions and wish him good health and happiness in the years ahead. Thank you, Michael. Starting off with safety. Our team delivered an extraordinary safety results in Q1 by achieving the lowest quarterly total recordable incident rate in our history at just 0.39.

While we invest in better equipment, technology and company-wide programs to improve safety, you only get the type of results we are achieving with buying at the field level. We are continually setting a higher standard for our company and our industry. For any employees tuned in today, thank you for all the best you do and keep yourself safe and your colleagues safe. Turning to a summary of results on Slide 3. We kicked off 2026 with better-than-expected Q1 results, including higher profitability in both of our segments.

Despite challenging weather conditions that impacted our collection and services business in February, we exceeded our EBITDA expectations and improved the company's adjusted EBITDA margin by 60 basis points from Q1 2025. Within the Environmental Services segment, we demonstrated our resiliency by delivering the segment's 16th consecutive quarter of year-over-year improvement in adjusted EBITDA margin and 18th straight quarter of EBITDA growth. At the same time, Safety-Kleen Sustainable Solutions segment benefited from our continued focus around charge for oil services and from a late quarter surge in base oil pricing that lifted its profitability. Turning to the segments, beginning with ES on Slide 4.

Q1 revenue in this segment increased by more than $40 million due to growth in project services, including PFAS-related opportunities and a considerable amount of emergency response work. We also continue to see healthy demand for our disposal and recycling services. Technical Services revenue rose 5% and Safety-Kleen Environmental Services revenue grew 7%, driven by pricing and higher volumes within its core offerings. Incineration utilization, including the new Kimball incinerator was 80% versus 81% a year ago, reflecting scheduled maintenance days and weather-related impacts in both periods. Continuing the trend of the past several quarters, we generated a sizable increase in landfill volumes, which rose by 34% on strength of project work, including PFAS-related claims.

Field service revenue grew 7% in the quarter as we responded to a steady stream of customer emergency events across the U.S., including a large-scale event that generated approximately $10 million in revenue. We opened 18 field service branches during 2025 and plan to open 10 more in 2026. While these new locations will take some time to grow their revenue base, our investment speaks to the opportunities we see in field services as well as our ability to cross-sell across other businesses. Adjusted EBITDA was up 6% in the quarter, with ES segment margin up 50 basis points due to pricing, higher volumes, workforce productivity and cost control initiatives.

Overall, our ES segment achieved positive Q1 results despite certain market conditions in the quarter, including weather and regional softness in our Industrial Services business. We exited the quarter with considerable momentum for ES in March. Revenues were approximately 10% higher than the same month a year ago. Turning to Slide 5. We wanted to take a moment to highlight our PFAS management framework that we issued in early April. The purpose today is not to cover the individual details of the framework, but to reemphasize that we have an end-to-end cost-effective solution for PFAS in all of its forms and concentrations.

Over the past several years, we've had many customers, government agencies and even community leaders approach us for advice on how to best address PFAS. For example, they call on us when they want us to clean up contaminated water, remove stockpiles of AFFF firefighting foam and need someone to respond to emergency situations like fire [indiscernible] spills or remediate a contaminated site. Customers have a lot of uncertainty around PFAS, and we believe our framework featured on this slide is beneficial to help them make smart economic decisions at all stages of the process.

Our recommendations are based on years of institutional knowledge and the latest scientific data, including the PFAS incineration study we completed in conjunction with the EPA and the Pentagon. Our concentration-based framework provides the proper treatment and disposal pathway for a range of scenarios. This tiered approach provides the ideal way to address complex contaminants at reasonable costs. We are starting to see considerable regulatory movement around these forever chemicals. Both the Department of Water in March and the U.S. EPA in April have issued PFAS guidance that included incineration, hazardous waste landfill and water filtration as recommended methods of treatment and disposal.

