Greetings, and welcome to the Clean Harbors First Quarter 2026 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. Good morning, everyone. With me on today's call are 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, May 6, 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 to the statements made today, other than through filings made concerning this reporting period. Today's discussion includes references to non-GAAP measures. Clean Harvest believes that such information provides an additional measurement in consistent 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 Erstenberg to start.

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 25 years in his judgment and perspective. We thank him for his many contributions. Thank you, Michael. Our team delivered an extraordinary safety, leaving the lowest quarterly total recordable incident rate in our history. While we invest in better equipment, you only get the type of results we are achieving, with only setting a higher standard for our company and our industry. For any employees tuned in today, thank you for all that you do, and keep yourself safe, including higher profit and challenging weather conditions that impacted our climate. 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 of year-over-year improvement in adjusted EBITDA margin and 18, at the same time, charged for oil services. And from a late-quarter surge, 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 PFOS-related. And for our disposal and recycling service, revenue rose 5%, and safety, clean, and environmental services revenue grew 7%.

In the past year, Q1 adjusted EBITDA and SKSS grew 17% to $33 million with an impressive $320 billion. 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-refiners. At the same time, we incrementally grew both our direct lubricant gallons and group-free 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 seven, this morning we wanted 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. We use AI in many areas, including waste classifications, invoice audit, ready-to-build 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, and boat 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. Turning to capital allocation on slide eight, 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 also continue to view sharing purchases in 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, giving the favorable long-term outlook 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. Our growth opportunity, PFAS, and project. With a large number of maintenance days and our incinerators now in the rear view, we expect to deliver mid to up the full year. SK Environmental, 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 market SKSS and 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 exception.

With that, let me turn it over to our CFO. ...we outlined in February, driven primarily by SKSS outperformance and continued strong execution from the environmental service. ...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 in March, adjusted EBITDA increased 6% to $248 million. The EBITDA margin was 17%, representing a 60 basis point improvement from the prior year period as both operating segments contributed higher margins. A combination of our ongoing initiatives, including to be in the high range of $460 million to $19 million in Q1 of $1.19 with a net debt to EBITDA ratio, is in terrific shape at the end of quarters of the year. Operations in Q1 and strategic growth projects, including the SDA unit expansion, was a negative $76 million in the quarter and in line with our expectations. Due to seasonality, negative adjusted frequency in the SDA unit, and $25 million, we now expect net capex to be in the range of $350 to $410 million. A $10 million increase versus the guidance we provided in February and geographies. and adding capabilities where we see immediate returns by a modest increase to our Q1, we bought back approximately 87,000 shares of stock, $25,287 per share. 31 remaining under our share repurchase authorization, reflecting the expansion of that program, $7 billion of $40 million. We now expect in both of our operative EBITDA growth of approximately 9% versus 2025. Looking at our annual guidance from a quarterly perspective to 9% year-over-year on a consolidated basis. Into our reporting segment, adjusted EBITDA and environmental services to grow 5% to 8% for the year. We exited Q1 with increasing demand across the mediation work of reshoring activity, FAS-related work, $5 million of adjusted EBITDA in 2025 and higher than the $135 million we provided in February due to the increase in base oil prices, 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. Negative adjusted EBITDA to increase by approximately 3% to 6% compared to 2025. It's primarily driven by higher wages and benefits, increased insurance costs, percentage of revenue. We expect to be flat to slightly down from adjusted free cash flow in the range of $490 to $550 million, $120 million. collecting the higher adjusted EBITDA we now anticipate this year and considering the revised cap in our Q1 performance has led us to raise our full-year expectations of the positive demand environment we are seeing today to support strong, profitable growth through the balance of the year, long-term vision, and goals as we move through the rest of the year.

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 Noah Kay with Oppenheimer. Please proceed with your question.

Good morning, all. Thanks for taking the questions. Great start to the year. You know, I'm just trying to think about the growth profile across business lines, you know, here in the second quarter in the guide. You know, clearly, I think you mentioned, you know, improving trends, really accelerating trends across segments. You know, in March, I think you said 10% year-over-year revenue growth with NES in March. And, you know, base oil prices improving as well. So, I guess if we just unpack kind of the midpoint of the EBITDA guide for 2Q, you know, how do we kind of think about that, if possible, from a segment perspective? Because it seems like your exit trends imply, you know, a pretty good amount of upside to that.

Yeah, continue to overperform. When we think about our environmental, as we saw in Q1, field service business, all are north of mid-single.

Industrial services, we continue to be cautious about looking at how diesel and the environmental services segment, Q2 last year strong. Q1 this year, you know, 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 three months ago. And so that's nice to see. Year-on-year, 10% due to the increase in base oil pricing.

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

When you think about bringing it back, when you think about our state saying things, trying to make sure that we are questioned, Noah, our field.

That's great insight. You know, I'll leave it there, and looking forward to having you guys at the conference tomorrow. Appreciate it.

Talk to you tomorrow, Noah.

Our next question comes from the line of Brian Bergmeier, Root City. Please proceed with your question.

Hi, good morning. Thanks for taking the questions. Just on the 26 guide, the updated 26 guide, Just curious if there's any impact from kind of rising diesel costs, you know, maybe the impact to 1Q or 2Q is to 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.

