Good morning, everyone. Welcome to day four of Oppenheimer's 20th Annual Industrial Growth Conference. We're starting off today with a great one, Clean Harbors. We're really delighted to have the management team back at our conference this year with Co-CEO, Co-President Mike Battles, and SVP of IR, Jim Buckley. Gentlemen, welcome. Thanks so much for being here.
Hey, Noah, thanks for having us on the Oppenheimer team. It's always a pleasure to come talk to investors, and you do great. You give us great coverage, and appreciate it.
Thanks, Mike. You know, I listened to a lot of scripts over the years and realized you always start your earnings call off talking about safety. So I want to do the same, actually start off here. You reported a record low TRIR in 1Q. And I think other waste companies, in the last several earnings, have made the connection for investors between lower incident rates and margin benefits they see at a lag. Can you talk about what the company's doing to achieve safety improvement and how we should think about that showing up as a margin benefit in the financials?
Yeah, no, it's a great way to start. As you may know, Noah, we start every meeting with a safety moment. That's when I was the CFO in finance or the operations. We start, it's really important to talk about kind of our safety culture because it's just so important to kind of who we are. We want our number one goal is to have every employee go home safely to their family. Every night is the number one core value of our six core values. It really is a big part of kind of what we do. Because we're managing such dangerous, going into dangerous places, managing dangerous waste streams, safety serves multiple purposes. You know, we don't normally talk a lot about what the safety culture does for our P&L because it's not the purpose of what we're doing it for.
We're doing it to make sure that our people get home safely and that we don't have injuries on the job. But to your point, Noah, there is a connection. It's a lag, right? Because when someone doesn't get hurt, when someone doesn't hurt their hand or hurt their back, you know, it takes a long time for that to show up in the financial statements because of the lag of a diagnosis and then a treatment plan, if it's serious, that can take six months to years in some cases. You know, someone gets a car accident, something like that. But it does happen. You know, the challenge we see in that part of the world is I think we're doing a great job of lowering the amount of incidents, but the cost associated, for instance, has been much higher.
And that could be for healthcare costs and legal judgments against companies, which are higher than ever. And so my view is that we need to be safe for a lot of good reasons and have an industry-leading safety record, you know, multiple times better than the industry average. We do that because that's important to us. But it does help offset rising healthcare costs, which are rising at a rate probably faster than GDP. It does offset legal judgments when there are injury cases, when the Morgan & Morgan of the world are kind of suing the heck out of us and getting judgments at a pretty high rate, at a pretty lucrative rate.
Those are the, in my mind, we need to pedal faster from a financial statement standpoint on our safety just to offset, let's say, a dramatic rise in healthcare costs over the past five years and legal settlements. That's, in my mind, kind of why we do that. Also less accidents, less being safer on the road, trans compliance. We don't talk about trans compliance, but transportation compliance is really, really important because of car accidents and the cost of automobile repairs. That's also a very large cost for us. We have 15,000 pieces of trucks and trailers out there. That's with the 14th largest motor carrier in North America. Car accidents, truck accidents are hugely expensive. Being safe is not just about making sure that people don't hurt themselves, but they also drive safe and they drive defensively.
That's all part of the culture of the company. Those are all, again, to offset rising automobile repair costs is really what we're thinking about here.
The last point I'd add, Noah, is being safe helps with recruiting for people that are outside. It's like, I want to come work there because they take care of their people, they care about their people, and it helps with turnover for people not leaving.
Yeah, I was in Vegas earlier this week, and we did go to a couple of our sites. One of the sites we saw, you know, a father and two sons. That makes me feel great because why would a father put their son to come work for them if they didn't think it was a good company to work for? So that really kind of was very rewarding for me as a CEO to meet the dad who's been there for a number of years and the two children who are also working there because, you know, it's one thing for you to do it because you need a paycheck, but another thing to bring your kids there. The fact that it happens all the time. We travel a lot to different sites.
You see fathers and sons and nephews and nieces all the time.
I think that's a great anecdote, Mike, and illustrative. So appreciate you sharing that. I just want to stick with the theme of margin improvement here and then put in the context of some of the targets you put out at Investor Day. You know, that sort of implied maybe a 22% margin by 2027, obviously exiting 2024 at 19%. So do you see still the overall business getting close to that kind of 22% figure? Is that achievable in your view?