The market is still developing, but having both the Pentagon and the EPA issued guidance that endorses high temperature, permanent incineration and our other PFAS offerings is critical. Those endorsements of our proven capabilities add to the momentum we are already seeing in our PFAS sales pipeline. As PFAS remediation accelerates nationwide, our integrated framework provides a practical and scalable model for industry and government partners. Today, we continue to believe that Clean Harbors remains the only company that can offer a cost-effective end-to-end single-source solution that is commercially scalable for any PFAS need. With that, let me turn things over to Mike to discuss SKSS our reference related to AI and our capital allocation strategy. Mike?

Michael Battles: Thanks, Eric, and good morning, everyone. Turning to SKSS on Slide 6. The year-over-year decrease in segment revenue was expected and reflects lower market pricing for base and blended products as compared to a year ago. This was partially offset by an increase in charge-for-oil revenue as well as rising base oil prices toward the end of the quarter. That base oil price increase and the work the team has done to manage our costs over the past year has led to a meaningful rise in profitability. Q1 adjusted EBITDA in SKSS grew 17% to $33 million with an impressive 320 basis point improvement in margin.

We increased our CFO pricing sequentially from Q4 and more than doubled our rate from Q1 last year. We continue to provide high-level services to customers. And even with a higher CFO, we collected 53 million gallons of waste oil to keep our re-refinery running efficiently. At the same time, sales of base and blended gallons were consistent with the prior Q1. We incrementally grew both our direct lubricant gallons and Group III gallons sold versus Q1 a year ago. Those gallons carry a premium value and profitability compared to our other products. Overall, our SKSS segment delivered better-than-anticipated results. Turning to Slide 7.

This morning, I want to briefly touch on the topic of artificial intelligence, an area of immense potential for us. Technology has been part of Clean Harbor's DNA and a competitive differentiator for decades. AI is the next practical layer of that. We have implemented AI type functionality for years, and we continue to see real opportunity to improve productivity, compliance, safety and customer service over time. We use AI in many areas, including waste classifications, invoice audit, ready-to-bill automation, document processing and field support tools. We are also evaluating opportunities in routing, scheduling and supply chain logistics. Our approach is disciplined, governed data, human-in-the-loop controls and clear operating use cases.

People and technology creating a safer, cleaner environment has been our corporate slogan for many years. AI will continue to be a key element of our technology journey, and we expect our AI efforts to keep delivering meaningful financial returns for us in the years ahead. Turning to capital allocation on Slide 8. We continue to look for internal and external opportunities to generate the best return on our shareholders' capital. In recent years, we have executed well against all elements of our capital allocation framework, and we expect 2026 to be no different. We closed the DCI acquisition at the end of Q1, and we're excited about other attractive candidates that could materialize in the very near future.

We're also investing wisely internally to accelerate our growth, including our previously announced back truck fleet expansion, SDA unit in East Chicago and other smaller revenue-generating opportunities that have recently developed. We ended the quarter with an ample cash balance and low leverage to execute both facets of our growth strategy. We also continue to view share repurchases as an attractive way to return value to our shareholders. Eric will detail our Q1 purchases, but we continue to see our shares as attractive at current market prices, given the favorable long-term outlook for our business. We exited Q1 with momentum in a number of fronts.

Within our disposal and recycling network, we are seeing an improving U.S. economic backdrop to drive our base business, supported by growth opportunities stemming from reshoring, PFAS and project services. Within -- with a large number of maintenance days in our incinerators now in the rearview, we expect to deliver mid- to upper 80% utilization for the full year. SK Environmental should deliver another consistent year of profitable growth. Our Field Service business continues to strengthen its position as a trusted national provider for environmental emergency response. Our Industrial Services business continues to operate in a challenged market, but initiatives we are undertaking now should position us for growth and better margins as conditions improve.

For SKSS, we are capitalizing on elevated pricing and demand dynamics associated with global market disruptions and a continued focus on maximizing profitability while enhancing long-term customer relationships. Overall, we expect another year of exceptional profitable growth, margin improvement and free cash flow generation. With that, let me turn it over to our CFO, Eric Dugas.

