CLEAN HARBORS INC Q1 FY2025 earnings call

• Safety: Total Recordable Incident Rate (TRIR) was 0.46 in Q1, the best quarter in company history.
• Financial Performance: Q1 results ahead of expectations; ES started well after weather issues in January, SKSS outperformed guidance.
• ES Segment Details: Field services grew 32% (HEPACO contribution), Technical Services incineration volumes and pricing drove growth, Safety-Kleen had 5% revenue growth but industrial services down 10% due to refinery delays.
• SKSS Segment Details: Shifted to a charge for oil position, idled California re-refinery to support CFO initiative, Group III program expected to produce 2-3 million additional gallons of Group II this year, active on M&A and internal investment opportunities.
• CFO Insights: Q1 results topped guidance; revenue grew 4% ($55M); adjusted EBITDA $235M; balance sheet strong with ~$600M cash, net debt-to-EBITDA 2.1x; share buyback activity in Q1.

ES Segment: Adjusted EBITDA increased 4% with a 3% revenue increase, resulting in a 10 basis point margin improvement. Revenue components: Field services grew 32% (largely from the 2024 acquisition of HEPACO), Technical Services saw a 5% revenue increase due to higher incineration volumes and pricing (incineration price rose over 5% in Q1, utilization at 88% vs 79% in Q1 '24). Safety-Kleen Environmental Services had a 5% revenue increase, but industrial services revenue was down 10% due to refinery customers deferring spending. SKSS Segment: Revenue increased year-over-year due to greater volumes (including Noble) and a shift to a higher charge for oil position, but adjusted EBITDA margin was down year-over-year due to base oil pricing. Revenue contribution: ES segment accounted for two-thirds of the company's Q1 revenue growth.

• Reiterated 2025 adjusted EBITDA guidance range of $1.15 billion to $1.21 billion (midpoint $1.18B, 6% annual growth).
• Q2 adjusted EBITDA expected to grow 1%-3%, with 3%-5% growth in ES segment and lower corporate expenses offsetting expected SKSS decline.
• Full year 2025 ES adjusted EBITDA midpoint expected to increase 5%-8% from 2024; SKSS full year adjusted EBITDA midpoint $140M; adjusted free cash flow guidance $430M to $490M (midpoint $460M, ~30% increase from 2024).

• Tariff and trade uncertainty potentially impacting industrial services weakness.
• Weather-related disruptions affecting volumes, with some revenues potentially lost permanently.
• Base oil pricing fluctuations affecting SKSS segment performance.
• Potential economic slowdown impacting waste volumes and customer spending.

Q: Could you quantify the weather impact on ES segment and if volumes would catch up?

A: Weather caused ~$10M-$12M lost EBITDA in January, but March and early April showed strong momentum, with ES expected to have continued strong demand in Q2.

Q: Update on PFAS pipeline and administration's PFAS plan?

A: Strong PFAS pipeline; EPA's PFAS announcements create a strengthening regulatory framework, with results of incineration study expected in Q2.

Q: Concerns about economic slowdown impacting M&A pipeline?

A: Valuations still high for assets, strong balance sheet allows leveraging assets for synergies; pipeline of deals remains active but selective.

Q: Impact of base oil pricing weakness on SKSS?

A: Team drove higher used oil collection pricing, offsetting base oil pricing weakness; inventory costs lower, giving confidence in Q2 profitability.