Greetings, and welcome to the Clean Harbors Second 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, please go ahead.

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, July 30, 2025. Information on potential factors and risks that could affect our results is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision of the statements made today, other than through filings made concerning this reporting period. Today's discussion includes references to non-GAAP measures. Dean Harbis believes that such information provides an additional measurement and consistent historical comparison of its performance. Reconciliation of these measures, the most directly comparable GAAP measures, are available in today's news release, on our IR website, and in the appendix of today's presentation. Let me turn the call over to Eric Gersenberg to start. Hey everyone, and let me start with our safety results. We achieved our lowest ever quarterly TRIR of 0.40 in Q2, setting a new company benchmark for safety performance. Year-to-date, our TRIR stands at 0.45, reflecting our ongoing commitment to operational excellence and a culture of continuous improvement. This approach delivers significant benefits, including measurable advantages, to costs and fewer lost workdays. There are also intangibles, like a stronger reputation with our customers, the ability to attract the best people, and most importantly, making sure everyone knows they're protected and valued at work. Turning to our financial performance on slide three, our results in Q2 highlighted the sustained, profitable growth of environmental services and the stabilization of safety, clean, sustainable solutions, as both segments came in ahead of our expectations. Consolidated adjusted EBITDA margin increased by 60 basis points to 21.7%, driven by strong demand of our disposal and recycling assets and lower SG&A costs. SKSS, shortly, in that segment, are delivering results. The segment costs were lower year-over-year due to cost-cutting actions and non-recurring items that were included in Q2 of 2024, partly offset by higher insurance and technology investments. reflect continues from late Q1. Turning to our segment reviews, beginning with ES on slide, EBITDA margin grew year-over-year for the 13th consecutive quarter. The primary drivers were increased volumes, combined with pricing and efficiency gains. Segment top-line growth was all organic, as increases in disposal revenue, waste projects, and pricing programs more than offset the fewer large. Looking at regular safety, clean environmental led the growth at 9% driven by pricing gains and growth and core service offerings the number of parts wash services was down slightly from a year ago due to actions we are taking on the waste of a collection side as well as the more advanced parts wash models we are introducing that generate higher revenue per stop in addition the safe SK branches continue to drive substantial volumes of containerized waste into our permitted facilities. In technical services, higher incineration and landfill volumes supported by pricing programs drove a 4% revenue increase. Incineration price rose. Incineration utilization was 89% versus 88%. Incineration demand remained high. Show no signs reshoring and manufacturing expansion top of mind for many of our key. At the same time, we continue to have good to sound from a year ago due to fewer large events. However, the team performed very well in Q2, generating strong margins on its base business. Within industrial services, we are reflecting a larger number of turnarounds that carried a lower average. Due to these market conditions, we have been enhancing workforce and equipment utilization while taking out costs. We demonstrated that our incinerator achieved six nines of destruction of the key PFAS compounds and with emissions eight to 10 times lower than the most restrictive state, very compelling data for any customer that may have been unsure about the safety or effectiveness of PFAS incineration. At the same time, with that, let me turn things over to Mike to discuss SKSS and capital allocation.

