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

Thank you. Good morning, everyone. Thank you for joining me. We have a great lineup at our conference today. Featuring conversations with the CEOs of waste management, republic services, and we're hosting some great panels. And I'm pleased to have with me a few experts to really touch on this next topic, hazardous waste and PFAS. Joining me is Michael Battles, the CFO of Clean Harbors, the largest hazardous waste disposal company; Jim Buckley, SVP of Investor Relations at Clean Harbors; and Richard Thompson, Managing Partner of TEC Consulting, who has 30 years of environmental engineering experience at landfills, and we've hosted calls in the past on the topic of PFAS with Richard. So the point of this panel is simple. Most investors had a general idea of where their regular average nonhazardous waste gets collected and disposed, but not so much on the hazardous ways or the complex waste streams.

So Mike, maybe we can start with you. Can you help us with where Clean Harbors fits in terms of environmental services landscape. Can you give us a high-level view of the hazardous waste market? What constitutes hazardous waste and how it is treated differently?

Sure. Thanks, Mike, and thanks Bank of America for having us, certainly quite an honor to go speak on the panel and talk about our business, which we're really proud of. So when you think about Clean Harbors, we're about $3.1 billion North American company, with about 85% in the U.S. and about 13% to 14% in Canada. And what we do, it's interesting, when you think of rubbish, you think of kind of the large player, the waste managements of the world. And you think about your curbside pickups, you think about -- and although it is waste, although we are picking it up, it's very different type of waste. This is -- the hazardous waste environment is a designation by the EPA, and that waste needs to be disposed of in certain ways, not going into a municipal solid landfill. It needs to be filled into a hazardous waste landfill that has special linings and special protection around it. And so we own 11 hazard landfills across North America. In addition, some waste is designated that it needs to be incinerated because it's so dangerous, putting it in a landfill would create -- it's so volatile, it's going to create some form of a reaction. And so we have -- we are the largest commercial hazardous incinerator operator in North America. We own 9 of the 13 hazardous waste incinerators in 4 locations across the U.S. And so -- and then 1 in Canada. What we do though is we take kind of some of the nasty byproducts from the manufacturing process. Think of everything from paint to plastics to fertilizer, all the things that we use every day, create kind of nasty byproducts. And we take those byproduct, go to our customer sites, pick up that byproduct, and then try to take out all the -- reuse what we can reuse, and then from there, we dispose of it. And once we've extracted all the value out, we dispose of it in our landfills or incinerate it. In addition to that, we also are the largest collector of used motor oil. So when you go get your car's oil changed at Jiffy Lube or some place like that, that oil can't be poured down the drain. It's got metals in it. It's got solvents in it, it's very dangerous to do that. It's -- that oil is regulated in every state, and it is hazardous in some states. We go and pick that oil up. And through our 6 re-refineries, actually make base oil out of them. We may make motor oil. So we are the very green ESG-friendly answer where we take your dirty motor oil, we refine it, it comes out cheaper to make, no crude used in the process, and it's as good, if not better, than crude oil. So really a great answer from a sustainability standpoint. So we also do a lot of work with automobile shops across North America. And so for example, we do parts washer services. Simply stated, and I don't want to take the whole time, but parts washer is a big part of our business. What will go, if you get your brakes done, for example, you need to take parts that have to come out and brake pads need to be put on. Those parts need to be cleaned. And you can't do it in a sink because they have oil and they have metals on them, so you have to do it in a parts washer, which is really just a drum, I think, and a pump, and they clean the part up and they can put it back into the car, and then every 8 to 10 weeks we go and change that solvent out and then we refine that solvent as well, so recycle that solvent as well. So that is the business model. We've been around for 41 years, started by a gentleman, named Alan McKim, kind of the true entrepreneurial story, 4 guys and a truck built this company, and he's still active today, he is CEO today, and owns little over 7% of the company, and here in the building somewhere today, I'm sure working hard.

That's great, Mike. And maybe just piggybacking off some of your comments. Is the waste stream becoming more complex and difficult to assess? You mentioned your wider range of options, there is the landfill sites. I think you have solvent recycling facilities, there's incinerators. Maybe for the audience, is the waste stream getting more difficult to break down? What are the differences when we think about incinerator? Are you seeing more demand for those type of disposal options compared to some of the others that were known of today?

