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

Great. Good morning, everybody. My name is Larry Solow. I'm a partner and research analyst at CJS Securities. I'd like to welcome everybody to the CJS 21st annual new ideas for the new Year conference. Since we're still relatively early in the day, presentation #2. Please allow me just to briefly review the format of our conferences. Our presenters will spend approximately 15 minutes or so, giving a high-level overview of their respective companies. We'll discuss opportunities that could benefit, then we'll move the next 1 to 2 or even 3, 4 years. And then we will have approximately 15 minutes for a Q&A session, which I will moderate. [Operator Instructions] With that said, I'm happy to introduce our next company, Clean Harbors. We covered here by CJS, I think, close to 20 years now. And joining us this morning from the company are Mike Battles, CFO.

Gentleman. I'm sorry, but we're having some technical problems. There's an echo on the line.

I can't hear it on my end.

Can we just -- why don't we just go ahead? And Mike, can you just start to -- can you guys hear me?

I can hear you fine, Larry, it sounds fine.

Okay, I think we're all right. If there's anything else, I will let you know, sorry about that.

No, no worries. With that, why don't we just go ahead and let me introduce Mike Battles, CFO; and Jim Buckley, Senior Vice President of Investor Relations. Thanks guys.

Thanks, Larry, and thanks, CGS, for having clean Harbors present today, certainly quite an honor to speak to investors, and we always appreciate the opportunity to kind of tell our story, which we're really proud of. So I'm going to -- I have a slide deck here in front of me. I'll just try to reference page numbers. So you guys can try to follow along as I speak to these things. I'm going to start on Page 3 and give you a little background of the company. Company is North American, the leading hazardous waste disposal company. About 3 point -- 2019 numbers, about 3.4 million -- $3.4 billion in revenue, $540 million in EBITDA. We're the largest collector and recycler and refiner of used motor oil, we are the #1 and #2 in all our end markets. We have a very large fleet of trucks, which we'll get into. We're the largest, one of the largest private motor carriers. And we are -- we have -- what makes the value proposition of the company is our permitted, hard to replicate waste disposal facilities, whether it be our 9 hazardous waste incinerators, our 11 hazardous waste landfills, our wastewater treatment plants, our 6 re-refineries of used motor oil, I mean, really is quite a great story started by -- which is not on the slide, started by a gentleman named Alan McKim. Alan's still the CEO of the company, owns 7% of the company. Started 41-years ago, kind of the true American entrepreneurial story of kind of 4 guys and a truck driving this company. And again, and still very active in the day operations of the organization and still as the CEO and Chairman of the company. Moving to Slide 4. This is the business model. We go out and gather waste at our customer sites. We transport that waste through our network of facilities. And then we recycle what we can. And that really -- I want to stop there for a minute because that is the basis of the whole organization. We are a sustainability solution for our end customers. Whether it be taking dirty motor oil, over 200 million gallons of dirty motor oil and making motor oil out, the base oil out of it, whether it's taking solvents and re-refining solvents, where they're taking metals or other types of -- we extract all value out of the actual waste we gather. But then when all value has been extracted, then we dispose it into our network of highly difficult to replicate permitted facilities across North America. About 85% of our revenue is in the U.S., about 15% is in Canada, and that's where we play. On the next slide, we talk a little bit about our actual facilities. As you can see, we have this kind of North American footprint. It really is, in my mind, when I'm thinking about it as an investor and thinking about Clean Harbor, this is where the value is. These incinerators and these landfills and these re-refineries, very difficult to replicate a good national footprint, a great network of logistics so that we can take the waste kind of wherever it is, and we show a bunch of different types of trucks here, but we also have a lot of railcars, and we use a rail network to transport our way to where we need to be. And these are just our infrastructure, our facilities, we have over 450 sites across North America. We're in actually every city across North America where we do kind of -- we pick up -- we start the process of picking up the waste. And so we really have what I think is an incredible footprint, again, is very difficult to replicate, highly permitted, very difficult to get new ones and really -- quite really a sustainable business model. So we talk about end markets. Again, something very interesting that we can ask about from time to time. So we put this slide in here. We are -- we service the majority of the S&P 500, but we're not really tied to one end market. And when people -- we kind of talk a lot about chemical and manufacturing, and we'll talk about that later in the deck. But really, the top-5 end markets are less than 50% of all of the whole company. And we show these top companies here. It's still only 75%. And things that are not on here, retail and pharma, I mean, we're kind of everywhere because it's interesting enough that all these different parts of the U.S. economy and the North American economy generate hazardous waste. And when they generate hazardous waste, they call us, and that's who they call because we have the only company that has the national footprint to kind of take the ways kind of wherever it is. And so really, that is kind of what we're really proud of. And I think that when certain parts of the business hit by the pandemic are affected, other parts have picked up, and we'll talk about that in a minute. So sustainability. And I know that over the past 6 months or the past year or 2, certainly, the investing public has gotten much more interested in this. And the interesting thing about it is that