Thank you, Eric, and good morning. Turning to our SKSS results on slide five, for the past several quarters, the team has done a terrific job, shifting our customers to higher charge for oil, CFO, which helped drive our better-than-anticipated results in this segment. Our revenue decreased year-over-year, as expected, reflecting lower market pricing and reduced volume sold. The $38 million we delivered in Q2 exceeded our expectations and reflects meaningful progress the team has made across a range of initiatives. We continue to aggressively manage our re-refining spread while lowering our cost structure and improving the efficiency of our operations. The shift to a CFO position that began in November continued in Q2. In the quarter, we gathered 64 million gallons of waste oil, which is up 11% sequentially. We believe we are achieving a healthy balance between charging appropriately for the used oil collection services we provide against the value of waste oil in the market and the quantities we need to optimally run our plans. We made progress and kept several key initiatives at Q2. We modestly increased our direct blended sales in the quarter. These sales provide greater stability to our business as pricing tends to be less volatile and they represent our highest margin gallons. During the quarter, we also advanced our partnership with BP Castrol as we support their more circular offering for corporate fleets. This lower carbon footprint solution is attracting more interest in the market with several fleets signed up and more evaluating the offering. We continue to grow our Group 3 gallons and are on track to add several million gallons of Group 3 this year versus last year, which should support greater stability in this sector. Turning to Slide 6, we continue to evaluate opportunities to execute on various elements of our capital allocation strategy with the goal of generating the best long-term returns. In Q2, strong cash flows resulted in higher cash balances and our leverage improved. As a result, our strong and ideal position to grow both internally and externally. On the M&A front, we remain active in evaluating both bolt-on transactions and larger transactions that would provide us with more permanent facilities, leverageable assets with high synergy potential, or ones that support our market position. Given our expansive network of assets, we believe that the right acquisition affords us the ability to unlawful and remain selective as always. Internally, we are evaluating additional organic investments to drive shareholder returns. With Kimball now on the path to success, we're looking at ways to increase incineration throughput at other locations in the years ahead. In Q2, we purchased our new Phoenix site where we will replicate the hub concept we are executing in Baltimore. We have other reasons to apply the same playbook going forward, as well as adding more processing or recycling capabilities, like e-waste, to other locations. We're also addressing the potential for further processing of our re-refining byproducts, as we believe there's value to be harvested there. With $700 million in cash, low leverage, a strong free cash flow, and free cash flow expected in the second half of 2025, we're in an ideal position to accelerate our growth and scale through both organic investments and strategic M&A. The pipeline is strong, and we fully expect to deploy significant capital in the quarters ahead in ways that enhance growth and long-term margins. As we're entering the back half of 2025 with strong momentum and a high level of confidence in our ability to deliver outstanding results, with the ongoing reshoring trend and substantial planned industrial investments in the U.S., our optimism is supported by a promising economic outlook. Reshoring is no longer a headline. It is becoming a funded reality. Our customers are breaking ground, expanding production, and creating more demand for our services. Although near-term trade incentives to invest in America manufacturing will drive greater customer activity, we see no indication that a healthy customer demand for our services will slow down anytime soon. We have multiple customers with plans to move ahead with remediation projects and to come to support our recycling and disposal assets. In SKSS, we remain focused through disciplined collections and the expansion of our blended direct sales and cash flow of more circulated partnerships. Our favorable outlook is underpinned by a powerful combination of macro and company-specific cash flow. We remain focused on executing our pricing strategies, cost mitigation efforts, and operational efficiencies to drive further margin improvement. We anticipate leveraging the strength of both our operating segments to achieve record top-line and bottom-line results in 2025. With that, let me turn it over to our CFO, Eric Dukas.

Our Q2 results came within Environmental Services with Q2 of 20, both in ES, offset the decline in SKS-2 adjusted EBITDA in our ES segment prior year, which more than offset the lower SKS-S EBITDA contribution. Our Q2 adjusted EBITDA margin was 60 basis points from a year ago. The team delivered a better than expected margin in Q2 through pricing, labor management, decreased 70 basis points from a year ago, 2025, we anticipate being in the low to mid-12%, 116,000, and increased landfill amortization due to higher landfill volumes. For 2025, we continue to expect depreciation and amortization in the range of $440 to $450 million. $110.3 million. Higher depreciation and amortization to net income also declined modestly. Earnings per share, slide 9, was nearly $700, remains a competitive advantage for us and gives us the flexibility to execute the capital allocation strategy that Mike covered. Our net debt to EBITDA ratio with no material debt amounts due until 2027. Our Q1 call, our overall debt rating is just one notch below and our secured debt, $108 million. Our adjusted free cash flow was a Q2 record of $133 million, 60% greater than the prior year. Substantially, in the prior year, when our Kimball construction was still in Q2 of this year, we purchased the Phoenix property and spent the bulk of the $15 million that we will be renovating and building out this location to create our next strategic hub facility. 2025, we continue to expect our net capex to be in the range of $345 to $375 million, $12 million, remaining under authorization. We are reiterating the midpoint $0.18 billion, $1.16 billion adjusted EBITDA for the prior year in the ES segment for full year 2025. Adjusted EBITDA guidance will translate to our reporting segment adjusted EBITDA in 2025 at the midpoint of our guidance to increase 6% to 8%. The pipeline is encouraging and should feed good volumes. PFAS and reshoring continue to represent good half of the year and certainly over the longer term. The COVID-1925 adjusted EBITDA at the midpoint of our guidance to be $140 million in the first two quarters due to the terrific work by the SKSS team in improving our collection rates while controlling costs. We anticipate growth and profitability in this segment in both the third and fourth quarters. Within corporate, at the midpoint of our guide, we expect negative adjusted EBITDA to now be up 5% to 7%. The year-over-year increase relates to the company's expected growth, higher wages and benefits, technology investments, and rising insurance costs. by our many cost-savings initiatives, which remains in the range of $430 to $490 million, represents nearly a 30% increase in Q1. The demand environment, even in the face of tariff uncertainty in Q25 and beyond, we see no material changes in our markets today as we execute against our longer-term goals. And 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 question.