Eric Dugas: Thank you, Mike, and good morning, everyone. Turning to Slide 10. Our quarterly results came in ahead of the expectations we outlined in February, driven primarily by SKSS outperformance and continued strong execution from the Environmental Services segment. Total Q1 revenue increased 2% to $1.46 billion, reflecting solid top line growth for the quarter. Following some weather-related impacts in February that Eric mentioned, the ES segment delivered a record revenue month in March. Q1 adjusted EBITDA increased 6% to $248 million. Our consolidated Q1 adjusted EBITDA margin was 17%, representing a 60 basis point improvement from the prior year period as both operating segments contributed higher margins.

This margin expansion reflected a combination of our ongoing initiatives, including disciplined pricing, leveraging volume growth, effective cost controls around labor and cost internalization as well as network and transportation efficiencies. SG&A expense as a percentage of revenue in Q1 increased year-over-year to 14.2%, partially due to higher incentive compensation and insurance costs in the current period. For the full year, we still expect SG&A expense as a percentage of revenue to be in the high 12% range. Depreciation and amortization in Q1 was $116 million, up slightly from a year ago. For 2026, we expect depreciation and amortization in the range of $460 million to $470 million.

First quarter income from operations was $119 million, up 7% from the prior year. Net income in Q1 increased 8% as we delivered earnings per share of $1.19. Turning to the balance sheet on Slide 11. We ended the quarter with cash and short-term marketable securities of approximately $670 million, providing ample flexibility to execute on the capital allocation priorities that Mike outlined. We closed the quarter with a net debt-to-EBITDA ratio of approximately 2x, while our debt currently carries a blended interest rate of 5.2%. Our balance sheet remains in terrific shape as we move into the more cash-generative quarters of the year. Turning to cash flows on Slide 12. Cash provided from operations in Q1 was $6 million.

CapEx, net of disposals was $97 million, down roughly $20 million from the prior year. Included in this quarter's CapEx figure is approximately $15 million of cash investments in strategic growth projects, including the SDA unit and our vacuum truck fleet expansion. Adjusted free cash flow, which excludes spend from these strategic projects, was a negative $76 million in the quarter and in line with our expectations. As a reminder to folks, due to seasonality, negative adjusted free cash flow is typical in Q1 for our company.

For 2026, excluding our expected $85 million of spend on the SDA unit and $25 million related to our fleet investment, we now expect net CapEx to be in the range of $350 million to $410 million with a midpoint of $380 million. This represents a $10 million increase versus the guidance we provided in February due to some investments related to attractive growth opportunities in select markets and geographies. We are acting these opportunities by making additional property investments and adding capabilities at certain sites where we see immediate returns. As such, these investments require a modest increase to our 2026 capital plan.

During Q1, we bought back approximately 87,000 shares of stock at a total cost of $25 million or an average price of approximately $287 per share. At March 31, we had approximately $575 million remaining under our share repurchase authorization, reflecting the expansion of that program by our Board in February. Turning to our guidance on Slide 13. Based on current market conditions and our Q1 results, we are now guiding to a 2026 adjusted EBITDA range of $1.24 billion to $1.30 billion, with a midpoint of $1.27 billion or an increase of $40 million from our prior guidance.

Given positive trends and market factors, which have developed late in Q1 and on into Q2, we now expect meaningful increases in both of our operating segments and are confident in our revised outlook. At the midpoint, this updated 2026 guidance now implies adjusted EBITDA growth of approximately 9% versus 2025. Looking at our annual guidance from a quarterly perspective, we expect second quarter adjusted EBITDA to grow 5% to 9% year-over-year on a consolidated basis. Looking at how our annual guidance translates into our reporting segments. At the midpoint of our guidance range, we now expect our 2026 adjusted EBITDA in Environmental Services to grow 5% to 8% for the year.

We exited Q1 with increasing demand across disposal, recycling, remediation work and our SK branch offerings. Our facilities network is positioned to process record volumes this year with strong execution from our sales team in a market backdrop of reshoring activity, robust project work and expanded PFAS-related work. We also expect to see continued expansion in our Field Services business. This 2026 guidance midpoint now assumes that our SKSS segment delivers approximately $165 million of adjusted EBITDA, up approximately 20% from 2025 and higher than the $135 million we provided in February due to the increase in base oil prices.