Clean Harbors was doing sustainability before sustainability was cool. And really that we have a great story here. And so we're going to issue a sustainability report in Q1, and we're working on it now. It's going to comply with all the SASB standards that need to be done. And again, I think it'll be really interested and excited about it. But the point that we want to mention here is that, and we'll talk about our greenhouse gases and our water uses and our power usage and all that stuff, and that's all going to be in there. But really, that's our footprint. And really, what's interesting about it is we are -- I think we provide a sustainability solution for our customers, whether it be the -- so we go out and pick up the waste at the customer site and make sure it gets disposed in accordance with laws and regulations because kind of what we're grabbing, what we're picking, what we're transporting is very dangerous. And if it ended up in the waterways or in the soil, it would cause a lot of damage. And so again, we are the sustainability solution. We're going to issue a report, and we've done a good job of them. We've improved our scores over 40% in the past year. And we're really proud of it, and we're going to continue to do well on that, and we put some resources to it to make sure that we have kind of a great answer to that question. But really, all we're doing is documenting kind of what we're already doing. And again, I'm really proud of kind of what we do. And we are -- whether you think about carbon credits and other things around picking up 220 million gallons of dirty motor oil that would be -- the alternative would be in the waterways or some place else and being able to make base oil a lot of it cheaper and better than from crude, again, a great story that we need to do a better job talking about. But ultimately, I think will be a great investment opportunity for us as we go forward. So now I'm going to talk a little bit about the different segments of our business, which there are 2. The first is the Environmental Services business. And that's where all the incinerators and the landfills are, wastewater treatment plants and so forth. And so -- and the drivers of the business are here to the left, but there are 2 here that I wanted to call out in particular. The first is kind of regulations. And so regulation, we get a lot of questions around the Biden administration versus Trump and Obama and this and then that. I mean, regulation started this company. And that's the whole business model is predicated on having regulations and being in compliance with regulations. And so when you think about the organization, when something is labeled as hazardous, and then we have to deal with it, it doesn't get labeled as -- it never gets label as unhazardous. So the roles just grow, and they don't get smaller. And things like PFAS, which we'll talk about, our -- we think with the Biden administration are going to go faster as far as making it a hazardous waste, and that would be just another type of waste stream that we have to deal with. And we are in the perfect solution whether the answer is incineration or landfills or other types of treatment facilities, we have it now. We're the only one that has it all. And we have the most closed-loop landfills. We have the incinerators, that's the answer. And we need more regulation around that. But no matter what the answer is, we'll have the solution for it. The other thing I'd want to say is that when you think about the pandemic and the impact on our business is that -- impact on the U.S. economy, there's going to be probably a push for re-shoring, if you will, or moving operations from international locations to the U.S. and I'm of the view that that's a winner for us, right? Because more U.S. manufacturing means more waste streams no matter what it is, whether it's drugs or whether it's critical, critical parts or critical spares. I mean, I think that you and I had the company today, we wouldn't close down our China operations, but maybe the next dollar of investment goes in the U.S. versus in Asia. The other thing I'd say is that -- which is unfortunate is that the amount of natural disasters that are happening in the United States 2020 was the highest amount of hurricanes in North America. That was the highest hurricane season. The top -- the next 5 are all within the past 10, 15 years. And so unfortunately, there's going to be more natural disasters in less, and our field service organization will be there when those happen to help clean up when there's a ruptured oil pipe or other types of disasters that happen, we are the emergency response solution for these customers. And we kind of proved that with what we're going to talk about in the next slide. The next thing we did. So when the pandemic hit, obviously, we're all concerned like we all -- we make sure the safety of our employees and of our customers. And we definitely were really conscious on that and did a great job of kind of minimizing our exposure. But then we quickly looked for investment opportunities, right? So we definitely were -- used this opportunity to say kind of how will it impact our customers, and what can we derive, and how can we service our customers better? In an emergency response project, the COVID decom work, the D3 initiative was put in place. And we had first-mover advantage we've done more than 12,000 responses as of today and really been a great solution for our customers. If there is if you're on a manufacturing site or a distribution center and someone comes in who has COVID, but then you have to open up at 6:00 a.m. tomorrow morning, we come in late at night with the foggers and the PPE, do it right, clean it properly to make sure you can open up and be safe for your employees the next day. And that's been a huge business model for us. We'll generate north of $100 million of revenue this year. Again, something that -- it shows the resiliency and the entrepreneurial nature of our company, part of our DNA, led by Alan, as far as seeing opportunities there and having that first -- being entrepreneurial enough to have that first-mover advantage to take advantage of a business opportunity that comes out of the worst pandemic in our lifetime, I hope. So now I'm going to