Hey, good morning, guys. Hey, guys. Morning, Tyler. Hey, I just wanted to get your all kind of broad view on the macro. It sounded like yesterday a competitor was maybe a touch more downbeat on their call, but you guys seem pretty optimistic. I think you used the word enthusiasm. You noted healthy demand. You've got a good pipeline, maybe some reshoring activity. But just any thoughts broadly, do you feel like you're taking share? Or maybe you can help us just appreciate how your diverse portfolio really positions you to win, despite what looks like a pretty slow industrial macro.

Yeah, Tyler, this is Eric. I'll begin. And I'm sure these guys will, first of all, our volumes into our network continue to be at all time. Our receipts into our process, our TSDS, very, very strong. Our overall pipeline, the verticals that we're seeing, as well as our project demands, our project pipeline that we're seeing going into the Q3, as Eric mentioned in his script, very, very solid, driving volumes into our landfills, our incinerators, some into our wastewater treatment plants, and continue. I absolutely do think that leverage better relationships with our customers, servicing their national footprints, and that's where we've really seen some strong growth. We also have done a great job of growing with new customers and have had a number of different plans in place with a variety of different types of go-get new business to drive into our networks. On the service side of our businesses, our branch offerings, field services, mentioning that, year-to-date, we have opened 13 more field service branches. And what that allows us to do is service more emergency response events. Our goal is to make sure that we are the first call on all of our emergency was mentioned, and our script binary business seems to be stabilizing a little bit. Our count of turnarounds is in excess of 15% more than last year, although the revenue is a little bit areas as we enter into Q3.

The only thing I would add to that, Tyler, and Eric said as well, is around the pipeline. You know, the sales pipeline, our verticals are very broad, as you know, Tyler. And so, you know, if there's been slowdowns in certain parts of our business, we've been making it up in other parts of our business because of our very diverse end market approach.

So, yeah, excellent. That is excellent, caller. So I do want to come back, though, because I get this question a lot from investors around the refinery turnarounds. So it sounds like that's maybe showing some signs of life. but how much of the back half ES guidance is really predicated on a ramp in those refinery turnarounds, and how much of a risk is that if it doesn't materialize?

Yeah, Tyler, just to begin, the back half doesn't have a significant ramp at all. It isn't dependent on ES turnarounds. Overall, for the year, continue to say that the carvassing is up 15% year over year, But our back end guide us margins and efficiently managing our labor and just the base industrial holistically. We've been making sure that we implement a new service platform for that, which really enhances our margin improvement. But just to come back around to your full question, we don't anticipate a major ramp up.

Okay, that's extremely helpful. one. My last one, Eric Dugas, can you shape the benefit from bonus depreciation here in 25? And this is maybe just big picture, but do those changes possibly make some other, let's say, larger investments organically more attractive in the coming years?

You know, when you look at the enactment of the most recent act there, we do believe that here in 2025, we'll see some incremental cash tax savings from that. We've estimated that at somewhere between $10 and $15 million of incremental cash this year and some more in 2026, still refining those estimates, but that's what we're looking at. But I think you touched on something that's probably even more important and we're more excited about as it relates to the act is I think it's just another step to drive companies and further investment in the U.S. which is certainly a good thing for clean harbors on balance. So I think we're even starting to see with some of the discussion we're seeing with customers today around some movement and some activity and incremental investment and build-out, which is coming from a lot of different factors, but I think the recent tax law changes are driving that as well. So we're really excited about manufacturing in the U.S., and we think it's a continued tailwind for us.

But Tyler, to your point, though, I don't think that that changes our view on capital deployment. We have been very aggressive in capital deployment for CapEx, and we will continue to do that. You know, we do it based on return on invested capital, and the cap flows on that change.

No, that's very helpful. Thanks, guys.

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

Hi, guys. Good morning. First off, you've reported just under half of your full-year guidance in SKSS through the first half of the year, and given that the fourth quarter sometimes has negative seasonality, what gives you confidence in seeing an uptick in the third quarter from the second quarter in SKSS EBITDA, and then related, you made a comment about improvement in the third and fourth quarter, could you clarify and say, did you mean that EBIT.margin or EBIT.dollars would be better in 3Q and 4Q in SKSS?