There is significant uncertainty around the duration of the overseas conflict and its impact on petroleum-derived products such as base oil. We believe $165 million is an appropriate assumption at the current time given the wide range of potential outcomes. Within corporate, at the midpoint of our guidance, we expect negative adjusted EBITDA to increase by approximately 3% to 6% compared to 2025. This modest growth is primarily driven by higher wages and benefits, costs to support business growth, increased insurance costs and acquisition-related impacts. Looking at it as a percentage of revenue, we expect Corporate segment results to be flat to slightly down from the prior year.

For 2026, we now expect adjusted free cash flow in the range of $490 million to $550 million with a midpoint of $520 million. That represents a $10 million increase versus our prior guidance, reflecting the higher adjusted EBITDA we now anticipate this year and considering the revised CapEx assumptions. We're off to a strong start in 2026, and our Q1 performance has led us to raise our full year expectations for both operating segments. We expect the positive demand environment we are seeing today to support strong profitable growth through the balance of the year.

We're encouraged by our growth trajectory and remain focused on executing against our long-term vision and goals as we move through the rest of 2026. And with that, Christine, please open the call for questions.

Operator: [Operator Instructions] Our first question comes from the line of Noah Kaye with Oppenheimer.

Noah Kaye: Great start to the year. I'm just trying to think about the growth profile across business lines here in the second quarter in the guide. Clearly, I think you mentioned improving trends, really accelerating trends across segments. In March, I think you said 10% year-over-year revenue growth within ES in March and base oil prices improving as well. So I guess if we just unpack kind of the midpoint of the EBITDA guide for 2Q, how do we kind of think about that, if possible, from a segment perspective? Because it seems like your exit trends imply a pretty good amount of upside to that.

Eric Gerstenberg: Yes. Noah, this is Eric. I'll start. When you think of our different business segments, Clearly, as Mike pointed out, there's still a lot of fluctuation in what's going to happen with base oil, but we're cautiously optimistic that, that segment is going to continue to overperform. When we think about our Environmental Services segment, as we saw in Q1, our growth rates of our SKE business, our Technical Services business, our Field Service business, all are north of mid-single digits and higher.

Industrial Services, we continue to be cautious about looking at how that business will perform, especially in light of how refineries these days and turnarounds are producing -- are trying to maximize the production of fuel and diesel and jet fuel. So that business, we expect to obviously have a stronger second quarter and third quarter, but probably pretty flat year-over-year.

Eric Dugas: I think to address kind of the Q2 question you had, Noah, in terms of the segments, I agree with all of Eric's points. To put a little bit finer point on Q2, I think when you look at the Environmental Services segment, Q2 last year strong. Q1 this year, kind of in that 5%, 6% range, very similar growth pattern as we move into Q2 here for Environmental Services, a little better than what we thought 3 months ago. And so that's nice to see. On SKSS, obviously, the year-on-year growth in Q2 greater than that, probably in excess of 10% due to the increase in base oil pricing predominantly.

Noah Kaye: That's super helpful, guys. I want to pick up on your comments around the field expansion, the branch expansion and the cross-selling opportunity there. Can you talk a little bit more about that? Like how do you generate cross-sell from the field expansion? How does it translate across the business? If you can give us some examples, that would be helpful.

Eric Gerstenberg: Yes, absolutely. When you think about our Technical Services business going out and collecting waste and packaging and bringing it back, those same technical services customers have -- the larger ones have environmental needs to have us respond with Field Services to clean their production tanks, to perform vacuum services above and beyond those baseline disposal lines -- disposal and transportation lines of business. When you think about our Safety-Kleen Environmental customers, we're seeing the same things where those smaller customers, smaller locations still have tanks and still have emergency response events, still have fleets that need our Field Services, services to respond to their fleet emergencies or minor spills that they have as they transport goods throughout the country.

So our job is to make sure that as we grow out our footprint that when we have a technical service branch footprint or SKE branch that we're complementing that by building out all of our Field Service branch capabilities in those same locations and growing our cross-sell with all of our lines of business. We have about 60 different lines of business that we service. And when you think of the number of technical -- the types of technical services customers, they consume about 20 to 25 lines of business. Safety-Kleen customers is about 5 to 6 of those business unit lines of business.

