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

I'm Michael Feniger, I'm the machinery engineering and environmental services analyst at Bank of America, so a fancy way of saying, I cover the waste sector. I want to thank Clean Harbors for coming for to the conference. I know many of you may be aware, yesterday, we had Waste Management, Republic and Waste Connections, the big 3 waste companies, but increasingly, we're getting more and more attention on the other side of the solid waste equation in the industry, the hazardous side. And as you will find out, Clean Harbors is the leader in that space. And we're really excited to have them here for the first time to really kind of unpack their opportunity and what they see with that market. So before we kind of dive in, I'm going to actually just pass it off to Eric and Jim to introduce themselves, give a little bit of a background. We're going to keep this conversation 30 minutes, very informal. If anyone has any questions in the audience, feel free to raise your hand. We're happy to kind of have more of a dialogue around this. And for everyone on the line, listening to the webcast, feel free to ping me if you have any further questions, I want to learn more, happy to put you in touch with Jim to carry on that conversation further. So maybe over to you, Eric.

Great. Well, thank you, everyone, for joining us today. I am Eric Dugas, I'm the Chief Financial Officer here at Clean Harbors. I've been with the company 11 years now in my role as CFO for the last 2. Prior to that, I was the Chief Accounting Officer for the 5 years prior. So they're working on the finance side of the business, but obviously, work very, very closely on operations and sales and really see the whole spectrum.

Jim Buckley, I'm SVP of Investor Relations. Thanks BofA for having us here. It's a great conference for us to attend. And my background is, I've been internal at the company for 12 years as a IRO, but I was at an agency before that, and Alan McKim and the Clean Harbors team was my client. So I've written every earnings release since June of 1995. So I got a celebrating my 30th anniversary pretty soon with Clean Harbors' earnings releases.

Definitely not a rookie.

No, not a rookie. Wealth of Knowledge.

Wealth of knowledge. All right.

Well, Jim, maybe just because some of the audience and even people on the webcast heard from the Solid Waste guys, they would just love to know where Clean Harbors kind of fits into the ecosystem when we think about the overall environmental services industry.

Sure. And I'll jump in on that one, first. And then Jim, just fill in that. But when you think about Clean Harbors, and how we compare to some of the more solid waste peers that Michael mentioned a moment ago, I think the biggest difference is those Solid Waste peers really their market that they're able to address is larger than ours. When you think about those customers, it's the end of everyone's driveway, it's parking lots with dumpsters. And so you think about the amount of waste they're handling, it's probably close to 10x what we handle from an environmental or industrial waste side. So when you think about our customers, we service much of the Fortune 500, but our customers are largely think about chemical companies, general manufacturing companies, oil and gas companies, companies that are producing hazardous waste. So Clean Harbors, we handle everything short of nuclear waste across a variety of verticals. But the other big thing that I would point to is when you think about industrial waste, these are oftentimes very dangerous, right? We like to maybe joke every now and again, we're not talking about bananas peels here, right? We're talking about harmful chemicals that can hurt people. And so our business is very much a highly regulated industry. And one of the unique things about our business is that when you think about the customers we serve, the liability associated with the types of waste that they're generating and we're handling that liability begins with the generator of the waste at its inception. And then they maintain liability throughout the process until that dangerous waste is ultimately destroyed or disposed of. So they rely on us Clean Harbors to handle that waste in a safe way. We test virtually all the waste we collect, so we know what it is. And so as we move it safely through our network on to the disposal sites, we know what we have, and we're handling it appropriately and disposing of it appropriately. So our niche is in that environmental space. The stuff that you can't just throw in the trash and get to a landfill and very specialized work with specialized equipment and people.

