Clean Harbors, Inc. (CLH) Earnings Call Transcript & Summary

Good afternoon, everybody. Welcome to the afternoon session here at our 2020 Virtual Industrials and Materials Conference. My name is Brian Maguire. For those of you who don't know me, I cover the U.S. environmental services space as well as the paper and packaging group. And now we're going to transition to some of the environmental services companies we've got this afternoon. We're very fortunate to have with us the company that's not only the largest hazardous waste disposal company in North America, it's also the largest collector and re-refiner of used motor oil. So joining us from Clean Harbors today is CFO, Mike Battles. And I think we've also got Jim Buckley from Investor Relations on the line, just to make sure Mike says everything kind of compliant and keeps him in line. Mike, Jim, thanks so much for joining us today, and welcome to the conference.

Hey, Brian, thanks for having us here, and thanks for all the investors for your interest in Clean Harbors. And I want to thank the team from Goldman Sachs to sponsor this conference. Certainly, wish we could all do it face to face, but we appreciate the opportunity to talk about a company we're really proud of, Clean Harbors.

Yes, echo the sentiments. Thanks, everyone, for joining on the webcast. And normally at a conference, we'd have a period at the end where the audience can kind of ask their questions. We're doing it through the webcast this year. So there should be a dialog box on there for all of you to ask your questions. They'll come into my inbox towards the end of the session. We'll transition over to -- I'll read aloud some of the questions for Mike here, but please take advantage of that to submit your questions to me.

Yes. Mike, just to start it off, I think a lot of people in the audience are probably familiar with the company, but there might be some that are new to it. And you guys are differentiated in the space from a lot of the larger publicly traded, more traditionally solid waste companies. I was hoping you could just provide a quick overview of the business. Conceptually, it's very similar, I think, with collection and disposal, but the nature of the waste that you're handling is quite a bit different. So hoping you could just provide -- take a couple of minutes to just give an overview of the company.

Sure. Sure. Thanks, Brian. So when you think about Clean Harbors, we're about $3.4 billion in revenue last year, about $540 million of EBITDA. And unlike the solid waste guys, we're dealing with hazardous waste. So all our landfills are aligned in hazardous landfills, means we have 9 hazardous incinerators. We do wastewater treatment. We take -- and it's mostly servicing the chemical and manufacturing space, so not a lot of household waste. And so it's all -- when I think of the rubbish guys, I think of nonhaz waste and tipping fees. This is more compliance-based hazardous waste material that we have to go pick up at our customer site and ship and dispose of in our landfills, incinerators, wastewater treatment plant and so forth. So it is a little bit different. It is all -- we also take -- it's outside of the incinerators and the landfills. We also have a very large small quantity waste generation or through our Safety-Kleen business. And the Safety-Kleen business is about $1.3 billion last year, and that business goes mostly into the automotive space, dealerships and repair shops. And we go clean up the dirty solvents that are in the parts washer machines as well as pick up containerized waste. When you think about a Safety-Kleen for a minute, you think about a repair shop. When they do like a brake job, they can't throw the brake pad, that worn-out brake pad in a garbage disposal, in a dumpster. They have to put it in a specialized container, and then we pick that up and then we'll dispose of that into an incinerator or into a hazardous landfill. So that's about 1/3 of the company's size, and that's the company we acquired back at the end of 2012. So again, when you compare it to the nonhaz companies, the solid waste guys, this is much more of a hazardous specialist type of pickup, probably driven more by industrial production and GDP and less about construction site, construction development.

Great. Now that's great. And thinking about the business, you've had a great -- the last couple of years have been solid. Some of the investments on the Gulf Coast, some of the efforts in Safety-Kleen to get to more of a closed loop. I want to touch on all those things. But before we get to that, I did want to kind of just talk about real-time trends that you guys are seeing. We're getting a lot of questions from all of our companies just on how the virus and the lockdowns have impacted them. Obviously, the conference is timely from that point of view. And on the earnings call, you talked about some of the trends you were seeing in April and in 2Q. It's obviously having a pretty big impact. It's like particularly in the Safety-Kleen part of the business. But I was hoping you could kind of just talk again about those trends and maybe provide whatever update you can on how things have improved, if any. Or any signs of bottoming that we might -- you might have seen since the earnings call?