Yeah, Dave, this is Mike. I'll take it. If you remember, last year was a tough comp for SKSS. It had a pretty bad Q3, if you recall. So the comps on that, we are seeing kind of positive, we are forecasting positive kind of year on year in Q3, Q3 last year. And, you know, the two busiest quarters are Q2 and Q3 for the oil business. And so we see a good kind of positive momentum in that business. Really, Dave, it comes down to the shift we made really in Q3 last year in early Q4 where we moved away from, you know, our pay for oil to a charge for oil and focused on the pricing we are charging to pick up the oil versus feeding our plants. And as you know, we close the plant. And so those costs are there, so it should help from a profitability standpoint year on year. And so really, that's what's driving how we get to the 140 through the first half of the year. And so really, we feel very confident, and as we sit here today, better than ever from a reset perspective as far as how we feel about our ability to charge for used motor oil and our ability to leverage that in the marketplace and let that be the driver of profitability.

Okay, thank you. And I'm also interested in your outlook for turnaround activity and major projects in the back half. You said that turnarounds are up 15% in the second quarter, and you also said that you have confidence that the maintenance deferrals are behind us. If I put those two together, even though that's not in your guidance, if that level of activity continued, would it represent an acceleration in the back half of the year? Is that potential upside? I'm not trying to bake it in, but it sounds like if I put those two things together, the outlook is pretty good, and you're saying it's not in your current outlook.

Hey, Dave. Eric Dugas here. I think you got it right. As Eric said, for industrial services, our guidance does not necessarily depend upon a great comeback there. We are cautiously optimistic that we'll see a better back half with the turnaround schedule we have here, and we do feel like we're starting to come out of the maintenance deferrals.

So I think any kind of significant upside in the back half would be... Got it. Thank you so much, guys. Dave, just to clarify one key point, p.m. The overall turn in 2025 and the average spend, the average revenue that we're invoicing on a turnaround is down roughly about 10%.

The turnaround services, however, we really see that we are turning the corner, as mentioned here. There's not a lot in our guidance around it, but the team's doing a great job servicing the turnarounds ahead of us.

Okay. Thanks for that clarification, Eric.

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

Good morning, guys. I guess just in that same vein, you talked about the tariff uncertainty starting probably in April. Has that, you know, persisted? Has that changed at all? And is that kind of tied into some of these delays on the remediation projects you spoke about? I guess that's a separate, you know, kind of subject from the industrial turnarounds, right?

Yeah, Larry, I wouldn't correlate of any of their remedial projects. The spending is clear. The pipeline is up. We have some that have already begun into the Q3. So there's a lot of activity across the board. But we've also been doing a good job at getting ahead of those projects and those events. And now we see them starting.

Yeah, when you look at the project work that's feeding our landfills, Larry, this is work that started. But it's there. So it's not – some of it is – as Eric said, the pipeline is very strong. We feel good about the back half of the year, as I assume. But that's work that hasn't been executed yet. This work is either signed, sealed, delivered, or started already.

And then just switching gears on to PFAS, I appreciate some of the update. And it looks like, you know, you're getting a little more push from the state side. Just any update? You know, I know you guys were, I think, presenting or had this incineration study, DOD and EPA. I think that was going to be presented soon. Any update there and just thoughts on when we might get some guidelines from the EPA or more guidelines? And maybe I know that's important, but I guess maybe with the states pushing harder, maybe other paths to get customers to drive not just orders but revenue.

Larry, sure. So, as mentioned earlier, we completed our PFAS, and the results of the high-temperature RECRA thermal incineration is, that being said, the EPA participated, and we've been working with them on obviously pushing to get the third quarter, but there were evidence so the market is acting as if regulations are in place, growing, and some of the PFAS side into our network has been growing. So there's indications. I mean, we all know it's a bad material, and it affects human health and the environment. And even without those changes, the administration is clear, and they've said that they continue to want to act on it.

Thanks, Eric.

Our next question comes from the line of James Rusciuti with Needham & Company. Please proceed with your question.

Thanks. Good morning. Just a couple of questions. I think you had talked about your expectations for Kimball, I think, in previous course. And I don't know, you may have given some broad guidance on it in the call this morning, and I may have missed it. But I'm just wondering how we should think about the scale up in the back half and then looking out to next year in terms of how we might think about the EBITDA contribution.