talk a little bit about the other part of our business, Safety-Kleen. If you think about the Environmental Services business, that's about $2 billion, and this is about a little over $1 billion. And Safety-Kleen is really going out and doing services, primarily in the automobile repair sector. We do a lot of work in industrial as well, but that's really what it is, going out to Larry's Auto Body Shop. And doing services that Larry's Auto Body Shop, whether it be -- he has a parts washing machine, which we'll clean up and remove the solvent and put new solvent in, we'll pick up their dirty motor oil. Maybe they have a container 55-gallon drum of brake pads, which are full of asbestos, and so we have to take those brake pads and incinerate those break pads. And so we do those services primarily in the automotive repair space. And so that business suffered in 2020. As the world shut down in Q2, Q3 and Q4, maybe here in Q1, that business, vehicle miles driven, kind of drive that business, in my opinion. And so that has been a bit of a hurt here, and we talked about that in Q2 and Q3, kind of offset by some of the decom work, frankly. But the Safety-Kleen business certainly struggled with it. Even though we've done a great job when the pandemic hit and the demand for motor oil dried up we've shut down our plants, we kind of furloughed employees, we kind of did all the aggressive things we need to do, took out costs, try to manage it, try to manage our way through that. And I think we're going to come out of this kind of in better shape than ever, as demand has picked back up. Q3 was better than Q2, Q4 was better than Q3. I think Q1 will be great as well. And so I think we're kind of getting back to normal. And I'm hopeful, as you look at 2021, if we all get a couple of shots in our arms. And hopefully, by midyear, this business could kind of get back to normal. But I do think that this business has certainly suffered in 2020 due to demand only. I think the spread has been spent on the oil business has never been wider. I think it's kind of well run, and I do think I'm really bullish about the future of the state to clean business. The next question I'll talk a little bit about, corporate strategy. So our growth strategy has been -- we've been around for 41 years now, and we've done a lot of things through providing services to our customers. Like the decom, we're seeing where there's opportunity in trying to provide a service that we can provide for that customer. And whether it be cross-selling or network capacity or cost actions, I mean when the pandemic hit and we were very aggressive in taking out costs and issuing productivity initiatives, those are going to carry over into 2021. And I think that will be the beneficiary of that. When you think about expanding offerings, well, the decom work is a perfect example of that. M&A, we haven't done a lot of M&A in the past year or 2 and kind of lucky we didn't trying to integrate a business and a pandemic would have been a little tricky. But certainly, that's part of our DNA and what we've done, and we'll continue to do that as we get through the pandemic and get back to business. Next couple of slides I have here are on the finances and kind of where we are through Q3. When the pandemic hit, in March and April, we were very concerned like we all were around the amount of -- where is -- our covenants are and our debt? And how do we feel about a lot lower EBITDA, a lot lower revenue. It kind of turned out that we were looking at we grew on our revolver back in Q2, which was probably unnecessary. At the end of the day, we're going to finish the year in kind of great shape from a balance sheet standpoint. Our leverage ratio will be well under 2x on a net debt basis. I think that we'll have close to $600 million in cash. Our receivables are well managed. We did have some bad debt, but not a lot. We've managed our -- we've redone all our debt maturity has been pushed out at least to 2025 or 2026. So we have nothing due in the near term. And we're kind of in great shape as we go forward and look at the organization going forward. And certainly, from the pandemic standpoint, I've been able to manage through that pandemic in great shape. Turning to Slide 16. Cash flows. This is just -- I love this slide because this is a great slide. And really what it says is if you look at the adjusted free cash flow number, and we've more than quadrupled free cash flow over the past 5 years. Just an amazing story and really a disciplined approach of both driving EBITDA, driving organizational change as well as managing our cash, managing our CapEx well and really driving free cash flow. We'll end the year. We told the midpoint of our guidance is $260 million. I think that's a reasonable expectation. Even -- and that's due to some money we got from the from the CARES Act and other areas, which we'll have to pay back some of that. So I'm of the view that we get into 2021 and beyond, meaning the cash flow generation of this business will continue to be very strong and provide us great opportunities to make investments in our business and in our people. Slide 17, talking -- this is about capital allocation. Kind of where do we go from here? With the cash, we just talked about the low leverage, the great cash flow generation, kind of where do we go from here? And I think we can do all these things. I think we can make investments in our business, whether it be a new incinerator or other types of capital adds we need to do to drive different capacity into our network. M&A, we'll be back at it, I think, here in 2021. Share repurchase, we bought back a fair amount of shares. We still have $250 million available under our existing buyback program authorized by the Board, and we can pay down debt. I think that's the least return of all the different investments, even though we do have some mandatory repayments of debt over the next few years at very small levels. So again, a lot of good opportunities out there. And again, I'm really bullish about 2021, both from earnings standpoint and from a cash flow generation standpoint and giving us a great opportunity. We have the team, we have the bandwidth to go out and do some smart M&A and get a good return on your money. I got the slides, Larry.