Well, Mike, I think that the regulation is our friend. And as more and more items get labeled as hazardous material or regulated, well, that creates more waste stream opportunities for Clean Harbors. I'm not sure they're any more difficult than anything else that we've had. We take the nastiest of the nastiest products being manufactured today. And so there's nothing new about it. We have all the safety protocols, we're the industry-leading company for safety. And so we can handle it. We can handle whatever is there. And I don't think it's getting any more complex, there's more of them, things like PFAS are becoming more and more prevalent. But today, I don't think they're any harder to deal with than they always have.

Perfect. And Richard, I'd like to bring you in here on that conversation. Maybe you could give us a high level background and your biography, Richard and how you've been part of this industry for a very long time. And you have been covering the PFAS topic before it became what it is today. Maybe you can help us have a background of Michael Regan, the new Head of EPA. What is his history on PFAS tell us? What is it foreshadow on how we should think about this topic, maybe on a national level going forward?

Well, thank you, Michael. I appreciate you having me on today. Yes, I've been involved with both waste management and republic services, having worked at corporate level positions in environmental compliance and environmental engineering and spent a fair amount of time working with landfill operations during that time. It was only about 10 years ago that we started hearing about some issues with PFAS and I think it's become more and more well-known over the years, the different product set include PFAS, everything from Teflon to GoreTex to Scotchgard. And as we learn more in terms of the impacts that it could have on the waste stream, we learned that there a very good potential for it to be in landfills. And shortly after that, as we began testing the leachates that come out of the landfills, we recognized that there were low levels of PFAS in those leachates. And leachate, of course, is the liquids that come out of the bottom of the landfill. And so one of the challenges that the landfill companies have had is what to do with it, their normal processing is to send it off to a wastewater treatment plant for processing. And as wastewater treatment plants realized that they weren't able to process it, that's become a challenge for them as well. So let me answer the second part of your question, with regards to Michael Regan, who has been the Secretary of the North Carolina Department of Environmental Quality since 2017. And he's been approved at the committee level waiting to be confirmed by the full Senate to be the head of the EPA. And during his tenure, he's had quite a challenge with contamination from PFAS, which, by the way, if you don't know, if you want to get down into the weeds, it's polyfluoroalkyl substance that is known as a forever chemical because it's -- it doesn't biodegrade. It doesn't decompose, it doesn't deteriorate. And most Americans, I've heard 90% or 95%, 99% of Americans have PFAS in their bloodstream. It's just part of our lives. It's part of the environment. It's everywhere because of the products and the materials that we use. But anyway, back to Michael Regan, he's been very aggressive in terms of how he's handled PFAS at the state level, having one of the contaminated sites in the Cape Fear River area. And so he's very well up to speed in terms of the issues involved with PFAS. I think he'll come into EPA with a plan ahead in terms of how to address it and how to attack it both legislatively as well as administratively at the EPA.

That's great, Richard. And maybe back to Mike or Jim, if we wake up in a few months and PFAS is designated as a hazardous substance, help us understand what does this mean exactly? And what does this mean for Clean Harbors? What does this mean for maybe some hazardous substance that's in landfills that maybe are not hazardous landfill type landfill? So maybe we can try to understand if we wake up in a couple of months down the road, and it does get that designation of a hazardous substance, what could this really mean for the industry and really for Clean Harbors as a whole?