Yes. Sure. So in the earnings call last week, we did talk about the fact we thought that the Safety-Kleen business was going to be down in Q2, from a revenue standpoint, 30%. That's probably coming through as we expected. I do think that on the Environmental Services business, although we have seen some softness in certain end markets, we have been able to do some decontamination field service work, and that's been offsetting some of the softness in that market, which I'm happy to get into what we do there. But that business has kind of held its own versus prior year, where I'd say the SK business because of shelter-in-place rules and because of lack of demand for base oil, that business has really struggled here in Q2. I would say though that without getting too technical about it, there is signs of life. Do I see a bottom? It's hard -- it's always hard to call bottom, right? But I do see May being a little more optimistic than where we were in April. It's still -- the month is only halfway done. We still got plenty of time left in the month of April, but I do see kind of signs of life out there as far as miles driven and other types of key performance indicators that we would look at to try to measure the rebound of Safety-Kleen. Again, who knows what the future holds for the rest of the quarter and for the rest of the year, a lot of factors out there. But I do see kind of signs of life. The other thing I want to say is that when you think about our business in general, we -- it's interesting and maybe a little frustrating is that we do get -- our stock price does move a bit with base oil, with crude oil. Yet only 13% of our business is tied to oil. And so I just -- I want to try to disabuse our listeners and our potential -- investors and potential investors that most of our business is not tied to oil. It's tied to maybe GDP or industrial production. That's probably a better measure, and maybe we're a GDP-plus type of business. But when trying to say that we're oily and those types of comments, it just frustrates me a bit because really, it's such a small part of our business now. It's -- we'll talk about oil all day long, but it's only 13% of the organization.

Right. And even there, you have some ability to manage the spread, right? It's not like you guys are just drilling oil and selling it for whatever the market price is. You collect oil and you can -- the price you pay for that basically goes negative. You can charge for that oil if that's when supply and demand dictates, and that's what you're doing right now. Is that right?

That's absolutely the case. That's interesting. You go back to like '13 -- in 2013, '14, '15, and as oil prices went from $130 a barrel down to $30, we weren't changing that input cost fast enough or even at all. And as such, our margins in that business collapsed, and the business went from $80 million, $90 million a year to $35 million, $40 million a year. And that's all different now. Now we have -- we meet daily on making sure we get the spread right as to what we're selling the base oil for and what we need to charge the customer for that waste. When I go do a parts washer service or pick up used motor oil from a customer, we need to educate the team that it is a waste and that it cannot be thrown down the drain. It cannot be put into a -- in a dumpster. It has to be picked up. It is a hazardous material in some states. It's a regulated waste in all states, and it needs to be monitored and picked up properly. And so we have done a good job of trying to educate the organization -- our customers, excuse me, that it is a waste and we need to charge as such. And we've done that here in Q2. I think we've done a really good job of increasing pricing because the price of the base oil is really, really low. So we are getting that spread pretty well.

Okay. Just to stick on that spread management concept. So there's obviously just an inherent lag in that, and it will take a little bit of time for you to implement a price increase. Maybe you can just talk about how -- like what that lag inherently is before the income statement is sort of matched on an input and output basis. And would you expect, if we have found some kind of a bottom or stabilization on oil and base oil prices, that maybe by the third quarter, you'd be kind of caught up on that spread?