Okay. Great. No, Mike, we appreciate that. And I'm going to go ahead and kick off the Q&A. [Operator Instructions]

We're asking a lot of companies, first question on ESG, but Mike pretty much stole my thunder there. But discussing your ESG efforts. And I guess we'll leave it at that, and we'll look forward to your sustainability report. I think what you said would be issued during the first quarter of this year. And then on COVID, which is sort of a second hot buzz word and topic certainly. Yes sort of obviously, you spoke to that as well. And clearly, the Safety-Kleen segment was impacted a lot by lower volumes and less people on the road. How about on the environmental side? You had some benefit, obviously, from COVID cleanups, but how about incinerators and new waste volumes, it had that sort of react. And clearly, that's rebounded. Where do you sort of sit today relative to "what you think is the normal," if you will?

Yes. Larry, I'd say when you think about incinerations and landfills, I mean, the project -- the project work drives the landfills, large cleanups drive landfill volumes. Those have been down kind of all year. After by Q1, those volumes have been down all year long. And so I don't see that changing on that land. I think people are hesitant to go start doing projects because they worry about lockdowns and shutdowns and jobs that are going to be half done and people walking off the site. So I think there's some hesitancy to there. And us and our peers has seen a lower project level. That being said, on the incineration side, I mean, we did have a lull in the summertime a little bit as the Q1 and Q2 shutdown kind of impacted us but it's been lights out since then. And whether it be kind of steady volumes from our larger customers or project-based work that go into our incinerators of unplanned shutdowns and other things that some of the captives. That has been a huge win. And I don't see that changing, frankly, kind of anytime soon as I look at the -- as we look at 2021, that has been and continues to be quite a winner for us. And when you think about the shutdown and what it impacted, bars and restaurants and tourism and hotels and airlines, I mean they don't generate a ton of waste -- some, but not a ton. And so -- and so that -- those types of uses, car buying and other things that -- or home construction, I mean those are on a rocket ship, and those generate waste, whether or not directly to us, but indirectly. You think of a car manufacturer, well, car manufacturer needs paint. And so PPG makes the paint and the waste -- we deal with the waste for PPG. And that's just an example of kind of how we do it. So that secondary add on, it has been -- that has not changed. And I think that those plants continue to run, and we're going to have we're going to have a great -- prospectively, I think that nothing has really slowed down in that part of the world.