Yes, I'll start, Michael, I think with PFAS, you're talking about a family of compounds. So it's a very complex issue that Rich just laid out nicely. It's ubiquitous. We are carrying it around inside ourselves. And so -- but there's variance there of long-chain and short chain. And so the government has a very complex issue on their hand. So I -- the short answer is, I don't think we're going to wake up in a few months and find it hazardous because it is so complex, but I think there will be steps along the way. And within a few months, we may see something of the Biden administration where drinking water has really been the focus because that's obviously going into humans and making them sicker. And so they want to cut that off. And then we can figure out how to deal with contaminated sites, how to get it out of soil at airports or military bases or other places where it's been contaminated due to firefighting drills and the foams that we used for decades that were loaded with this material. So I think it's going to be a process. But as Mike was describing our company earlier, what typically happens, whether it's asbestos or PCBs or something or ozone-depleting chemicals, there's a big push to kind of take those out of the environment. And then it may take decades to kind of get to everywhere. And so we see that with PFAS. We get asked by investors all the time about this. And there's no easy answer because Mike uses the phrase that I'll steal that I like is how clean is clean. Like without those thresholds, if you're a company or a location that has a PFAS or even for the solid waste guys that are dealing with it in their leachate, what is the acceptable threshold? And what is the accepted method of disposal? Is it incineration? Is it solidifying and putting it in a landfill? Is it deep well injection for maybe some of the liquids? We need government regulation to really tell all of us where to go. So when people try to ask us to seize the opportunity, which Mike and I get that all the time, it's almost an impossible question. And so what we -- how we've answered it is that this will take a year, maybe 2, maybe 3 to really sort out all the piece parts before it finally gets a P-listing and it's officially hazardous. We know it's hazardous to humans now, but getting an actual hazardous label is a complex process within our government. So it will probably get some initial designations in the superfund listing, for example, and then it will grow from there. But we see it as something that will sort of tell out over several years. And then it will have a decade or 2 or 3 tail for companies like ourselves.

That's great. And maybe back to Richard, I mean, you spent your career working at non-hazardous landfills. What we've noticed, I think some of the waste companies in their 10-Ks, I think it was in 2019, they started listing PFAS as a risk. We're hearing the words leachate, could you please just help with people dialing in right now maybe how these landfills work? How does the liner with the leachate? You mentioned wastewater treatment facilities. Why if you go and listen to conference calls from some of these waste companies, you keep hearing about the cost of transportation and the cost of leachate going up. Are they trying to contend with some of these issues right now?

Well, yes, that's correct. Let's start, we will just do a quick primer. There's several types of landfills. Clean Harbors operates hazardous waste landfills. There's nonhazardous landfills, such as solid waste landfills which includes residential, commercial and certain industrial waste. There's also inert landfills, which contain just things such as wood, concrete bricks. One thing that's pretty much universal for all these landfills is that they're all built to contain any sort of liquids that come off of those wastes that are in a landfill. So they're typically built with liners, whether it be a plastic liner, the plastic of choice is high-density polyethylene or HDPE along with some sort of a clay layer that's built in there. But no matter what they build the landfill liner with, the liquids are going to go to the bottom of the landfill. That's just gravity. And the landfills job is to collect those liquids and usually with the system of pipes, they're able to -- the landfill operations are able to pump that liquid off that liner to make sure it does not leak to the liner and get into the surrounding ground water. Once that liquid is pumped up, it's usually held in tanks or it can be put directly into trucks, they're looking for some place to process that liquid immediately and whether or not it's taken off-site to a wastewater treatment plant or if it's processed somehow on-site if they do have that on those facilities. One of the things they've always done is try to remove any of the contaminants. And it's only recently that they recognized how much PFAS could be in there. And when I say how much, I'm talking about parts per million or parts per billion. It's a very small amount. But at this point, in terms of health risks, it could potentially still be there. So it's important to clean that part of the leachate as well. The answer -- the problem and -- the answer is not available yet, but the problem is, what do you do with that PFAS, once you remove it from the leachate? And there's lots of different options in terms of how it's removed and then what to do with it. Clean Harbors may be one of the options in terms of being able to incinerate PFAS once it's removed from these filtration units at the end. Other options are putting it back in the landfill, but some parts -- some south -- in some way, encapsulating it. So it never leaves that landfill. It doesn't become part of leachate. What we see all too often is a process we call cycling, where the wastewater treatment plant is removing the PFAS in a sludge that sludge goes back into the landfill only to be reproduced again in the next batch of leachate. So that cycling is the real problem that landfill operations are looking at right now. One of the things I look forward to is if we do ever actually have an infrastructure week, most times, we think of infrastructure as roads and bridges and dams and that type of thing, but wastewater treatment plants and drinking water plants are also part of the infrastructure that will need funding going forward in terms of how to filtrate or filter that material out of those wastewaters.