The only thing I'd add to that, that's a great description is their business awesome business models, right? Proximity, as Eric said, it's over 300 million tons of trash each year. There's about 35 million tons of hazardous waste. So it is that sort of 10x opportunity. But you don't have compliance around rotten bananas. Everything we pick up is associated with paperwork. As Eric said, we profile everything. We know what's in the waste stream versus kind of just grabbing barrels at the end of the driveway. And so people always ask in terms of margins, they just have such great density in proximity where sometimes we'll pick up waste on the East Coast, and we've got to bring it halfway across the country. And so it's just a different business model.

Well, maybe on that business model, I think what investors have always liked about the solid waste space is the idea that these landfills are hard infrastructure assets, you can't replicate them. I think just if we're talking about MSW solid waste, landfills, you've gone from 2 days ago, 10,000 to maybe 1,700. Maybe you could just help us understand how it works in terms of the collection and disposal side obviously, there are hazardous landfills, just kind of help everyone in the room and on the line right now understand what the market looks like in terms of collection and disposal for your guy space.

Sure. So when you think about the collection space or our collection arm, we have a variety of assets where we can handle waste, but collection is largely done through our transportation network, where we'll go out and collect. We operate a top 15 transportation network. Our fleet is a top 15 fleet in North America, where we're going out with that specialized equipment with very highly trained personnel and collecting and testing the waste, as I mentioned a moment ago. When you think about post collection on its way to disposal, if you will, our initial collection. Obviously, we have a network of assets, over 100 sites where we can handle waste. Oftentimes, the first stop in the journey of a way stream will be at what we refer to as a TSDF, which is really a location where we can taking that waste perhaps do some initial treatment, but also segregate the waste, put it in by likeness with other similar waste transport it efficiently and safely on to its next step, which could be a landfill, could be a hazardous waste incinerator. When you think about our network on disposal, we have 10 of 14 hazardous waste incinerators, so roughly about 2/3 or 70% of the commercial market right now. Really excited about our tenth and new incinerator in Kimball, Nebraska that we opened up just last December. So that is really a new incinerator modeled after an incinerator that we built in Arkansas about 7 years ago, is able to handle kind of the most dangerous types of hazardous waste. So really excited about that opportunity and growing our network that way. But then on the hazardous landfill side, we have about 1/3 of the overall commercial market on hazardous waste landfills. So a really large player, obviously, in the space and the #1 player in North America.

And to your point, Michael, on the hazardous landfill, there hasn't been a greenfield permitted since 1996. And prior to us opening one in 2017, there hadn't been a new hazardous commercial incinerator since 1997. So these are like the most scarce of scarce types of assets.

And I mean we'll talk a little bit about Kimball, but like it's really difficult. It sounds like to even think about opening up a new haz landfill. But even incinerator, how difficult is that barrier to entry to -- for private equity or someone to come in and try to maybe be -- have that infrastructure and haven't asked to be competitive?

Yes. I mean it's very difficult. I think one of the things that set Clean Harbors apart in the last 2 expansion both in Arkansas that I mentioned in our latest one in Kimball, is that we had an existing incinerator at those sites. So this is really just an incremental build of an additional facility. And so having the ability to already have those permits in place having the relationship with the local communities, having a long history of safety and investment in those communities really gave us a kind of an advantage to be able to build a new incinerator in a relatively short period of time. It's about a 5-year construction phase from very initial permit modifications to completing the project. And we spent roughly $200 million, $210 million on this new incinerator that will generate $40 million to $45 million of incremental EBITDA when it's up and running. So to answer your question, these are difficult, hard to replicate, hard to permit sites, and we are at a distinct advantage already having the history and locations where these operated to be able to really expand that footprint.

And Eric, maybe just to rewind a little bit. In 2024, you grew revenue 9%, EBITDA 10%, so a little margin expansion on that. Maybe just to help everyone, what are the factors that kind of drove that growth in 2024, either positive or held it back? And what are you seeing for 2025 right now?