Right. And how about on the cost side? I know you mentioned, Mike, you took some costs out of -- as can be expected. How about going forward as we hopefully ramp up in '21 and hopefully get back to some normal by late in the year '22? The cost that you've taken out of your business, do you see them all coming back? Could that make for a potentially difficult comparison as we look out over the next few quarters, or will you bring those back slower? And maybe at the end of the day, end up being more efficient than we were in a pre-COVID world end up better than you were. And how do you sort of view that?

Yes, Larry. So in 2020, it's such a weird year. So for example, we are -- we, clean obviously -- many companies are self-insured for health care costs. So people who go to the doctor, which were all pretty scared at one juncture about going to see the doctor. Because worried about getting COVID at the doctor's office. I mean, that was a big win for us because we -- people not going to create other types of problems, frankly, for the individuals involved. But that slowdown in the health care was a win for us. We're assuming that with people getting vaccinated and people still are getting sick, they need to go to the doctor. And so that's going to come back. And so that cost is going to come back. But when and how, it's kind of a bit of a -- this budget, I'd say our 2021 budget was the hardest 1 we've ever had to do just because of things like that. It's very difficult to model, like when does health care come back? I don't know, when do we all get back in and we all feel good enough about going back to the doctor? And do we feel good about it today? Or do we do it 6 months from now? I don't know. So -- but I would tell you, though, that unlike some of our peers, we definitely took more cost out of the business. We didn't do temporary wage roll back. We certainly could have done that. We could have done, okay, all [ SVPs ] and above, take 20% off the top, and we got -- we all got to tighten our belt here. We didn't do that. We took probably more cost up out of the organization. And so those types of -- that type of negative headwind will not impact us because we didn't take the cost out that are temporary, they're more permanent. We will have some costs come back. Like I mentioned, health care comes back. I mean our incentive compensation this year, unfortunately, is pretty low. We're hopeful that 2021 will be -- have a higher incentive compensation, but that's -- we had to make some number to do that. But so I would say, in general, Larry, that we were very aggressive in our cost actions. I think a lot of that carries over. In the Q3 earnings call, I mentioned that 100 basis points, maybe -- which is $30 million of costs kind of carry on a net basis kind of carry on into 2021. That was an estimate. Q3 is probably still a pretty safe estimate today based on where we are as we end the year. And so we are -- we recognize the fact that we've had 11 straight quarters of year-over-year margin expansion. Now some of that has to do with COVID and CARES money we receive and other things we've gotten that drove that. But that happened kind of well before the pandemic. And I'm of the view that in a postpandemic world, those costs kind of stay out of the business, and our margins continue to expand. You can't quadruple cash flows in 5 years without driving the revenue growth and driving the margin growth, and that's what we've done.

It's impressive. You mentioned the CARES Act, and I think the Canada Emergency Wage Subsidiary, I guess, is the other one. Briefly, how much of -- I guess, year-to-date, how much has that added to the bottom line? And just to remind us, do you have to pay that back does that work?