That was great, Rich. And maybe, Jim, if you could maybe comment on that. I mean we do hear about PFAS being a problem. It is a priority that Mike Regan has highlighted, we are seeing movies about PFAS. But when you speak to people in the industry, there still is some confusion on how do we actually address this? What is the remedy? Are there technologies? I cover some of these engineering companies. There are some technologies there, kind of come out with, break it down. I'm curious what Clean Harbor really sees that playing out over the next few years.

I'll take it. So the -- so at the end of the day, we really need to figure out, as I said -- as Jim said, how clean is clean. And the idea, when you get a designation like a hazardous designation, normally that comes with the treatment options. And it depends, as Rich said so eloquently, is that kind of what you do, depends on what the solution is, and whether it's through going back into a landfill with concrete or whether it needs to be incinerated or whether it needs to be some special wastewater treatment facilities that are unique. It's hard for us to say today what that answer is. The good news about Clean Harbors is that no matter what the answer is, whether it's a closed-loop landfill, which we have the most of, what I mean by that is that the leachate comes out, and we incinerate that leachate. And so that just -- it never actually gets back into the ground water, never gets back into landfill. And so that's an option as well or it's incineration of leachate. Whatever the answer is, we provide that solution. And that's a good thing about Clean Harbors. And that's why I think that PFAS is going to be a big catalyst for us. It's certainly going to be -- it's a real problem, and it really hurts people. And eventually, I think, again, depending on time lines, that all depends on the House, the Senate, the President, everything else is going on in the world. But I do think that's -- it is definitely an EPA priority, given as Rich said, North Carolina, the EPA directors, North Carolina roots, and the problems that we had there. I think that's going to be a -- I think they had channeled drinking water first, which we really don't play in. But I think ground -- I think soil is right behind it.

That's great, Mike. And maybe -- I know we're focusing a lot on the catalyst on a national level, legislation, regulation. I'm curious if you're seeing a change just in the conversations with some of your Fortune 500 companies. Is sustainability, environmental leadership, is that just being driven by legislation and regulation? Is there more of a top-down approach from the federal and state mandates? Or are you starting to see this ESG stewardship across the Fortune 500 companies becoming the bigger focus in your dialogue with them?

So let's just unpack a couple of things there. So you get the federal level that can provide PFAS regulation, which we talked about, that's to come, but the states have already tried to take initiatives, every state is unique as far as kind of how they're approaching it. And really, we do need, as my CEO, Alan McKim said, we do need kind of the federal government to kind of step in and give a kind of a baseline and people can build from there. But states like Michigan and California are already coming out with their own views on this. So they're doing it. Yes. To get to your ESG question, I do think this is happening because I do think this is a challenge. We haven't really heard it yet. Back to my point, we need to know how clean is clean and what the regulation is around it, but make no mistake, people know what it's going to be, and people are trying to get in front of that and understand that better. And whether it's through an ESG top-down initiative or through the fact that they're going to have some environmental liabilities down the road, they want to get in front of that.

Makes sense, Mike. And back to you, Richard, I know you follow what's going on in the local and state level closely. Are you seeing any momentum on the ground in certain states? Any states you think we should keep an eye on, in particular, that are really taking a leadership role here and are not just waiting for the EPA??

Well, there's 2 areas in particular that have really taken the lead-in. One is the New England states. They recognize that they've got quite a bit of exposure from contamination to groundwater and drinking water supplies. The other one is the State of Michigan. And I think you can watch those 2 areas in terms of the leadership that they have taken to address PFAS. One place, in particular, in Michigan, they found contamination from a factory that was making boots and they used GoreTex at that particular factory. That company recognized that they were having problems with surrounding wells being contaminated. They went back after the supplier of that -- the PFAS material that they use to make that GoreTex. And so that's sort of the initiation. And I know the state of Michigan was involved with kind of pushing that settlement through because they wanted to see that area remediated and cleaned up as soon as possible. But there's many other states out there that are working as well. And I think EPA needs to move forward in terms of providing some sort of a standard that all states can look to. Right now, they have some health advisories out there. But as soon as there are standards for both drinking water and also for remediation for cleanup standards, that will be the next step that they'll need to take to help these states enforce some of the requirements that they're going to have going forward.