Yeah, no, I think that the margin on the consolidated number is difficult to kind of put a finger on because of the movement in the SKSS business. So I'm of the view that we're going to get that right. We talked about that past couple of days. I'm sure we'll talk about it this morning. But that has been a challenge from a margin perspective. Certainly, when we did those models back then, the margin profile for the SKSS business was much higher. On the Environmental Services side, as you know, Noah, we've gone 12 straight quarters, three years of year-over-year margin expansion, and Q1 was no exception to that. And so I'm of the view that that's going to continue. We talk about environmental service margins going up, a goal of getting to 30% margins. Like the solid waste, guys.
And I think there's a real possibility of doing that. I hate to kind of do projections on the oil business because that is, I think we've turned the corner. I think we've changed the paradigm, but once is not a pattern. And so we need to start doing that over some time horizon before I come back to say, hey, look at kind of where we are on a consolidated basis. I'd say that Vision 2027 is on track. One business is doing much, much better than we expected, and one business is not.
Thanks, Mike. I guess we can maybe focus more on environmental services because it's more controllable margin story. It's also the vast majority of the company.
91%, Noah, 91% Q1, 91.
So we're coming off 25% segment margin for 2024. I think the kind of implied guide here is modest margin expansion for 2025. How should we be thinking about maybe sort of multi-year trajectory and the levers for margin expansion?
Yeah, no, I think that 2025 will be with a new plant opening up. Certainly, Q1 was probably a bit of a drag from a margin perspective. Maybe we get back to form for the year; it's not a helper or a hurter, but we've committed to 28,000 tons. The thing runs at a 70,000-ton incinerator, so it's not going to be running at full capacity by the end of the year. So that's probably a bit of a headwind drag there. You know, we are seeing kind of good trajectory in pricing. We have been able to get, you know, we're always concerned about, have we reached a limit on pricing? We absolutely have not reached a limit on pricing. We certainly have plenty of room to continue to price and drive margin expansion.
You know, do we get to 30% margins by the next three or four years? I don't know, but I think it's going to go much faster than I think it's going to continue on the good trajectory that we've seen for the past few years.
We'll dig into the different parts of ES in a little bit, but I just want to ask a couple of high-level questions before we do. You know, I think just given the balance sheet strength and the improving free cash flow conversion, just help us understand how you're prioritizing the capital allocation over the next 12-24 months between organic growth, M&A, and returning capital shareholders, and maybe help us understand really the metrics driving those decisions.
Sure, so first of all, it's all about ROIC. You know, we want to make sure that whether it's capital deployed in our plants, whether it's M&A, whether it's buybacks, we see whether it's leverage and debt. You know, we're always trying to make sure that we're deploying capital in a way that returns the best returns to our shareholders and that we're thoughtful about that, and so whether it's, you know, we haven't done a lot. We did $500 million of M&A last year, but we haven't done anything since Q1 of last year, and that's because the returns haven't been as good as we had thought. That doesn't mean we're not looking at things. That doesn't mean we can't get there. It's just that we tried to be thoughtful with our capital deployment.
In the interim, we opened up this wonderful plant that's going to have for $200 million. It's going to have enormous returns. It's going to have enormous returns. There are other types of capital investments out there. We're looking at whether we can take some of the byproducts of the re-refining process and add some capabilities into one of our sites to drive more value out of that. It's all based, to your point though, Noah, on ROIC. It's all based on returns. We ended the year with 2.1 times levered on our balance sheet. If it was $600 million of cash, kind of roll that forward and we generate $500 million of free cash flow over the next nine months or more than that, you know, we're going to be in a great position to deploy capital in a lot of different ways.
We think the stock is still very undervalued. We have over $430 million remaining under our pre-existing buyback program. And so we have plenty of opportunity, plenty of ways to do it. And we don't have any debt due until 2027. And we got upgraded by Moody's. I don't know if you saw that the other day. We got upgraded now, our consolidated book one notch below investment grade and all our secured debts at investment grade. So I think that we're in a really good space. A variety, it depends on whatever happens. If the economy goes sideways, well, we'll come out stronger than ever. And if it doesn't, well, then we'll have a great balance sheet to deploy it intelligently and take your money and deploy it properly.