Yes. First off, Michael, I'd say those numbers that you articulated there, the 9%, 10% growth at revenue and EBITDA that was at a consolidated basis, up to this point. We've spoken mostly about our Environmental Services segment, which is roughly 85% to 90% of the business. So that really is kind of the main story here. That segment actually grew 10% top line and 15% EBITDA about 10% of that was organic growth in EBITDA. So really a great story. But some of the things driving that is the company saw a really good year from a volume perspective. If you think about waste streams, so we collect a lot of our waste streams as drum waste, and we saw the number of drums that we took into the network increased 12% to 15% each month kind of year-on-year. So some really good volume expansion there. When you think about more volumes coming in, it's a very highly leverageable network of assets we have. So each incremental drum in this case that can come into the network you see a lot of margin expansion, a lot of profitability dropping to the bottom line. We also saw really good -- we've had several years now of really good pricing strategies, right, where we're able to price above inflation and drive margin expansion. And how are we able to do that? I think, first off, it's delivering great service to our customers safely given the assets that we have, and customers really value that for some of the reasons, some of the liability reasons that we talked about before, but also knowing that their waste partner is going to show up on time, take care of the waste dispose of it properly. That contributes to our pricing power as well. So you've seen that great volume growth, good pricing power. The other thing that I'd call out is we really did a very nice acquisition in 2024 with the acquisition of HEPACO, which continued to fill out our field services business. So our field services business is a lot of folks when they think about Clean Harbors, you see us in the news, responding to emergency responses, whether that be avian flu, whether that be COVID response, whether that be oil spills and it's really that field services business that's doing that work. So HEPACO filled out a nice geography for us there. HEPACO got us access to some more emergency response work. And we really are seeing more responses that we are reacting to here, whether that be brought about by just human error, weather-related incidences, but you see a lot of folks calling in the experts, those being Clean Harbors when bad things happen, and that legacy field services business saw about a 9% organic growth this year, 47% growth considering the acquisition. So I bring that up because it's really truly a great story in 2024.

And then as you're thinking of 2025, like as we think of those pieces in terms of volume, price, obviously, it seems like the acquisition is gaining momentum, how do we kind of put those buckets got to think about how 2025 evolve?

Yes. So I think many of the positive trends that we saw in 2024, we expect to continue. We gave out some full year guidance last week during our earnings release and in terms of the Environmental Services segment that we're talking about here, we guided to about 6% or 7% growth in 2025. So down a little bit from the 10%, but still very kind of respectable and in line with -- 2 years ago, we put out our Vision 2027, which is our long-term goal, where we had 6% or 7% growth in that ES business. So expect to see some of those same trends continue. I guess I'd also take the opportunity if you think about kind of both short-term and long-term growth catalysts of the business, there's a lot of things, and I'm sure we can talk to some of the specifics in a moment, but I'm talking about kind of -- I think we -- currently -- the current administration kind of pro-growth pro business. We've had reshoring and nearshoring that's been a tailwind for us. PFAS legislation and the movement around PFAS. So a lot of great tailwinds kind of long term for Clean Harbors as well.

Well, let's talk about that, Eric. I mean, I think new administration, there's a lot of things going on in terms of, obviously, your domestic story. So just things as tariffs, but he is trying to stimulate the economy, get manufacturing back. ISM has been below 54%, nearly 24 months or 2-year decline in manufacturing, trying to get that back there's also worries on PFAS, which has been building momentum. Can we see the new EPA get involved. So there's a lot of puts and takes. So as a CFO, I'm just curious how you're kind of looking at these tailwinds and headwinds and really what you're going to be monitoring over the next 6 to 12 months to kind of give you a gauge on how those things play out.

Yes. I mean I'll start with what kind of I'm looking at. And I think we want to get specifically to PFAS or some of the administration expectations. Jim can touch on that. But really, what I'm looking at is continuing to see those volumes increase. So I mentioned kind of the drum count. Are we continuing to see that? How are we doing with some of our pricing strategies. What is inflation looking like, right? And we can talk about tariffs and what that might mean for inflation, but what is inflation doing and how am I pricing and how are we pricing things effectively against that, right? So those are some of the key levers that I'll be looking at, and we'll be monitoring what the administration does to determine -- we to make sure we respond in the right ways.