Field Services complements both of those business units by responding to their needs, and that's why we continue to build out that field service footprint. It also, I would say, is that as we talk about field service branches, we're strategically trying to make sure that we are always the first call for any emergency response, large or small. And our team has been doing an excellent job of positioning us with emergency response agreements with large and small customers that we can be there from our needs. And those efforts, the team has done a great job there, and they're really paying off.

And that's to come back around and to answer your question, Noah, our field service business is really complementing those other business units.

Operator: Our next question comes from the line of Bryan Burgmeier from Citi.

Bryan Burgmeier: Just on the '26 guide, the updated '26 guide, just curious if there's any impact from kind of rising diesel costs, maybe the impact to 1Q or 2Q as you kind of pass those costs along to customers or maybe that's kind of happening in real time? Just any thoughts on that would be helpful.

Michael Battles: Yes, Bryan, this is Mike. I'll take a shot at that. The diesel, we have a recovery fee that covers many different things, including the price of diesel that gets reset monthly. And so we tend to offset the cost of the diesel prices with that recovery fee. It's really been a long-standing process we've had for many, many years. It's based on the underlying price of diesel, and I think it's been well understood and well accepted by our customers and it moves every month. So I think that the rising price of diesel as it relates to Environmental Services, the rising price of diesel has kind of an immaterial effect on our profitability, on our margins.

It's almost a pass-through. On the SKSS side, obviously, it's very much more material.

Bryan Burgmeier: Got it. Got it. Yes, that makes sense. And then I appreciate the kind of overview and your thoughts on AI. Just maybe from a high level, where do you see the greatest opportunity right now? Would you say it's maybe on top line, bottom line? Is it efficiency or safety? Just some general thoughts on where the opportunities lie.

Michael Battles: Sure. I'll start. The -- when I think about artificial intelligence, it was interesting as we prepared for this call, we start wanting to talk a little bit more about AI. We went back and looked and we were actually talking about AI and robotic process automation back in 2017. So we've been actually having these types of technologies in our systems, in our processes. As we say, we think we're leading in technology in Clean Harbors and AI is just the next iteration of that. And again, we've been talking about it for many, many years.

So all the things I laid out in my prepared remarks, they're all part of the reason why the margins have gone up 16 straight quarters for 4 straight years. They're all that and many other things we do as an organization, with that type of safety, compliance and profitability drivers, whether it be invoice audit automation, faster profiles, I mean the list goes on and on. I mean we're making a more concerted effort here in 2026, a little more money, not a lot more money, but there's many, many different projects out there that are -- that help us from a safety and compliance standpoint as well as profitability.

And it's hard to put a real number on that, like how much is that related to it. It isn't a huge spend, but we do see it as a great opportunity.

Operator: Our next question comes from the line of Jerry Revich with Wells Fargo.

Jerry Revich: I'm wondering if you could just talk about the cadence of demand that you're seeing in Industrial Services, especially on the refining end market given the improved spreads. I'm wondering what you're expecting over -- as we head into turnaround season and what's the potential upside in that line of business now that the customers are a lot more profitable than a year ago?

Eric Gerstenberg: Yes, Jerry, to start the year, we went out with our sales team, and they did touch points with over 12,000 customers that have both small and large type turnarounds planned for the year. And our overall turnaround count seems to be consistent with last year. However, with what's going on with the Iran conflict, we're also seeing that those refiners really want to run full out to make as much fuel and diesel as they can. And preliminary trends that we're seeing exiting first quarter seems to be that those are more of pit-stop-related refinery turnarounds shorter in duration. So while the count seems good, they have been shorter in duration, we've evident.

We have had a few that have expanded in scope that we've seen, and we think that, that's primarily due to last year, they were also constricting their spend. But we're cautiously optimistic. We're staying close with our clients. We're making sure that we manage all their needs. Our specialty services is growing when we perform those turnaround services as well. So we'll continue, I think, 90 to 120 days from now, we'll have a better outlook of what we're seeing.