If we think about the M&A landscape, I mean, you know, $30 billion plus environmental services industry, still fairly fragmented. You know, is there a way to think about, I think back to your 2023 Investor Day, kind of the size of what's potentially acquirable revenue for Clean Harbors, you know, kind of the size, the TAM within the TAM, if you will, maybe an update on kind of the focus of the M&A pipeline today?
You know, so Noah, when you think about some of the big areas of where we are today, when we own 10 of the 14 hazardous waste incinerators in North America, the likelihood of us being able to acquire another incinerator is probably incredibly low, incredibly low, even if they were for sale, you know, incredibly low, and so in areas like landfills, again, also probably not going to be able to buy that given our dominant position in the marketplace. Other areas where we have 20% or 15%, there's opportunities there in areas even smaller, and so again, I think that private equity has had interest rates rising on them. They are under pressure. They've owned these assets for quite a period of time. The clock is ticking for them to get a return to their shareholders. They're worrying about a recession.
They're worrying about a recession and high interest rates. So if I'm a PE guy, I'm going to be going, we got to go, we got to go today. And I'm here to tell you, it's tough to prove a negative because we haven't done anything, but there's a lot of assets out there in a lot of different areas. And as you know, Noah, we take all waste short of hazardous, short of nuclear, excuse me. And so we're open to any types of industrial waste, any type of industrial waste that's out there that again fits the screens of strategy and of financial rigor.
I want to move through some of the segments. You know, I think starting with Tech Services, you know, the company talked on the earnings call about active conversations with a number of captives. You know, we've monitored this for years. Of course, you remember the 3M announcement. But I think to level set, right, there's 41 different captives today making up half the market. So how do you see that trending within the next five or 10 years? And how do you position yourself to capture the market share from captives shutting down?
I can tell you that one, yeah. The captive market is a source of growth for us. And for those on the call, there used to be over 120 captive incinerators. Now this is going back to the mid-1990s, but that 120 has winnowed down to 41 today. So when you ask next five years, 10 years, there's going to be more closures. I can't tell you exactly when because it's a one-time decision for those operators. And so it's a major decision that they can never get that permit back. And so, but when you spread it out over that length of time, there'll be some captive closures. And the other challenge in more recent years, 3M has given us a perfect playbook to bring to those folks, but it also really packed up the industry because 3M sent a lot of volume exclusively to us.
And because of that, if there were some captives considering closing, they were probably waiting until we opened Kimball and our peers opening one later this year. So there's some new capacity coming in the market. So logic would tell you if that was the gate, that gate's open right now, and it may not be open for all that long. So I would say within the next five years, you'd certainly see some closures.
I think, you know, speaking of Kimball, right, I mean, the message from the call was very much on track with its ramp. I guess talk about the visibility you have into the demand of the pipeline for the 28,000 tons you're expecting to process this year.
Yeah, no, so it's 28,000 tons. We're on track. And opening up a new plant is a challenge. We opened it up late last year, you know, right before Christmas. And you know, the winter that we experienced in the Midwest and the South, it slowed us down. And we were concerned. But the team is a great team. I mean, as investors, you should feel proud of the team. I've been out there a couple of times in the past few months, and they run that plant as if they own it, and they take care of it, and they want to maximize its value and maximize the returns. They're really, like many places around Clean Harbors, they're terrific operators, terrific. You know, I'm of the view that the pipeline is strong.
No, I think that I didn't, I mean, I listened to other solid waste guys that kind of had the same answer that they see like a reshoring phenomenon that continues, and there's plenty of waste streams. As you know, 16% of our revenue comes from the chemical vertical, but that's only 16%. You take the top 10 verticals, it's only like 45%, and so we get waste from whether it's pharma. It's just amazing. What I find amazing is that no matter what industry you're talking about, government, hospitals, universities, I mean, they generate hazardous waste, and so that generates a waste stream that comes into our network that I think that regardless of what happens, we're going to be in a great spot.
I thought DOGE was going to eliminate that, though.
Say again?
I thought DOGE was going to eliminate that, so. Just a follow-up on Kimball. I mean, do you think that it becomes kind of mixed neutral or mixed positive within incineration once it's at full ramp? Is there anything kind of structural about the waste streams going there, the asset location, or is it kind of?