I mean, at our core, Michael, we're an industrial production business because as the country produces we take the byproducts and we recycle what can be recycled and we dispose what can be, and we provide services around all of that. So when you think of the past several years, where we've been wildly successful and as Eric said, we guided to 6% or 7% to start last year, delivered 10% organically in '15 with HEPACO from an EBITDA perspective. There's no reason to think we wouldn't do that again this year. We just guided to 6% or 7% to start again. Because part of that industrial production, plus, plus, plus is pricing, which we should be able to do, again, it's projects and where we always don't assume those in our guidance, but they happen every year. And last year, we had a number of ERs. And with the HEPACO business, we'll have access now to even more. We had 21,000 emergency responses last year. And every one of those is a scratch ticket to something larger potentially. And so we feel really good about the growth path we're on. As far as Trump and the new administration Eric touched on it. It's very pro growth. We're not a multinational. So in the end, if his policies are full and drive American manufacturing and American jobs and American production, that's all perfect for Clean Harbors, but I think that was already underway. And there's folks out there tracking manufacturing projects. There's I think $584 million was the number I saw of $1 billion or larger manufacturing projects over the next 5 to 10 years. All of that will be beneficial to Clean Harbors beyond new legislation or the new administration and then hopefully, some of these new policies put that on steroids and they move really quick. It will be beneficial to us. I mean from a -- we're also an acquisitive company. So one thing to touch on is there's some thought that dealmaking and people in your world certainly are looking at, will that go back to a much more robust pace and bring more things to market. And a lot of times in the past because we are #1 or #2 in so many of the things that we -- areas we operate in. Sometimes we don't even get invited to the party for some certain acquisitions because they feel like the DoJ overhang would be too much. And so this might open up some avenues for us as well under a new administration.

That's helpful. And just since we're on the topic of the administration, I mean, PFAS, this is a conference that's had a lot of chemical companies. So we've heard about this from time to time. Obviously, when it comes to waste if it's designated as a hazardous substance, that does change the discussion. So just for reference, yesterday, the waste companies are mostly nonhazardous waste. So this PFAS designation did kind of change the game. I'd just love to hear from you guys what is the opportunity is there as you guys have the largest amount of hazardous landfills, you guys have incinerators. How has that kind of changed? How are those conversations? And Eric, just your initial take on the new EPA, what are you kind of hearing, we're hearing there is some worried that there may be some slow walking, but everyone wants a clean water. Everyone's clean air. So I want to pass it off to you about what the opportunity is and how you're kind of looking at that going forward.

Do you want to take this Jim?

Sure. Yes. I mean Lee Zeldin doesn't have much of an environmental track record and stepping in as Head of EPA, but the one thing we knew about them was that he's been very pro PFAS cleanup. He's done that as a congressman in New York. He's voted on some legislation there. In the summer of 2019, there was a House bill and a Senate bill both called the PFAS Act of 2019, and Lee was a proponent on the house side for their version. Of course, they could never agree the sky is blue. So they never got a bill to Trump's desk. But he's got actually a kind of a track record there. So we -- and he's made public statements already that PFAS is going to remain a priority. So we don't see that. I know there's that whole deregulatory kind of aura around Trump, but we don't see that really changing. And at our core it doesn't matter who -- what administration is in because chlorines and fluorines and halogens are harmful to human health, and that just doesn't change administration to administration. So from that perspective, it's still a game on for us. As far as PFAS, we rolled out a complete. We call it a total PFAS solution last year that's been well received in the market. in terms of being able to analyze and samples, soil and water, being able to filter drinking water, we're doing that. I think if we were speaking 3 years ago, Mike, we would have said we're not -- we don't play in the drinking water business. But we were sort of pulled in there with PFAS because oftentimes, there may be -- and it happened in the case of Pearl Harbor, there was a fuel spill, and we were brought in to sort of clean that up. And then as they started to test the water, it turned out it was loaded with PFAS. And so we set up a large filtration system out at the naval base in Oahu, and we're there and we'll be there through at least the end of the decade now. And so suddenly, we're in there, and we've done a tremendous job that team did. And so the defense department has asked us to participate in other areas. So our carbon filtration business has grown faster than we ever would have anticipated, but for us, the Holy Grail is the disposal of PFAS, right? Because we've got closed-loop landfills. And so anything that goes into our landfills, we control the leachate. So when you have a landfill you're always going to have groundwater or rain that has to get dealt with at some point. And that's an issue for the solid waste folks because they've been burying carpets and couches and teflon pans for decades. And set their leachate coming out, and obviously, they have to deal with the PFAS in there. But for us, because that we never send that back into the water table, we either destroy it through incineration or deep well injection or we have an evap -- sophisticated evaporator system at one of our landfills, so that we can take it into landfills it never gets back into the environment or ultimately what we think is the best solution is to destroy PFAS and put it into an incinerator.