Yes. So normally, Brian -- you bring up an interesting point. Normally, it's 6 to 8 weeks by the time a price changes in the end market, and then we get -- we'll change our input cost, either up or down. If prices are going up, then we'll get that benefit, that spread widening for a little while until our pricing of the charge for oil changes. So there is a bit of a lag there on the good side, too. But what's happening now is it's just a lack of demand. And that's -- we've always assumed in our models that the -- we could sell oil at any price, whatever the market prices are, and there's just not a demand for that oil right now. And as such, that's really causing this dislocation and requiring us to shut our re-refineries down and really try to slow things down a bit as we try to manage through this. But normally, I'd say you're absolutely right, Brian. As we get to kind of Q3 and maybe there's signs of life, and driving -- summer driving is going to be taking off and everyone is going to be using their cars and oil prices will be in demand again and will burn through this backlog. I do think the normal lag is 6 to 8 weeks.

Okay. That's very helpful. I mean you have the 2 components, the spread and then the volumes. Maybe you could argue that the oil price drop is tied to the virus. But, yes, the volume part of it certainly is tied to the lockdowns, and we're all optimistic.

That's right.

Yes. We're all optimistic that as some states start to open back up again, and down here in Texas, we're starting to open up a little bit, those miles driven will pick up. Miles driven, you'd say that's probably the best forward-looking indicator to look at, is -- as miles driven translates into oil changes, translates into better...

Absolutely.

Better volumes. Yes.

I'd also say that my hypothesis, it's going to be the summer driving, right? Because you get the low prices of gasoline, which I'll correlate directly to driving, miles driven. And you have people reluctant to get on airplanes, which I'm certainly one of them. People are reluctant to get on mass transit. That's me, too. And so there's going to be, I think, a lot more driving this summer than normal. And as such, I think that, that's going to kind of take -- not only open up the repair shops and the parts washer services and other types of our business, but it's also going to burn off the excess oil that's in the marketplace. And the last thing I'd say is that, certainly, people are, in general, very fearful of their jobs, lucky to still have them. And people who do, they're going to keep driving their old clunkers versus trading it and buying a new car. And if you're making a decision whether I get the brakes fixed or do -- or get new tires put on the car instead of buying a new car, you may go down the former versus the latter. And that's going to spur, I think, more investment in repair shops and dealerships and so forth.

It makes sense. Personally, I'm looking at maybe finding some -- a rental house somewhere on the Florida Panhandle and just driving from Houston as opposed to flying anywhere crazy for a vacation this summer. So I'll be putting a few miles on the mini van this summer.

What's interesting, Brian, to that point is that RV rentals, people who can rent, they're sold-out to Columbus Day. RV rentals this summer are essentially sold-out to Columbus Day. Not that I know personally because I would -- I don't think that would be a fun thing -- it doesn't feel like a very fun vacation. But for some, it does. And that's -- and it's come to find out that those rentals are sold-out for quite a period of time.

Yes. That's an interesting data point. I haven't heard that one before. So just a bit beyond Safety-Kleen, I think we kind of spent enough time on the recent trends there. But looking at the bigger part of the company in Environmental Services, the -- they got a lot of different -- they seem like a couple of different businesses under the same segment reporting. But the more industrial exposed parts of the business there, chemicals and some automotive end markets, yes, what are you kind of seeing there? Because I don't think -- this is such a different recession, right? We're not seeing this being driven by industrial slowdown. This is sort of starting with the consumer and all the lockdowns, and then that seems like it's trickling from there into the industrial economy. But are you seeing those parts of the business now catch up to the consumer and start to fall off? Or have they remained pretty firm? And the backlogs that you went into the year with, which were really good, are those still at a pretty high level? Or are you starting to see some impact in the industrial part of the business?