That's great, Richard. And Mike, are there any comparisons we can make from this PFAS situation in terms of the other contaminants that Clean Harbors has been involved in? As you said, your company has been around for a long time. I'm curious if there's anything we could point to in terms of the remediation work, a legislative framework that can be used as a template and help investors understand how this PFAS situation maybe compares to other situations in the past?

Yes, Mike, it's been -- this is how it works. It takes a long time to get through to that designation, a lot of back and forth, the companies that are impacted, obviously, fight very hard but ultimately, when they realize the science overwhelms that it is dangerous, it gets labeled as such. PCB is a perfect example of that, or ozone-depleting chemicals like Freon, a perfect example of that, where it took a long time to kind of come to the conclusion that it was bad. And then there's a super long tail. We're still removing ozone-depleting materials and PCB today, even though PCBs was 25 years ago. And so that tells you kind of what we're talking about here. And I don't think PFAS, it feels very similar. And people who've done this for a while say just that. They're saying, this is how these things work. And as -- just as we thought -- as these things start failing off, new things come up and it becomes another revenue stream for us.

And maybe, Richard, I could pass that question to you. In your 30 year career, really working at landfills and watching the operations of landfills. Has there been anything in the past where you've had to contend with certain contaminants like this where the industry had to address certain issues?

Yes, you're right. It's about 30 years behind, but I recall the late '90s, the early 90 that we started to recognize some of the problems with organic chemicals, for instance, like TCE or some other chemicals like dry cleaning chemicals, those types of things. And I think as they contaminated groundwater, the first thing they recognize was what's the quickest, easiest way to get that out of the groundwater. Well, that's typically using granulated carbon that activated carbon is what they do. They run that material over it. It absorbs those organic materials. Something like that does work for PFAS, but it's only one of the potential solutions, maybe not the best one, but certainly one of them. That's where you bring companies like Clean Harbors into the mix where their next step was, okay, now how do you remove that from the environment in the typical way is to incinerate it or to put it in a hazardous waste landfill? So there's some opportunities there in the future. But I think that's the closest thing I could say, in terms of the past history. Michael is actually correct in PCBs, too, there are another one of those forever chemicals, if you will. They really don't ever break down. The more we find them in terms of remediation projects, it still creates opportunities for the environmental services industry to be able to properly handle those, place them in a safe landfill and contain them for the future.

Yes. That's great. And maybe turning to Mike. You have a great table in the back of the Clean Harbors presentation on your website. It shows manufacturing and chemicals, how it's a growing part of your cost per mix. And there's a lot of discussions right now in the U.S. about bringing back manufacturing, becoming more energy independent. I'm just curious where you think Clean Harbor's role is in this? Does there need to be more environmental services support for us to see that shift in America with manufacturing and chemicals?

Mike, I think that's been happening for the past few years, the low prices of natural gas, there's been a lot of growth in the chemical space, especially in the Gulf and in Texas and other parts of south, that has really been a boon for us in the past few years. And whether it's add on to existing plants, we look forward to anywhere from $200 billion to $300 billion in spend in the chemical space to do add-ons to plants to build new brownfield or greenfield plants. It's been a huge win for us. I think to your point, though, as with the pandemic and kind of what the long-term impact could be for a company like Clean Harbors is there is probably more investment in the U.S. in manufacturing because you want to keep your key supply chain kind of closer to you. And whether it be in pharma or other areas, they all create hazardous waste. And that would be a win for us and a win for the industry. As more manufacturing comes to the U.S., and people want to get their supply chains kind of closer to the end customer because right now, they're still struggling with supply chains here even though we're in month 12 with the pandemic.

Yes. And Clean Harbors has assets all over the U.S., you mentioned, I believe, Canada as well. I'm curious, is there any regional differences in terms of how we treat or manage hazardous waste? In our panel before, we had a panel on recycling, and there are clear differences in penetration from California and the coast compared to maybe the Midwest, where it's just cheaper to landfill and consumers and corporations are just not willing to pay up for the recycling. I'm curious from the Clean Harbors vantage point, do you see any notable trends across your regions?