Yes. So that's a that's a little complex answer because it's actually in 2 parts. Right? So let me just try to take a step -- take a little longer than it probably should, but I got to do it. Yes. We received monies from the Canadian and U.S. government. Through the first 9-months of the year was $36 million, $37 million, and we forecast on a $3 million or $4 million in Q4. So let's say it's $40 million for the year. That number is not -- is a grant, it is not refundable back to the Canadian and U.S. government. That is either wage subsidy -- keep our employees employed both in Canada and the U.S. So that funding stays. We also took advantage like many companies did of the payroll tax withhold and not pay payroll taxes. And so that just happens to also be forecasted for the year of $36 million. That does need to be paid back that needs to be paid back, half of which in 2021 and half of which in 2022, both in December, so $18 million and $18 million in December of 2021 and 2022. So in 2020, we've given guidance at the midpoint of our guidance is $260 million of free cash flow. In that free cash flow number is $36 million of money that needs to be refunded. And it will be refunded in 2021 and 2022. So we haven't done -- we haven't given our guidance yet, Larry, but I've said publicly that we think that the 2021 free cash flow number, even with that negative headwind of not getting the grant money in 2020 and paying back some of it, '21, will still be north of $200 million. And I think that's a very, very safe assumption.

Right. Okay. Great. You mentioned in your prepared comments a little bit, switching gears to the incinerator business. I think you mentioned a little bit about captive closures and without quantifying it, has the pace of closures over the last couple of years? Has that increased? Has that benefited results? And what is the outlook going forward? Do you see a lot of additional captive incinerator closings as you look out?

Yes. I think, Larry, that when you think about captives, we haven't had a lot of captives closing per se, like closing up shop and giving up the waste. What's happened in 2020 is that they're upset at the captive. Something goes wrong at the captive. Yet the front part of the plant still is working. We're still making the product that we need to make and still creating the waste, yet the back half of the plant is something went wrong with it. And so that waste comes to us. And so that has been that continues to be a great revenue stream and earnings stream for clean harbors. And we still negotiate with our captive customers to see if they want to close the site permanently and how we can work with them. That hasn't happened. That may happen. We are, as we've mentioned many times, is that we always try to de bottleneck our incinerators. We've said publicly 20,000 to 30,000 tonnes of incremental capacity comes online every 3 to 5 years. We continue to do that, that the focus of the organization. Some of the CapEx we have reserved for 2021 is to help us to do that. And so again, I think that continues to drive incremental volume through our network to take this type of waste. But the captive closures, I think, have been more upset conditions at captives, which drive waste into our network, just like it would at a regular customer. And that's been the incremental revenue and EBITDA that really drove the ES business in 2020.

Right, right. And clearly, the ES business on the margin side has had a pretty good performance the last few years, helped a lot by mix, I think, mix and price, but a combination. And so perhaps you can maybe sort of a 2 or 3 pronged question, if you will. Discuss a little bit because I think a lot of the drivers have been El Dorado and the incinerator piece, at least helping you with mix. So is there still more to go there? And then, I guess, pricing outlook for incinerator? And the rest of the technical services, if you will, how do you see that going forward?

Yes. So we've had double-digit growth in pricing in the business over the past couple of years in the incinerator network. And about 1/3 of that due to price and about 2/3 of that is due to mix. And that -- and so the question you're asking is that, does that mix trend continue on in 2021? There's no reason to think that, that stops. I think we still have plenty of opportunity with the growth in the Gulf for more investment in the chemical renaissance, I think there's still opportunity there. Around the price side, that -- we probably -- as Alan said in his call, we took a pause in some pricing in the business, mostly in industrial services, less than that plant, less than the incinerators, but pricing train comes back online in 2021. No matter what. And I think that continues both on the ES side and on the SK side. I think that we are getting a lot of pressure on price for raw materials. We're getting a lot of pressure on price around insurance costs. Health care costs. I mean, these things are going one way up. And so we have to drive price. And we, like our peers are going to do that 2021.

Okay. Switching gears to Safety-Kleen for the outside of the business. Excluding, obviously, there's been this COVID impact, which we're all aware of. But independent of that, your spread management has dramatically improved. What steps have been taken to improve this? And is there continued room for more improvement as we look out?