Yes. So when you think about our end markets and they're listed on Page 13 of the deck, when you see automotive, that's not Ford and GM making cars, that's automotive repair shops. And we probably -- I just want to clarify that when you're thinking, that's more an SK. So when you think about manufacturing and chemical, that's probably more of the, let's say, the Environmental Services business. And you're right, Brian, it's -- bars and restaurants and hair salons don't generate a lot of hazardous waste, right? And so those types of consumer-driven or the retail space, not so much. A little bit, but not so much. Airlines, again, some more for the TSA, but not a ton, right? So I would say that the majority of our business kind of continues on. And we still see that the chemical manufacturing still moving forward. The agriculture, fertilizers and other types of -- those types of products still being manufactured. Obviously, there's going to be some downstream effects at some time. You can't -- if we're not making new cars, the new cars don't need paint. And if new cars don't need paint, then they don't need DuPont to make paint. And so we don't need to have -- we don't need to keep making the paint. But in many of these cases, they're hard to shut off. And so they're kind of -- they're continuing on. And as such, we still see those waste streams coming into our network. Has it slowed down? Certainly. In certain areas like in Western Canada, certainly. In the industrial services, the turnaround work may have been postponed. And we see it in as maybe hydrovacing, some smaller businesses, those have all been -- those all have been hurt a bit. But that's also been offset by decontamination work, and we've been able to offset some of that. The other area that is not a big business for us, $60 million, $70 million a year, but household hazardous waste days. I'm sure your investors and you have had these days in your community, and those are obviously put on hold. So yes, there is some small pockets of softness there. But the big drivers that drive the places, the businesses that drive our incinerators, the businesses that drive our landfills, and they are continuing. They are continuing. So we came into the quarter with a good backlog, and I'm hopeful that we kind of work right through this thing. But again, it depends how long it lasts. And if it does last for quite a period of time, well, there will be an air pocket for us. So we'll have to work our way through that. But nothing yet. Nothing as of -- here we are. Last week, we issued earnings. We talked about April, nothing that would suggest that. Anything I said last week is still accurate.

Okay. That's great to hear. And you talked about this part of the business a little bit earlier. I think it's within field services with some of the sanitizing crews that go into an office or a manufacturing facility and are sanitizing all the parts for people that are starting to reopen. They want to make sure that if somebody was in there and had the virus that this place gets totally sanitized and cleaned before anybody else gets back in there. Maybe you can just talk about that part. I mean, I'm sure you're going gangbusters in that part of the business, but the ability to scale it up to meet the demand or the expected demand as we start to reopen, and a lot of things need to be cleaned and sanitized just so that people can come back into those workplace environments.

Yes. So Brian, it's been really interesting because certain parts of our business, whether it be the household hazardous waste days I've talked about or industrial services turnaround teams. I mean, the beautiful thing about it is because we have 15,000 employees, those teams can just -- and they've all been trained, those teams can go right on and help out with decon work. And so we've been able to keep these guys busy, which has been great for them and great for us, and been able to service, as Alan said, 2,600 jobs in March and a lot more here in April and May. We've talked about in the main call this being a $50 million of incremental revenue coming out of this -- the decon work. I think that as businesses are starting to reopen, I think that's probably a fairly conservative number. And I'm hopeful that we kind of do much better than that through the rest of the year. The other hypothesis we have is that this is not just an emergency response project that we're doing on a one-off, that in many cases, it may turn out to be a line of business, and we may be doing this for an extended period of time. Will it be hundreds of millions? I don't think so. But I do think that it is -- I do think that it's going to be a line of business that we're going to have for quite a period of time because I do feel like, again, as companies start to reopen, as arenas start to reopen, and that's maybe a long way away, you would want to make sure that you have -- from an optic standpoint, from a real standpoint and from a litigation standpoint, you want to make sure it's done by a nationally recognized organization. And Clean Harbors is the #1 brand that you want to bring in and do that work. And oh, by the way, we do it safely. We do it in accordance with laws and regulations. And we'll make sure you get a good, deep clean, if you will.

And then just sticking on the topic areas where -- of potential growth for the company or new markets that you haven't traditionally been in. One that you talked a lot about last year was PFAS, and that's sort of an emerging hazardous -- potentially hazardous area. I think right now, it's still allowed to be put into municipal landfills, solid waste landfills. But yes, there's been some legislation. There's been some talk around classifying it more as hazardous. I know on the wastewater side, you're already getting some business on wastewater treatment. But maybe you could talk a little bit about it for the audience who maybe is less familiar with the topic, just where we stand on some of the legislation, and how you guys are uniquely positioned to sort of solve this problem.