One last point that I would add to that, and it's kind of the key takeaway of everything that Jim was talking about is we believe whatever the ultimate rules and regulations are here, Clean Harbors is in a very unique space. One, we have relationships with many of the companies that are going to need to deal with this issue, whether that be the government or private companies. But two, we have currently the infrastructure to handle it, whether that be soil remediation, water filtration. We have the equipment and know-how to excavate things. And then we have the ultimate end disposal, right, along with the transportation to get it there. So it's a fully integrated full solution that we have now. We don't have incremental CapEx that we'll need to invest to be able to build out that network. We've got it now. We're ready to go, and we have the relationships.

So Eric, as Jim pointed out, 3 years ago, you weren't there, now you're doing this to service customers. 3 years ago, the solid waste companies were not talking about ES. And now we've seen a shift. One made a big acquisition. They're doing a few others. They're talking about it. So I'd love to understand, without maybe you commenting specifically on competitors. Just how has the competitive dynamic changed. Is it a welcome to have these big companies that have the pricing? Does it make it a little bit more competitive as you evaluate M&A? Just what is it that you're seeing out there that now just ES is much more in the headlines, either with Apollo, either with some of the sales acquisitions we've seen. Just love to get your sense of a shift that you've observed in the last few years.

Yes. I think it's been an interesting last couple of years. I think a lot more eyes on the space. I think investors and strategics looking to add to their portfolio, really see the value in our marketplace. I think they do see downside protection. These are necessary services that companies need to have, right? They need to get rid of their waste and they need to do it in a safe way. And I think people really value that. So the landscape on the M&A front, it's becoming -- it has become more competitive. I think on balance, that's a good thing for Clean Harbors. I think the value of our company has increased, and I think there's a lot of catalyst for that. In terms of new entrants and new players, I think it's been good to have larger sophisticated companies come in, bring some of that operational discipline has been good. And look forward to that to continue. But no question, there's more eyes in the space. I think they're really seeing the value in these hard to replicate, hard to obtain assets that the country drastically needs, especially now given some of the pro-growth type things going on.

And can you talk a little bit about just the incinerators? I think if I look at Q4, I think utilization was at 94%, you're able to get pricing up. Just help us understand for the audience, like what are the key KPIs you look at that is how you can drive pricing? And what do you see the long-term outlook there?

Yes. Certainly, pricing, volume throughput and utilization are some of the key KPIs there. You mentioned 94% in Q4, awesome quarter for the plants. They ran really well limited number of down days throughout the year. There are scheduled down days where we need to do turnaround activities in things and Q4 was rather low there. But for the full year, so each individual quarter might be difficult to evaluate. But for the full year, kind of running in that high 80% utilization is where we like to target. And that's kind of one where we want to live. So certainly look at that KPI. And then you mentioned pricing in the fourth quarter here, kind of year-on-year, 4% increase in pricing. Because of the high utilization, there's some mix impacts there. on a like-to-like level, probably closer to 6% or 7% kind of year-on-year pricing is what we're seeing in disposal and the incinerators. And really, that's driven by the strong demand and the nature of items going through there.