Jerry Revich: Okay. And then, Mike, can we just circle back to your comments in the prepared remarks on the M&A pipeline. Can we -- to the extent you're comfortable, just talk about the sizes of potential deals that you're looking at? Is it one large deal? Is it multiple deals? And any color that you could share or willing to share on what are the key signposts from a timing standpoint that we should keep in mind?

Michael Battles: Yes, Jerry. So when we think about M&A, it's been another busy year here at Clean Harbors. It's just like it was last year, which just weren't as successful. But we got the DCI acquisition over the goal line that closed here in Q1. And there's many other opportunities out there, all in our swim lane, primarily in Environmental Service that have permanent facilities that feed our network or have a large collection network. So these are many out there. I think some are very close to closing. Some are -- but there's plenty in the hopper, mostly smaller deals, tuck-ins type of transactions, but I think those have been plentiful this year.

Operator: Our next question comes from the line of James Ricchiuti with Needham.

James Ricchiuti: Just based on what you're seeing in the Industrial Services turnarounds in the energy market, which I think you just characterized as kind of like pit-stops in nature. Does that suggest something more meaningful in the back half we see some change in the overall pricing environment for a while?

Eric Gerstenberg: We don't see a change from the pricing environment, no, but could suggest that in the back end that it might be a little bit more heavily loaded on turnarounds in Q3 and some bleeding into Q4. Obviously, as mentioned earlier, they're running hard right now. But we're staying close with those customers, making sure that we're available for all of their needs, and we'll be there to service them.

Michael Battles: Yes, certainly hopeful that, that pattern comes to fruition, Jim. But just to be clear, kind of in the guidance as we have it laid out right now, we don't have large turnaround activity coming back in the second half. again, hopeful that, that happens. But the way we have it laid out right now is pretty flattish year-on-year.

James Ricchiuti: Got it. And just with respect to the activity, the more positive trends that you're seeing in ES in March, can you give any color on -- and maybe more broadly in the quarter, which market verticals are you seeing changes versus your expectations, say, entering the year? I think you alluded to it.

Eric Gerstenberg: Yes, James, we're seeing very strong trends with multiple verticals. Chemical, a little bit too early to tell. But in other areas such as health care and retail, we are driving expansion of those businesses. Pharma has been showing a lot of strength. Manufacturing, we're seeing volumes being really strong. So a number of areas in our verticals that are pushing volume growth across the network in both Technical Services as well as SK Environmental, other things like universities and household hazardous waste days, pretty confirmed good spending trends. The number of quotes overall that we're seeing across the business is continuing to grow substantially. Our pipeline is strong in various areas, including project services.

So a number of verticals we're seeing expansion in.

Michael Battles: Jim, the only thing I'd add to that is that you've been covering us for a long time. We've been doing this for a long time. And normally, we don't raise guidance after 90 days in the quarter, whether we -- unless there's an M&A or something like that. So the fact that we're raising guidance on both segments here just after just giving guidance 6, 7 weeks ago should tell you about our view as we think about the rest of the year.

James Ricchiuti: Yes, it does. And I appreciate that additional color and congrats on the nice start.

Eric Gerstenberg: Thank you.

Operator: Our next question comes from the line of Larry Solow with CJS Securities.

Lawrence Solow: I was going to follow up on that question just because I know you mentioned the economy, too, the backdrop seems to be improving, and you gave a little more color on that. Just a question I had was, has there been any hesitation from any customers through the kind of just the Iran conflict going on? Has that interrupted you guys at all? It doesn't feel like much. Obviously, we talked about the oil effects. But outside of that, has any customer behavior changed at all due to maybe inflationary pressures they're feeling. Obviously, your energy customers are kind of drinking from the fountain there from the hose, but just outside of those customers.

Michael Battles: Larry, this is Mike. Thanks for the question. I guess I would say that we haven't seen a lot of disruption because of the conflict. As a matter of fact, one would think, logic would tell you that you're getting kind of more U.S. production, that should be, if anything, a short-term pop from a short term -- from a manufacturing standpoint, you want to be closer to your customers, you're worried about supply chain. I mean those types of things that happened during COVID, frankly, that may be happening again.