Yes. Sure. So I'll start, and then Jim Buckley certainly has probably even a deeper knowledge on PFAS than I am. But the -- yes, PFAS right now is nonhazardous, but it was used in teflon and waterproofing, and it was made in the '70s and '80s. And there's actually an interesting documentary on it called The Devil We Know. It's on Netflix, which I'd encourage you -- it's actually an interesting documentary. It's a bit of a hit piece, but it does tell you the history of the chemical and what the product is and how it has been used. And it is a known carcinogen, yet not labeled hazardous yet. And so I think it is an important designation that today it's nonhazardous. And so although we get a lot of inbound questions and requests on it, we really haven't disposed of a lot of PFAS. Maybe it's in firefighting foam, and that's really a prevalent use maybe at airports and at military bases, where they've been using it to train and put out fires. And so that foam, that gets in the groundwater, it gets in the soil, and it can cause birth defects and other types of ailments. And so the answer is that Congress is working its way through legislation around making this -- and the EPA is making this a hazardous material. And once it becomes hazardous, normally, they come out with how it's going to be disposed. And so in this election year, it's probably not going to be something that's going to get resolved between now and November. But we feel over a longer horizon that this is going to be labeled as hazardous. It is going to need to be disposed. The only known way to actually really destroy that -- destroy this organic material is through incineration. It's called a forever chemical for a reason. And so as such, we feel like it's going to need to be disposed of through incineration. And we, of course, have 9 of the 13 commercial hazardous incinerators in North America. And as such, it's -- we think we're in a good position to take advantage of this legislation when it becomes law. And when you think about other things like PCBs and asbestos and other areas that became hazardous over time, it is a -- this is what happens. It takes 5, 10 years for it to become labeled hazardous. Once it gets labeled hazardous, it never gets nonhazardous. And then it becomes a business for us and others to kind of dispose of whatever is out there. So long-term good guy, probably nothing in 2020. And I think that we need to get a new administration in there and work our way through that. And once that will happen because we're not the only guys who are -- we were not getting damaged by it. A lot of people are getting sick from it still, and it needs to be resolved.

Great. Now that's clear. It's kind of one of those political hot potato items that depends on the administration a bit. But certainly here, a lot of documentaries.

But the Senate and the House are both working on bills. Again, they're not close to being reconciled, and they probably will not be reconciled between now and the end of the year.

Environmental topics in general seem like they've been getting a lot of attention with investors in this concept of ESG investing, really took off over the last year or 2. The waste industry, Environmental Services industry has a bit of a complicated message there. But have you seen increased interest in investors from an ESG or sustainability mandate? And what's kind of the messaging around? Because sometimes people hear we're a waste company. We have landfills. We have incinerators. They sometimes think that's bad. But in reality, this stuff has to go somewhere and you're part of the solution, not the problem. But just wondering what your own like inbounds from ESG-type investors have been? And what's the kind of messaging around sustainability?

Yes. So the answer to your question, yes, there is a fair amount of inbound traffic on sustainability and ESG initiatives. And we probably need to do a much better job of telling our story. Because as you say, Brian, when you think about incinerators and landfills, you're like, "Oh, God, that's not ESG-friendly." But honestly, it is actually the most friendly answer you could possibly have. When you have these organic hazardous materials, the only way to resolve that is through incineration. So we are actually saving the planet by burning that waste first thing, and letting it get into groundwater, letting it getting into the environment and killing people and animals and so and wildlife. So I think it's very important that we get that message out. We also are -- as you mentioned, Brian, we're the largest re-refiner of motor oil. We take 200 million gallons of motor oil out of the -- 230 million gallons of motor oil out of the environment and make base oil out of it, and make motor oil out of it. So we really are -- it really is a very green solution that I think needs to -- it has started to take on, get some traction, but we need to do a better job from a sustainability standpoint, from a reporting standpoint and help tell our story. And we did do a sustainability report a couple of years ago. We need to update that and make it more in line with guidance that's out there in the marketplace and less anecdotal, right, and less a marketing document versus a sustainability report. And we're going to try to do that this year. And so more to come on that. I do think that it's an important initiative that we need to make sure that we are doing. And I think that we have a great story to tell, and we just need to do a better job of doing that.