And can you talk just sort on the topic of incinerators Kimball? I mean, this has been a big project for you guys. Just how do you evaluate it? How do you feel comfortable making that investment? And what you really think the returns are for that area for the incinerator going forward?

Yes. So like I alluded to a little bit earlier, kind of Kimball was part 2 of kind of a new incinerator build-out, if you will. So with the success that we had from the incinerator that we built down in Kimball -- El Dorado, Arkansas. It opened 6, 7 years ago now. We really saw an opportunity about 5 years ago as El Do was ramping up in full to, hey, our customers and the market really needs another incinerator. So we had that blueprint from El Dorado. We had a couple of different sites we could have chosen from. We elected Kimball, Nebraska as the next phase. So really, it's a replication of the El Do facility, a few incremental kind of bells and whistles and capabilities in Kimball. But again, we had a site there, as I mentioned. So it was a permit modification. We had a great relationship with the local community. We had invested in that community and continue to do so. It was an area where we could attract people to for labor to work the new incinerator. So we've done all that. Like I said, about a $210 million total investment. And at today's pricing, when this thing is up and running, it will produce $40 million to $45 million of incremental EBITDA is what we're estimating here. Now the ramp-up, we're purposely going to take it a little slow in terms of the ramp-up, maybe get it to about 50% capacity this year. and hopefully exit 2026 kind of at full capacity. So that's by choice. Certainly, these are valuable assets. It takes a little break in time to make sure everything is running well and work out the kinks and that's the strategy that we're going to kind of pull forward.

The other thing I'd add, Michael, is it's given our market share, and so we've gotten this question a few times from some folks today about capacity and is there too much too little? How does it impact pricing? As the clear industry leader, we'd rather -- as it turns out, we were late with building Kimball. We'd rather have had it a couple of years ago. We didn't know the pandemic was going to happen. And reshoring was going to happen nor did we know that the chemical company running the largest captive was going to close in 2022. And so we had to kind of scramble with the whole industry was a bit backlogged. But given our share, and how we want to price, we'd rather be late than early. And so we've gotten asked today about when are we building the next one potentially out in at our Utah site, which could fit. That's what we have to wait when we make that decision is we want to make sure the market is ready for us rather than having to go chase volume.

And maybe, Jim, just to pull on that string a little bit because now Kimball the call -- you spent the CapEx already. How do you evaluate, Eric, the free cash flow going forward? Because it seems like pricing, it doesn't seem like margins have a ceiling yet in your ES business. So just curious how with so much focus on free cash flow and free cash flow conversion, how are you kind of thinking that step up in the next few years?

Yes. Certainly, we guided to lower CapEx here in 2025 as the completion of Kimball has taken place. So when we think about kind of free cash flow, oftentimes, we'll look at kind of free cash flow conversion, the amount of free cash flow generated as a percentage of our EBITDA, and we've targeted 40% or above. So the last few years, if you kind of normalize and take out that Kimball investment, we're right about there in the high 30%, touching 40%. As we project forward next year, we have a little bit of catch-up capital from some of the acquisitions we did this year that we put off because of the completion of Kimball. But we're kind of right there at approaching 40% free cash flow conversion. As I look out and I think about long-term targets and long-term goals, it's exceeding that 40% in pushing it up each year closer to 45% longer term. But that's really what we're looking at. That being said, though, to the extent that we have internal accretive opportunities like Kimball, there are some of those out there on the horizon that we won't be afraid to execute either.

And maybe you could talk about because you referenced it earlier, just the M&A strategy because you guys do have cash to deploy. I mean, is it that you have the disposal networks, and you're building the field service and collection around it to build that density? Jim talked about transportation is really important. Just what should investors think about year in, year out, what Clean Harbors is kind of looking out on the M&A front?