Yes, Mike. So I can see how that could be the case in the solid waste guys. I think that for us, the waste we take is hazardous, for the most part, not all of it, most of them all regulated. And so the option of other options outside of the options that we're proposing is not viable, right, because it would not be working. So whether it be we refine motor oil or solvents we talked about earlier or bad and dangerous chemicals, highly fluorinated, high coordinated chemicals. The reason why we're taking them at all and we're being called is because there are no other options for it. So that is not something that -- there's no optionality there for the most part.

Makes sense. And Richard, back to you on just landfills in general. Do you see that there needs be more investments in the testing and the treatment, is that just inevitable at this point as we're starting to see some more complexities in the waste stream. I'm curious about some landfills that are operated and run by townships or municipalities or private companies. Do you think they have the balance sheet and the engineering acumen to really contend with some of these rising issues and more complex issues in the waste stream?

That's an excellent question, Mike. Let me tell you what I think. Most of the larger corporations have very specific plans that they put into place in terms of what it's going to cost them to operate that landfill and provide the environmental protection necessary. And that includes things such as the testing of leachate and the processing of leachate. And one thing that they've never really thought about 10 years ago, 5 years ago even, was let's add some cost in for additional testing and additional processing. But now that's all part of their value proposition. What do we do for our customers in terms of making sure that this place you put your waste is going to be safe for the future? And when landfills do close, they are required to have a 30-year post closure period where they continue testing that landfill, everything from processing the landfill gas to processing the leachate that comes out of there. Now all of a sudden, you have this -- this wild card that's in there. What's it going to take to make that leachate clean to remove PFAS from that if that's what's necessary and to handle that as well. So that adds to their costs. That's the private companies. Now looking at the public operations, whether it be a community or a county or a city landfill, that's not something that they typically plan for. They have certain estimates that are in place for the agencies. But now this kind of throws things into a quagmire in terms of how they're going to manage that in the future. They need more money. They need more money for testing. They're going to need more money for processing. They're going to probably look to the federal government for infrastructure funding for their local wastewater treatment plant because it's typically the county landfill and the county, the wastewater treatment plant or the city landfill, a city wastewater treatment plant. They're going to need more money to put those filtration units that are in there for processing PFAS into the future.

That's very informative. And Mike, I mean, I know we just talked about really non-hazardous landfills, but it seems like it's very capital intensive, you need a lot of resources, engineering know-how to be able to run? And some of the non-hazardous players try to expand further in this market. The reason why I ask is the DOJ has been very stringent on some of the non-hazardous waste companies, waste management ADSW or Republic Services. I know the apples and oranges in terms of collection, disposal, cycling nonhazardous waste and hazardous waste but I'm curious in a few years from now, who are going to be your biggest competitors or emerging as your biggest competitors for Clean Harbors?

Yes, Mike. So when you think about it, these permits are very difficult to obtain, almost impossible to obtain, and very difficult to maintain and so there isn't a lot like -- there isn't people saying, hey, let's go build a hazardous waste landfill, it just hasn't been one permitted in over 20 years. And so when you think about our business model, and there are some slides in our deck that talk about this. There is no Coke to our Pepsi. There is no miller to bud. This is -- we own the market. And we own 913 commercial hazardous incinerators. And again, I don't see the solid waste guys getting into that because it's impossible to permit these types of things.

Yes. That makes sense. And on what you're talking about, Mike, every day, there's a new headline for an industry being disrupted. There's fuel cell hydrogen trucks, there's commercial space launches. You name it. There's a lot of specs right now being developed. What are you monitoring over the next 3, 5, 10 years, as the largest provider of parts cleaning, recycler of waste oil incinerators? I'm just curious if there's any structural trends or technologies that you think we should be monitoring right now.

Yes look, all those things are very real, and they're all coming at different speeds, right? And it's -- and so they all affect our business some way somehow. I mean, I guess I'd say it this way, as we are -- we've been around for 41 years, and we have grown this business from 4 guys, its Ivan, the guys before me did to make it a $3-plus billion North American leader. And so whether the answer, whatever -- wherever this goes, hydrogen fuel cell, lithium batteries, we'll be there to handle the hazard waste around it. And we'll be able to do that safely in accordance with laws and regulations. So we'll -- we have pivoted, and we will continue to do that, to be the sustainability solution for our customers.