Yeah, James, I'll begin, and then Eric will add on the $1 million number in the past. We continue to ramp up. We see strong volumes and ramping up to more.

The only thing I would add to that, Jim, as well, as Eric said, still confident around the incremental EBITDA for bringing this unit online across the network. But also, point in mind, as we move throughout the year with more production, and more EBITDA coming through that unit. Right now it is a little bit of a drag to our margins. So the incremental margin that we produced in ES this quarter, there was a little drag from the startup. You have a full allocation of costs, but not a plant running at its full capacity yet. So that is kind of some upside that will continue.

The follow-up question I have is a little bit more longer term. And I'm just going back to, you know, analyst event that you guys held back in March, I guess, 2023. And obviously, there's been a lot of changes, certainly in the political environment. But I'm wondering if your view of the M&A opportunities out there has changed. I almost get the sense that you're looking at more organic investment opportunities. So maybe you could talk a little bit about the way you're thinking about the business longer term.

Hey, Jim, this is Mike, and I appreciate the question. You know, the pipeline is very focused, but we are focused on making sure we get a good return for our children around that. It's got to make kind of cultural fit, financial sense. We've got to see a path to synergy, the path to value. We're trying to improve our, you know, get our ROIC up and get that business kind of contributing at the rate that we think is important to us. At the same time, to your point, there are a lot of internal investments that are out there, whether they be, you know, the Phoenix hub we talked about, the Baltimore hub, the investment in Kimball, there's more out there. And those are terrific investments as well. You know, they take longer to execute on, but frankly, you know, they don't come with a lot of goodwill, if you will. So I think that's really a – I think we are measuring all those things. We think that those are all great uses of our capital. We look at – we share that.

It's all based on – Our next question comes from the line of Noah Kay with Oppenheimer.

Please proceed with your question. hey guys thanks for taking questions uh can we talk about environmental services margins because you you entered the quarter with a very tough comp from last year uh you didn't have as much er revenue you had the drag from kimball and you still expanded 30 bits year over year so can we can we first unpack the puts and takes of getting that expansion and then can you share with us, quantitatively possible, how we should think about margin trends in ES for the balance of the year.

Yeah, so Noah, just to begin, as we've talked about, we saw strong margin improvement from all the services on the lines of business. On the field services side, as pointed out this year, about 10 million in the business, the number of overall ERs. We've had a lot of based business ERs and based business from our customers, and our team has done a great job managing labor and efficient industrial services as well we saw improvement even even with as of last year we've driven margin improvement through managing labor tightly of our crews and then uh we continue down that path appreciate it and and the second part of the question around how to think

about margins for the second half of the year nes yeah no i think all the all the progress that Eric just articulated around pricing, labor management, cost efficiency, transportation, and those continue. As you know, the comp in Q3 gets a lot easier because there's not that large event work that Eric mentioned earlier. So I think that the margin progression that we're going to see for Q3 and Q4, you know, our 13 consecutive quarters, I think, is going to expand based on kind of how we're looking at our own internal models. And so I'm of the view that, you know, We're going to have – this train continues. We're talking about – we're talking about pipeline and the view we see around our sales pipeline and our ability to execute against that. So I'm very bullish on the back half of the year, March expansion and environment. None of these – I don't think any of these things are one of these. I think they are.

I think the comps do get easier in the back half as well, so it's fair to think about expansion probably at a higher rate, right, in the back half. I mean, that seems to be implied.

Very much so. Very much so. But you're right. We came into the recorder with a view that perhaps Q2 would be a margin of contraction given all the event work we had last year. But as Eric said, every one of our businesses did very well.

Thanks, Mike. I just want to pick up on the M&A question and maybe try to put a little bit of meat on the bone here as net leverage continues to trend down. Anything you can share on LOIs, size of targets? I mean, you're talking about a very full pipeline here. or just help us understand a little bit more what you're looking at.

You know, real tough to get very specific as to the target because, you know, we want to make sure we're disciplined and we sometimes go very late in the process and don't go further. So it's really hard to say, Noah, you know, what's going to close, when is it going to close, and we get questions like that all the time, like what's your view over the next 12 to 18 months. It's very difficult to give that answer. I'd rather talk about our process, which I think is incredibly disciplined, but incredibly robust. We have a team of people who've done over 75 acquisitions in our history, and I do think that we have an incredibly talented team of people who can execute on not just on the Dota side, but on the integration synergy capture side. We really, especially businesses that we bought last year like Kepico, we are seeing terrific returns on that. And as Eric articulated in the margin story around field service, that's internalizing those emergency response call-outs has been a huge win for us. So I think that the engine is very strong, and we're getting a good pipeline of things to look at, both large and medium, and some small and medium, some large. And we'll continue to be very active with our strong balance sheet.