Yes. I mean, certainly, M&A in the company's 45-year history, that's been the predominant thriving factor, and we'll continue to do that. When you think about what we're targeting, certainly continuing to build out our Environmental Services business, building out that collection arm of waste, bringing more and more volumes into this highly leverageable network. We often call it feeding the beast, right, and bring that into our disposal assets. That's -- those are the most attractive opportunities. I think the HEPACO acquisition that we talked about before, again, building out in certain geographic areas, our capabilities in field services, which is what we did with HEPACO, great opportunity. And those types of service business, those feed the beast, if you will, as well. You don't think about field service or industrial services areas that produce a lot of hazardous waste, but there is hazardous waste that comes out of that again can go into our waste network. So it's filling in a couple of geographic holes. It's looking to drive more waste into the network. It's looking to consolidate certain things in certain areas. Those are all kind of where we would look for M&A.

And maybe as we're wrapping up, can you kind of touch on Safety-Kleen, just this other portion of your business, just maybe some of the headwinds you've seen there and how you're kind of managing that going forward? Is it kind of core to everything you guys kind of do? Just love to touch on that.

So the Safety-Kleen business or SKSS, this is our oil collection re-refining business. About 10% of the overall EBITDA at this point. So a much smaller piece of the business. We've really come against some headwinds in this business on the base oil pricing side of things. So if you think about the major factors here, it's what is the cost of revenue that -- the cost savings or revenue generation we can have from collecting used motor oil, which we use as a feedstock, send it to our re-refineries and then produce base oils and blended oils. And it's the pricing that exit price that's really been dampened over the last couple of years and contributed to kind of the decreased earnings profile. If you think about the business and being core, it is a business where we're collecting a waste, i.e. used oil here and recycling it into a finished good. So at its core, it's a similar process, but it does have a different risk profile in terms of commodity risk and what is under our control, right? Some of it is not under our control. So as we do, we'll look to continue to improve the business as we do all of our businesses. But the other thing is, it is there are complementary aspects that bring in some additional services on the waste side of the business from there as well. So we'll see. But really a solid business. It does generate very good free cash flow even in times when EBITDA is not as impressive.

Maybe just to wrap up, Eric, the store has worked really well over the last few years. Just what do you look at as you guys are kind of the big fish in this pond, what are you kind of looking at benchmark-wise maybe versus other companies? Is it Jim mentioned maybe transportation, there's a logistics element of your business. I'm just curious, from your vantage point, what you're kind of looking at in terms of feeling like what the long-term potential is for CLH.

Yes, I mean it really starts with network efficiency and throughput and utilization of personnel, utilization of equipment, lowering our rental spend. There's 100 projects that our asset management group is always working on to kind of to goose the margins along with our pricing. And as Eric said, even when it's non-haz waste that we may be taking somewhere else, once you've got those trucks out and going the incremental pickup revenue falls through pretty quickly. And so as we look at acquisitions, we certainly want things that are going to drive more waste not necessarily to the incinerators, like a HEPACO, not a lot of incineration waste, but those folks go out and clean up spills of a lot of different chemicals. And so that gets driven through the network. And so from a perspective of how we want to grow, it's looking at all aspects of that. It's price, it's volume, it's efficiency. And that's how we've taken margins in the ES business, up 550 basis points over the last 5 years. And ultimately, in that business, take the oil recycling aside for a second. We'd like to get to that 30% margin and look more like our solid waste peers.

And we're going to do all that by maintaining our position as the largest player by delivering great safe and reliable service to our customers. That's really the key here.

Perfect. Well, maybe we'll wrap up there. I want to thank Clean Harbors, Inc. for coming. And if anyone has any questions or follow-ups, please reach out to me. Happy to put you in touch with Jim. Thanks, everyone.

Thank you, Michael.

Thank you.