Perfect. And maybe, Mike, could you just help us understand how really COVID and the pandemic impacted your demand and for the hazardous market in general. On one hand, I could see how large projects might have stalled out, companies tightening the belt. But on the other hand, we're seeing such a big focus on environmental sustainability. I think you were awarded some decontamination work. Maybe you could help all the people on line right now have a view of how COVID really impacted Clean Harbors last year and into 2021?

Yes. So that's a tough question to unpack because there are so many moving parts associated with that. But simply stated, to your point, Mike, is that large projects did get put on hold. So some of our landfill volumes did slow quite a bit from Q2 on to the rest of the year and here even in Q1 but -- we did see -- we are an emergency response company. We are the only nationwide emergency response company. And so we were called in to do decontamination work with some of our large customers, large distributors, large supermarkets, that has to open up next day because they're providing vital services. Someone gets sick at the site, that day or comes home and got it. Well, they have to open up at 5:00 a.m. next morning. So we come in at 2:00 in the morning with the hazmat suits and the respirators and go clean it up. And so that business turned into $120 million business in 2020 really help offset some of the lost business, whether it be project work, whether it be on our safety clean side, all the parts washer services and used motor oil, people weren't driving their cars. And so there wasn't a lot of used motor oil to go collect. And so that was really -- that part of the business suffered a bit. Yet, that decontamination work really helped -- it was almost like a natural hedge on our Environmental services business.

That makes sense. And Richard, I'm getting a question from someone on the line. They're curious of who could be responsible for some of this PFAS cleanup work? They're saying that there's lawsuits from 3M and Dupont. But do you envision that the waste companies, particularly with landfills, are they going to have to pay up and be part of the solution to address this problem here?

Excellent question. I think the approach would be that if landfill accepts the material, they're accepting that risk as well. And that's where the challenge begins because if they've received a material that wasn't accurately represented at the time of them accepting that waste, then we have a problem, especially if this PFAS action bill moves forward and somehow we decide that PFAS and PFAS waste, whether sludges or other types of materials become hazardous. Then you have a different challenge. A company like Clean Harbors, they know going into that, that the sky is the limit, that it is hazardous, they've got to treat it a particular way. They're not going to change too much about that, but the landfills and other operations are going to be different. Now the example that I had where somebody went back and sued the manufactured material. In this case, it was a boot making plant that went after 3M that's a little bit different situation because they actually provided the raw material for them. But in the case of a landfill work, you look at what's in a landfill, it's everything from residential and commercial waste. This is stuff coming out of people's homes. It's used carpeting. It's old drugs. It's raincoats that aren't usable anymore. It's everything under the moon, old pots and pans that might have Teflon coating. How do you identify who's responsible for that. So there's no way you're going to be able to go back and clearly identify the generator of that material. So what they're going to have to do is, they're going to have to make provisions to what they do accept in their landfill. Certain types of industrial waste, they may not want to accept in the future because they know that it has the potential to contain PFAS. But other materials, they're going to continue to take, just as they have for the last 10, 20, 30, 50 years. And to manage those in the safest possible way to prevent contamination of the groundwater, of the surrounding waters in their communities, and do what they need to do to treat and process any materials coming out of that waste stream, so they can prevent that from being put into a river or a stream or something like that.

Makes a lot of sense. And Mike, I hope to pass this question to you. I'm curious, based on the portfolio that Clean Harbors has, is there any pockets, any areas you'd like to build upon? You guys have done acquisitions in the past. I'm curious if there's anything you're looking at, you guys are the largest leader now. Is there anything in your portfolio you would like to build upon or expand into? How do you view acquisitions for this company?