Brian, the other thing that's changed for us, I think, just to add to that real quick is that previously, some of the ESG investors are sustainable investors since I've been here. We're hung up on the fact that we had such a large presence in Western Canada. The oil sands is sort of ground zero of carbon badness. And the fact that we've gone from $600 million in revenue 8 years ago and kind of our oil, gas and lodging to where it was $115 million last year, and it's probably south of $100 million and falling this year, plus we've continued to divest businesses up there. I think that's been a winner for us as well. I've had a couple of folks tell us -- tell me that, actually.

Yes. When we were in the oil sands and we had a huge presence there and $150 million of EBITDA and other things like that, that was -- that's a bad guy. And there's no getting around that. The good news is that business crumbled to the point of irrelevancy. So great -- good news there, right?

Yes, yes. They can lemonade a lemon sometimes, exactly.

The positive spin on a negative answer, right?

Well done. Well done. I'll -- I'm going to open it up to the audience questions and sort of transition over. I've got a couple come in. One, just around the -- getting back to Safety-Kleen and the closed-loop initiatives there. And I think that's been a strategic priority and focus for you guys over the last couple of years. I know you changed out the kind of the sales -- leader of the sales team a little bit ago and seems to have reinvigorated it, and you're making progress increasing the amount of the -- of your sales that are kind of directed internally. But maybe you could just update us on where that effort is. And if all of these -- the virus and all of the slowdown in driving and everything right now is stunting that, or if you think maybe it potentially creates some opportunity out of it.

Yes. So the closed loop is interesting. So to be quite candid, we had great expectations of the closed loop. Instead of making $70 million -- 70% of our output is base oil and 30% is blended oil. We were going to go 30% base and 70% blended, and that clearly hasn't happened. It's just -- it's harder to displace that direct lube model. People are very -- brand awareness and brand connectivity is a lot stronger than you think. People are very committed to the Quaker States and the Pennzoils of the world, and it's really hard to displace those guys. Our story is the same. We're making progress on it. Last year, we grew by 25%, Brian. And if you and I run this business, 25% would be great. It's just not going as fast as originally as we had anticipated. We still believe in the story. Obviously, the whole world will shook up about with coronavirus and what that volume is going to look like for Q2. It's a bit of an open question right now. But make no mistake, the long-term horizon of that businesses are still growing, and the direct lube business is still a very viable answer for us. And we're really proud of that growth. And the team really is excited about how that can continue. We do need to get some larger customers. A lot of them are more -- are smaller, the mom-and-pops of the world, so we need to kind of continue down that path. But again, the business has been growing. It's just -- we talked about it growing. It's going to be $100 million of incremental EBITDA in 5 years. Well, that didn't happen, right? It's not going to be -- that growth of that business in 2020, even pre-COVID, was not going to be a material amount of the EBITDA that the SK business generates. So that is a grower. It's just not growing as fast as we originally liked. My view on that is nothing changes. Like that catalyst of growth in a post-pandemic world is unchanged. And I do think that people -- The Green Initiative, the ESG initiative, it's just one more tool in their toolbox as customers look for ESG answers. "Hey, do you want regular motor oil from the ground? Or do you want re-refined motor oil that came from cars already that's been cleaned and meets all the safety standards and performance standards of your -- of conventional motor oil?" And the answer is more and more companies are going to want to do that. And that's -- and the market is flowing to us, not the other way around.

All right. Another question that came in over the webcast was kind of referencing your balance sheet in a really good spot. The sub kind of right around low 2s, I think, on leverage, nice cap-to-cash position.

That's 2.2.