I think the interesting thing about SK, when you think about it in total is that they actually had a great year. It just got -- they got killed by demand. I mean I think the spread has never been wider on the SK Oil business. I think our market share of our customers in the SK Environmental business, which was most of the EBIT is generated from, by the way, is doing great. It's just -- when Larry's Auto Body Shop is closed, and no one's there, that's a problem. And so again, I can't point to -- we took a lot of costs out. We managed that very aggressively to help -- and I think that we'll be in a better spot going forward because we certainly cut from the bottom up. And it's not just people. It's site consolidations, it's rentals, it's over time, and we just kind of went nuts in every area. We generated a ton of cost savings in 2020, and we'll see those benefits in 2021. We don't -- with the economy getting back to normal, we don't forget those things. We don't forget labor management. Those skills are looking at low cost, low-margin branches and why they're low-margin branches and managing our T&E and all those things are kind of coming. We don't forget that with the pandemic in the rearview mirror. So I'm very bullish about SK. I know we need to have a better 2021 than '20. We definitely will. I'm a little concerned when we see virus kind of running unabated across North America. So it is concerned, but they -- because they do need people to get back on the road for this business to recover. But in the interim, we're managing the cost very carefully, and I think we're going to be in a good spot. And an offset to that on the U.S. side, the decom work will continue on, which is the natural hedge we've been talking about all year.

And sticking with SK for a couple of quickies, potential longer-term growth opportunities. I guess, 2 things. Your closed-loop distribution strategy for one, perhaps give us a minute where we stand there, realizing that COVID probably has slowed progression this year, obviously.

Yes. I think we really -- we're really excited about the close. We've talked about it for a long time. But as sustainability becomes more and more of a thing Larry, and people embrace that solution. And you think about motor oil, like sustainability leaders are going to look for more -- they're going to run out of good ideas on how to drive their sustainability metrics. What's -- the answer is combustion engine is not going anywhere anytime soon, regardless of whatever Elon Musk has to say for himself. I'm of the view that even if oil goes from 2 billion gallons sold to 1.5 billion gallons sold, our market share will improve because it's a sustainable oil. And I think that, that is really the important point here is that our solution is a sustainable solution. And so -- and we've done re-refining and selling our oil back to our customers. I mean, up in Eastern Canada, we talked to the branch manager there that he's probably resold the same oil back to his customer 50 times. Because it never loses its properties. And so I mean, it's just really a great story. And as the world embraces that and understands that. And with the Department of Energy study that just came out, it kind of proves that this oil is as good, if not better, I'm really bullish about this opportunity going forward.

Okay. Great. You mentioned acquisitions, obviously, have been a -- certainly a part of the Clean Harbor's growth story through the years. Have certainly slowed in the last few years, and you guys, I think have become a little bit more on the conservative side, and probably timing is probably good for that, too. Your leverage is, I think, at a 10 year low, if not even historical -- maybe more than 10 years low, cost of capital is achieved. Perhaps, do you see yourselves getting a little more aggressive on the acquisition front?

Larry, we've done 60 acquisitions in our history. So we've done a lot always with the view to drive value to our shareholders at a reasonable return. And the -- and it has to meet both the strategic rationale and our financial rationale. And when it doesn't do that, we pass because I don't want to waste your money. So we continue to look. We look for opportunities. We're patient. But when the opportunity strikes, we're going to be aggressive. And we're going to continue to have our eyes and ears open. Frankly, I don't think we've gotten more conservative over the past year or 2. I think we've just been more disciplined. And we tried to -- because we've made some errors going back 10, 15 years ago, and we don't want to do that again. And the interim, by the way, we're in the middle of a freaking pandemic, and we have to -- we're worried about our cash and our cash flow. So I'm glad we didn't. And so I'm of the view that we have been and we'll continue to be very disciplined in our approach. And the team has done this and ready to do it again. And we want to make sure that when we make investments with our customers -- with our investors' money, that's something you'll be supportive of and make sure we get a good return for it.

Got it. Okay. I think with that, I think we're pretty much out of time. Mike, do you have any closing remarks or conclusions before we sign off?

No, just I want to thank everyone for their interest in Clean Harbors. Again, we're really excited to speak to you guys. Thanks, Larry, for having us, and appreciate the opportunity.

Thanks for joining us, and thanks for all the folks out there as well, and have a great rest of the day.