And certainly, if you look at some of our larger customers and read their earnings releases and their transcripts, you come away with that impression that they are definitely -- whether or not the demand environment is changing, I don't know, but that's still kind of muted. But certainly, as the U.S. manufacturing should grow in the short term because of this conflict, if you're betting then.

Lawrence Solow: Right. Okay. And then just a question more mid- to longer term on PFAS, and I appreciate all the color and the framework that Eric provided there. Just so the DOW, the EPA, obviously, they've given kind of guidance. It still feels like it's interim, though, right? Because they're not really establishing actual requirements. They're just kind of laying out the options, right, for removal. So are we still waiting for like a more finalized guidelines or requirements for customers that might actually accelerate growth over the next couple of years?

Eric Gerstenberg: Larry, I'll start. So certainly, we've talked about in the past, the revenue that we did in 2025 was about $120 million plus, and our pipeline was continuing to increase by 20%. To start the year, based on the activity and the announcements over the past couple of quarters, we're seeing an accelerated pipeline. And our whole reasoning behind putting out that recommended guidance was because we see customers responding to that. When they have PFAS needs like changing out AFFF fire suppression systems or fire departments need to change out their fire trucks or an airport is going to be remediated because they're going to put a new runway down. We're using that guidance, and they're accepting it.

And they accept it because of who we are and what we know and how we utilize our network in order to perform those responses. So I think the point is that we're seeing that framework being enacted, customers acting more and more responsibly, regulatory agencies acting more and more responsibly. There definitely seems like there's more momentum going into this year than a year ago at this time, too. So we're -- even though there hasn't been any formal specific guidance like what we put out, we're acting by that. We see the market acting by that when they need to deal with their situations.

Operator: Our next question comes from the line of David Manthey with Baird.

David Manthey: First off on the new guidance. So it looks like $30 million of the $40 million midpoint EBITDA increase is because of SKSS. And as you said, I mean, you don't normally raise guidance in the first quarter. So should we expect the benefit from spreads in SKSS to flow ratably second quarter through fourth quarter? Or are you thinking about this like, hey, we have visibility on the second quarter based on where spreads are now, and we'll assess the potential third quarter and beyond spreads when we report in second quarter in July or whatever.

Eric Dugas: Sure, David, it's Eric. I'll take that one. I would say we have the better base oil pricing kind of spread ratably between Q2 and Q3. Certainly more insight into Q2 right now, given the uncertainty around how long oil stays high. So I would think about it kind of ratably through Q2, Q3. I think Q4 remains better just with a lot of the things that the business is doing as well. But in the current guidance, we kind of assume pricing maybe coming back down a little more towards normal as we get closer to year-end.

David Manthey: Okay. That's helpful. And then as it relates to Kimball, I know initially, you were doing a lot of starting and stopping and doing some test burns and things. As we sit here today, is Kimball sort of running on a normal schedule? Is it taking what you would consider normal waste streams at this point?

Eric Gerstenberg: Yes, David. Kimball ramp-up has gone extremely well. We more than exceeded our tonnage targets in 2025. We're out of the gates exceeding our expectations in 2026. The plant is running well. Team has done a great job, and we're on track with everything that we've laid out in the past from financially. When you think about 2025, our overall EBITDA contribution was about $10 million this year, add another $10 million to $15 million to that. But we're hitting our goals, our targets, and the plant is running very well.

Operator: Our next question comes from the line of Adam Bubes with Goldman Sachs.

Adam Bubes: How are you thinking about potential to maybe hold on to some of the charge-for-oil actions in a base oil up cycle? And is there a way you would advise us thinking about SKSS EBITDA growth on a percent higher base oil prices or maybe incremental margins are a way to frame that?