2.2, which is a good spot to be if you're anywhere in industrial and materials as far as I'm concerned. Nice cash position. Obviously, I think right now, there's a lot of uncertainty with how the pandemic is going to play out. But if we get a month or 2 down the road, and we start to get a little bit more comfortable that the trends that are in place are as bad as it kind of get, do you think there are opportunities to redeploy that cash? And would you be more inclined towards acquisitions? Or you talked about the stock earlier, being overreaction to oil prices. Do you -- do buybacks look more appealing if that's the scenario?

Yes. I'd say that the -- we're assuming lower for longer. And the challenge we have in M&A right now is that we don't know kind of what EBITDA we're buying. And we don't know what the growth prospects are, so we don't know the multiple we should be paying. And oh, by the way, when we had that conversations with people, they're looking at their world through the lens of 2020 BC, 2020 before corona. And so that tells me that we can't really get connected on valuations. And so we're probably going to have to continue to kind of focus on our cash collection, focus on the strength of our balance sheet, focus on managing CapEx, managing our working capital and see where it goes. We have been very disciplined in our capital allocation, and we will continue to be so. From a buyback standpoint, because we borrowed $150 million on that revolver, we probably want to pay that back first before we go out and start buying back shares. But personally speaking, Brian, it's not a state secret. I did this yesterday, I bought back -- I personally bought 1,500 shares of the stock. I think it's -- I'm not trying to give you investment advice here, but I do think it is pretty good value where it stands right now, that's for sure.

That's the best answer you can give because sometimes companies will hide behind, we're in a window, we can't buy back our stock or the balance sheet, we want to preserve cash. And then I always think, well, you've got your personal account. So if you really think it's cheap, go out and buy it yourself. So when you see somebody put their money where their mouth is like that, that's an even better indication, I feel like. That's great to hear.

I do it because I believe in it, that's why. I do it because I believe in it. I believe in the company, and I think that -- I personally think that the incinerators alone are worth that, to be quite candid.

Last one we have time for from the webcast again. Just a question on input costs. Just labor is a pretty big component, landfill costs. Some others have talked about landfill costs, compliance costs and things like that having gone up the last couple of years. Anything you're seeing change on the input cost side? Maybe you can expand it beyond the buckets I mentioned. But any good guys on the input costs?

Well, what's interesting about it, Brian, is that areas like variable costs like T&E, I mean, that's way down. That's not -- that's the least surprising news of the day. But what is surprising is that we are self-insured, and health care costs are actually much lower here as we look at April because people aren't going to the -- as we all know, if you're watching the news, people aren't going to the doctor and people aren't going to the hospital. So that's kind of in a weird way, that's been a small good guy for us. I think that comes back to us as shelter-in-place laws are removed and people feel a little more comfortable going to get -- going to see the doctor but because people haven't stopped getting sick. But certainly, we see that in April, a small benefit for health care costs because we're self-insured, like many companies are. And so we just haven't seen that level of volume in hospitals, and physical therapy and all those guys are all -- and people are concerned, and I get that, and me too, for that matter. And so I just think that's an interesting anecdote as we look at kind of the April results. And you see that health care costs are down by, I'd say, a fairly material amount.

That's an interesting anecdote. Yes. I think, we already...

Yes. I just -- I heard that the other day. And I just was kind of -- it kind of makes sense when you think about it for a second, right, because we're self-insured, and people aren't going to the doctor. And you can see that -- or they can't go to the doctor because COVID only. And as such, our -- and you'll see that for every company that's self-insured. You'll see that -- I assume that the health care cost will be -- at least through April and maybe into May, you'll see those costs kind of being way down, which I just thought was an interesting data point.

I look forward to getting some of my health insurance premium back if that's the case.

Good luck. Good luck.

Maybe get a little bit of that back.

I think I got a token amount of [indiscernible], but I think that was just because they're regulated.

That's right. I got the rebate from USAA myself. I appreciate all the time guys and all the details. We're out of time. But I want to wish you guys best and stay safe through the quarter. And thank everyone on the webcast, especially the ones who submitted questions. Hope everyone enjoyed the conference, and everyone has a great day. Thanks again.

Thanks, Brian, and thanks for the team at Goldman Sachs to have us. Well, have a good afternoon, everybody.