All right. Well, stay tuned.

Thanks, Mark. Thanks, Mark.

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

Hey, good morning, guys.

Good morning.

So on the SKSS guidance, you guys sound very confident in the 140 this year, but if we just look at the numbers, and you were asked this before, but if you just look at the first half and then 3Q is supposed to be up year over year, but that could be $42 million, I don't think that gives investors a ton of confidence because 4Q could be weak. So I just wanted to ask, is there something else? It is FIFO accounting, right? So if your pricing has been going up, are we working through the backlog of pricing from six months ago that was lower than – You know, so maybe you have something in hand that we can't see, that we're not aware of, but maybe you could just talk to, you know, the charge for oil pricing that maybe has gone up. And so 3Q could look a lot stronger than 2Q based on what you already have in the system. Any help you could give there would be great.

Sure, Jim. And this is Eric Dugas, so I'll take that. I think a lot of what you said there is right on. But just that Mike touched on, you know, certainly we see sequential growth in SKSS from Q2 to Q3. And one of the primary drivers of that is, in fact, you know, the lower cost inventory that is now in the system. So we've sold through. We've sold through that higher cost inventory from last year, referred into Q3 and Q4 here, that we're going to expand the profitability of the business. We will. We do expect to continue to see kind of the seasonality, typical seasonality from Q3 to Q4. but probably not as deep as last year. So like we said in, I think, our prepared comments, we've been very happy with the first half of the year. Each Q1 and Q2, we've exceeded expectations in this business a little bit. We're almost 50% to our full-year goal, and we anticipate greater profitability in the back half here. So very, very good. Again, I would just emphasize that the team has done a phenomenal job here transforming the economics and changing to a charge for oil position. and I think the market has followed, and that's been great, and that's probably the single biggest driver of the change here and our comfort and our guidance this year.

Okay, great, Eric. Thanks for that. And then I just wanted to ask, in environmental services, can you talk about your pricing and contract structures, how they vary? Do you have, you know, how many of your contracts are long-term contracts? And then if you could just, like, specifically address, like, are there long-term price agreements for your incinerator volumes?

Yeah, James, this is Eric here. I'm in a three-year area. Very, very disciplined. Our cadence is, so we do that on a cadence. The business unit, the whole breadth of customers, see what contracts are getting renewed. So we continue to have opportunity there. We all know that inflation, and we see more opportunity.

Okay, thank you for that. And then just on the incinerator part, is that what you're referring to, typically a one- to three-year agreement there? Is that the same throughout ES?

Yeah, it's really our top-tier customers across the board. It's not related. It's really all the way saying that is...

Okay, got it. Thank you very much. Thank you.

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 Sommer with Truist. Please proceed with your question.

I wanted to start out and see if you could provide us some additional color on the strategic and financial advantages of the hub concept that you talked about in your prepared remarks that you're sort of proliferating throughout the system.

Toby, I'll begin. So other major hubs leverage across working off the same people at speed of supplies and transportation through our network gets leveraged. So it's really an entire mix of driving efficiencies, driving cross-sell, working together as a team, meeting those needs. I can't fail to mention from a distribution side, we're selling a lot of products as well, whether it be oil, whether it be materials and supplies. how we get back calls on our transportation through those hubs. And it's very important for us.

The dollar savings that Eric sort of articulated around cross-selling, around logistics, around maintenance, kind of all those. And so when you have a larger hub like that, when you get a smart young person, he was trying to leave the company, I think from a very, very low. But our turnover standpoint, we've been able to keep it.

Thank you for that.

From a competitive behavior perspective within EES, What does it look like from a pricing vantage point?

Are you seeing any players out in the market nip at business, at prices that don't generate the kind of returns that you want, and therefore you're kind of foregoing some business because of that?

I'd say more now than ever what there is, very disciplined. Really, we aren't driving prices. We, as we know, what we do and the way the investments that different companies have made into the ES space.

Thank you very much.

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

Thanks, everyone, for joining us today. Our next investor event will be at the Raymond James Virtual Industrial Showcase in mid-August, followed by more IR activity in the September timeframe. Have a great, safe day.

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.