Eric Gerstenberg: Yes, Adam, we -- the team throughout 2025, we were responding to some very challenging conditions with what was happening with base oil and did a great job of moving to a charge-for-oil basis. As we exit Q1, we're in that $0.60 range, and we look to continue to manage. We had lost some gallons, but we really want to continue to manage in a charge-for-oil scenario. It's a waste that needs continued processing and refinement. And we want to make sure that we continue to operate that way and operate efficiently even though the base oil market has been changing.

Michael Battles: Adam, we worked really hard to change the industry from a pay for oil to a charge for oil and it's a long painful 18 months, and we're not that interested in giving it back. Obviously, we're going to need to be selective on that because we want to make sure we keep our gallons flowing into the re-refineries, but I think we'll be loathed to do that.

Adam Bubes: And then can you just help us think about where your realized base oil price was in the quarter? And how is that compared to the exit rate?

Michael Battles: I mean base oil prices, I don't have exact numbers to share with you, but base oil prices certainly went up as we got towards the end of the quarter. The conflict started in late February. We gave guidance in mid- to late February. The conflict started in late February, prices started ramping up, and that was part of the beat here in Q1. And frankly, the guide raise in Q2.

Operator: Our next question comes from the line of James Schumm with TD Cowen.

James Schumm: So maybe just a couple of clarification questions for me. So the SKSS guide, up 30%, we're spreading that over 2 quarters, Q2, Q3. So that's like $5 million additional or incremental per month over those 6 months? Or did you realize some benefit in Q1 and you're assuming a little bit of benefit in Q4? Just maybe some help there.

Eric Dugas: I would describe it as this. We certainly realized some of the benefit in Q1. We talked about that kind of on the call. In Q2 and Q3, I would say kind of an equal amount of incremental benefit and then kind of back down to normal in Q4. Q4 has a small kind of year-on-year increase in our current assumptions. But as I alluded to a moment ago, there's -- and in my prepared remarks, a lot going on in the business, a lot changing even early as today, some news. We have some assumptions we're working on right now, and we're going to come back in 3 months' time and kind of update those.

But I would think about it as the increase that's in the bank in Q1, spread pretty evenly between 2 and 3 for the rest of the $30 million and then kind of flattish to up a little bit in Q4.

James Schumm: Okay. And then on PFAS, it sounds like you just kind of mentioned some -- maybe some accelerating momentum there. Is 20% the right growth rate to continue to think about this? Or does the accelerated pipeline maybe we should be thinking about like a 25% growth rate? Or is that too premature?

Eric Gerstenberg: Yes. We -- it's more in the 25% to 35% range of what we're seeing initially here entering the year. So strong pipeline, number of samples that we're seeing to analyze for PFAS contamination that customers have been submitted have been up. The pipeline in both soil remediation, AFFF change-outs as well as industrial and municipal water treatment, all of those areas, we're seeing improvement trends as we begin here in 2026.

Operator: [Operator Instructions] Our next question comes from the line of Tobey Sommer with Truist.

Tobey Sommer: I'd love to get your perspective on the EPA guidelines, any differences that you've noticed between those fresh and the DoD and what you expect to hear from customers or, in fact, are already hearing.

Eric Gerstenberg: Yes. No, we were really excited, obviously, to get -- to see over the goal line, the approving of incineration by the Department of War. Our teams have been working with already 700 different military installations to make sure that we're here for their needs. So all positive trends there. Just as you know, we spoke in the past that we had Lee Zeldin down and visited our incinerator down in Houston a while ago, and he recently commented about meeting with environmental and us on helping to solve the PFAS challenges out there. So we're excited by just seeing some of that limited momentum about disposal of technologies being pushed out there, by particularly the Department of War.

Michael Battles: Tobey, it just revalidates what we already know that we have a great end-to-end solution. As Eric said in his prepared remarks, we have -- we can solve any of our customers' PFAS problems, and we've proven that both internally with our own framework as well as externally with the Department of War or the EPA.

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

Eric Gerstenberg: Thanks, Christine, and I appreciate everyone joining us today. We are participating in several investor events in the coming weeks, starting with the Oppenheimer Conference tomorrow. We are looking forward to seeing many of you at these events. And as always, have a great, safe rest of your week.

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.

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