Yes. So we do acquisitions, they have to make strategic sense, and they have to make financial sense. I mean, we try to stick to our swim lanes, which is our 2 major segments, the Environmental Services business, which is the landfills, and the incinerators, and the safety clean business that you mentioned earlier, which is the parts washer services, containerized waste and, of course, the re-refined motor oil. So we try to make investments kind of in those areas. And we try to be disciplined around it. I mean, luckily, we didn't do any large acquisitions in 2019 and 2020, trying to integrate a business during a pandemic would have been incredibly difficult. So I think we're in a good position now to go forward. I think there's going to be opportunities out there that we can go and execute on. But we're probably going to stick to our areas where we know and know well and not try to go add another leg to the stool, if you will. So that's where our priorities remain.

Makes sense. And Richard, I just had a question that came in, someone asking me about closed landfills. How does a waste company operate a closed landfill? How does that kind of get determined? And is there any opportunity to make landfills more environmentally suddenly to generate electricity or energy from? Is there anything interesting that you're seeing from your vantage point going forward?

Landfills closed, the requirements are for them to provide a 30-year post closure period, which means they've got to continue to maintain the cap on that landfill, collect any of the landfill gas that continues to be generated and also collect the leachate that comes out of it. Those are the 3 principal requirements when you're in the post closure period. And one of the things that putting a cap on the landfill does is it stops rainfall and other liquids from coming into the landfill. So what happens over that period of 30 years, you see the landfill gas diminish in terms of the production. You also see the amount of leachate that's produced diminish. And that's all good. That's what the closure period is supposed to do for that landfill, make it more inert, make it less hazardous in the future. Not that there's any hazard in as waste in there. But to answer your question is, how do you find other opportunities? Over the last 10, 20 years, landfills have gotten really good at being able to collect the gas and produce energy. And whether or not they're putting that gas through engines or turbines to create electricity, that's one opportunity. But there's a lot of opportunities in terms of the property that landfill companies own in terms of putting wind power or putting solar up on the edges of the closed landfill, all of these are options to these companies because there's not a lot that you can do when that landfill is going through that post closure period. You don't want to disrupt that cap, but you could put the photovoltaic panels up on top of the landfill or some sort of a line of material that has the capability of collecting sunlight and producing electricity. So there's all kinds of opportunities during that 30-year period for them to continue to make money off of that site by being an alternative energy source.

Interesting. And this question I'm getting from the audience, it's for Mike or Jim. The question is, what is the utilization right now of your incinerators? Where do you see it going in 2021? And how difficult is it for private equity or someone to really come into this market and build a new one from the ground up and try to gain share here.

I'll start, on the private equity side, it's really what Mike said earlier about the permit. And it's not something you want coming into your town. It's the ultimate NIMBY product is that you're not going to trucking hazardous waste and railing hazardous product in bulk through your town or through your community, nobody wants that. I heard someone say once that it's easier to permit a Supermax prison than it is a hazardous waste incinerator and I'd agree with that. As far as utilization, I always try to caution investors there is a 2 part harmony, it's, what is your price? And what is your utilization? Because we take a myriad of waste. Our facilities could take contaminated soils and bulk liquids and bulk solids and really chew through that stuff. We could have 90% plus utilization if all we want to move through there is low price material. So this past year, we were in the mid-80s and -- but we took in a lot of high hazard materials, as Mike mentioned, high chlorinated, high fluorinated. There's a limit due to emissions in our pollution control systems of that we can take at any given time. And so it's always a balance for our facilities. We want to take as much of that material as possible because it's highest price, but we also have to deal within the confines of the regulations on our plant. And so for us, we don't look at it as just, hey, we want our utilization to be x. It's -- we want our utilization to be as high as possible with the best mix possible.

Yes, that makes sense. And why don't we -- we're actually at the time. So why don't we wrap it up there. I want to thank Mike and Jim and Rich for doing this a panel, a lot of interesting things are really developing on the legislative front, and on the ESG front right now. If anybody has any questions, please reach out to me, and I'm happy to put you in touch with Jim and Mike. Again, at this conference, we obviously have a lot of the big waste companies here. Clean Harbors really does offer something unique and it's different. And I think it's interesting. And I think, feel free to reach out to me and love to put you in touch with them. Thanks everyone.

Thanks again, Mike, and BofA for having us.

Of course. Thanks everybody.

Thanks, Rich.

Thanks, Mike.