Yeah, Brian, this is Mike. I'll picture that. You know, 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 really is – it's really been a longstanding process we've had for many, many years. It's based on the underlying price of diesel, and I think it's been a 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, you know, the rising price of the margins, it's almost a pass-through. On the SKSS side, obviously, it's very much more material.

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

I'll turn it over. sure i'll start the uh you know i think about artificial intelligence is interesting as we prepared for this call which i wanted to talk a little bit more about about ai we went back and looked and we were actually talking about ai and robotic process automation back in 2017 so we would we've been actually having you know these types of technology as we say we think we're a leading leading in in technology and clean harbors and and in ai to the next iteration of that. Again, we've been talking about it for many, many years. So all the things I laid out in mind for three years, they're all that and many other things we do as an organization. That type of safety, compliance, and profitability drivers, whether it be invoice, audit, automation, fasted profiles, the list goes on and on. 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 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.

Our next question comes from the line of Jerry Revich with Wells Fargo. Please proceed with your question. Yes, hi. Good morning, everyone.

Good morning. Hey, Jerry.

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 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.

Jerry, to start the year, we went out with a touch point, and our role seems to be consistent with last year. However, we really want to run full out to make as much exiting first quarter. seems to be that those are more of the ground seems good. They have been shorter in duration. We have had a few that we've seen, and we think that that's primarily we're making sure that we manage all their needs. It's growing when we perform those. So we'll continue, I think, 90 to 120 days from now. Okay.

Thank you. And then, Mike, can we just circle back to your comments and 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 in any color that you could share, willing to share on what are the key signposts from a timing standpoint that we should keep in mind?

Yeah, Jay. So when you think about M&A, It's been another busy year here at Clean Harbors. It's just like it was last year. We just weren't as successful. But, you know, 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. We have a large collection network. So, you know, these are many out there. I think some are very close to close. Mostly, you know, smaller deals, tuck-ins type of deals.

Our next question comes from the line of James Rusciutti with Needham. Please proceed with your question.

Hi, thank you. Good morning. This is 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 hit stops in nature. Does that suggest something more meaningful in the back half? Do we see some change in the overall pricing environment for a while?

We'll see a change from the price load and not turn around, some Q3, and some running hard right now. We're staying close. We'll be there to service them.

Yeah, certainly hopeful that that second half.

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.

Yeah, James, a little bit too early to tell, but in other areas such as health care and retail, of those business strength, unless there's an M&A or something like that. So the fact we're raising guidance on voting guidance six, seven weeks ago should tell you about our view as we think about the rest of the year.

Yeah, it does, and I appreciate that additional color, and congrats on that nice start.

Thank you.

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

Hey, good morning, everybody. I was going to follow up on that question, just because, you know, 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, you know, 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?

Hey, Larry, this is Mike. 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 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, you know, 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 – Right.

Okay. And then just a question more, you know, mid to longer term on PFAS, and I appreciate all the color and the framework that Eric provided there. 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. You know, 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, you know, accelerate growth, you know, over the next couple of years?

Well, Larry, we've talked about it, and our part of the year, based on the activity and the announcements, announcements. Our whole reasoning behind putting out that recommended guidance was because we have PFAS needs, like changing out, AFFF fires 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 I think that the point is that we're seeing that framework being enacted, customers acting more and more responsibly, regulatory agencies.

I appreciate that call. Thanks.

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

Thank you. Good morning, guys. First off, on the new guidance, so it looks like 30 million of the 40 million midpoint EBITDA increases because of STSS. And as you said, I mean, you 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?

Sure, David. Eric, I'll take that one. I would say we have the better base oil pricing kind of spread rapidly between Q2 and Q3. Certainly more insight into Q2 right now. So, I would think about it kind of rapidly 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, you know, we kind of assume as we get closer.

That's helpful. Thank you. 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?

You know, when you think about 2025, our overall $10 million this year, add another $10 to $15 to that.

But we're hitting our goals, our targets. Okay, thank you.

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

Hi, good morning. 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'd advise us thinking about SKSS EBITDA growth on a percent higher base oil prices or maybe incremental margins are a way to frame that?

We had lost some gallons, but we worked for a whole scenario. You know, it's a waste that needs continued processing and refinement. You need to operate.

You know, Adam, we worked really hard to change the industry, you know, from a pay for oil to a charge for oil. And, you know, 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. We want to make sure we keep our gallons flowing into the re-refineries. But, you know, I think we'll be loathed to do that.

And then can you just help us think about where your realized base oil price was in the quarter and how does that compare to the exit rate?

We got toward 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 rate is Q2.

Thanks so much.

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

Please proceed with your question. hey good morning guys um so maybe just a couple of clarification questions for me so the the skss guide up 30 we're we're spreading that over two quarters q2 q3 so that's like five million additional or incremental per month over those six 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.

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, you know, and in my prepared remarks, not changing even, you know, early as today, some news in three months' time, we kind of update those. But I would think about it as can Q1 spread pretty evenly between two and three for the rest of the $30 million and then kind of.

OK. And then on PFAS, sounds like you just kind of mentioned some maybe some accelerating momentum there. Is 20 percent 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?

Number of samples for PFAS contamination that customers have been submitted have been up.

Okay, great.

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. Thanks.

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. Thank you. So we're at limited momentum.

Internally with our own framework as well as...

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