No, I mean, as you know, it's on an existing site, and so they already have an incinerator there. This is the second incinerator they put on the site, so it's sharing its logistics and so forth. We had to add a warehouse and a couple of other things to make it kind of operate effectively. However, I don't see the pipeline even slowing down a bit. March was one of our best months for drum volumes, and April will beat it. Drum volumes is one type of waste stream. We take all kinds of waste streams, but drum volumes is a good kind of good KPI. March was one of the best months we've had in the company's history. Therefore, I'm of the view that the waste volumes are going to continue to fill that plant up.
People ask me about the capacity coming online this year and one of our competitors' capacity coming online this year. And what's that mean for pricing? I mean, we own 10 of the 14, and when they come online, it'll be 10 out of 15. They own 3, and we own 10. And why would we want a lower price on that? Who's that? Who does that help? Who does that help? And so I don't see us kind of racing to the bottom kind of anytime soon.
I think you'd spoken on the call, the one call about the testing with the EPA and DOD for PFAS incineration, kind of looking for those results to come out in 2Q. So I guess just broadly, what are you hoping the study determines and kind of tie that to how it might support growth in the PFAS project pipeline?
Yeah, I can start on this one. PFAS is one of my favorite topics. You know, this is for those just background, we completed a test with the EPA and DOD, as Noah mentioned, back in November at our Utah facility. It's our third incineration of PFAS tests. And each time we've tested to the highest standard available, so the EPA has gotten more comfortable around incineration. They participated in our study last time, whereas the first two, we'd sort of been on our own using third-party designs and outside experts to evaluate the data. But the EPA wasn't involved, and they've tried to create new, more rigorous standards to get themselves and everyone, the market, comfortable with it, so they have an OTM 50 is the name of the new highest standard.
Assuming they don't move the goalposts again, we think this will be hopefully a big unlock for us. We sort of know the answer to the test because we've seen the preliminary data, but we'll have to wait and get the study officially published, which we're hoping will be in June. Maybe it slips to July with everything seems to be going a little slower with a little DOGE impact all over the place, it seems. With six nines of destruction, we feel like that's very achievable. That's sort of the gold standard in incineration. That's what we achieved the first two times with the first two tests. That's what we think is going to be the outcome here. The question of sort of what does this do for us? Very importantly, the DOD was involved. PFAS is a problem at military installations.
Depending on who you read, there's 400 of them out there. There's 700 of them out there that are contaminated. There's several hundred highly contaminated military installations, and we know in discussions with the different parts of the military within the DOD that they want assured destruction, and that option is just not out there right now. The work that we've done so far at military bases has all gone to landfill, and we think that's a wrong answer, particularly for stockpiles of AFFF and things that are very highly concentrated PFAS. You just really shouldn't be putting those in the ground, and so having this study could unlock the DOD opportunity for us. I always tell investors, that's our shortest hallway, right? Because we know who did the contamination, and we know who's writing the check, and they have a pretty big deep pockets.
And so there's going to be opportunity on the private side. There's a lot of rivers and waterways and locations that are contaminated, but there gets to be a lot of litigation and fighting about who actually put it in the Ohio River. When you're talking about military bases, it's a really good opportunity for us. So the unlock could be that today there's a moratorium on incinerating PFAS of DOD waste, and we want to get that lifted, and we'll hope in this study we'll do that.
Super clear. Thanks, Jim. I want to shift to Industrial services. You talked on the call last week about customers and IS deferring maintenance and turnaround work to the back half of the year. So maybe just thinking about the context of prior industrial downturns, periods of uncertainty, how long do these push-outs typically last? And do you actually get more spending at the back end because delays create additional problems? Just give us a context of where we're at.
Yeah, so if you think about a great example that Noah will be, COVID, where the plants shut down, they slowed down. And that was in 2020. You know, 2021, especially 2020, and then part of 2021, 2022 was a great year for us. I mean, it was a great year as far as the amount of industrial work that we got and the margin growth we saw in that business. And that was, it kind of depends, Noah, on when you get on site and you open up the vessel and you see how much damage is there. It's tough to say today that the back half of 2025 or the first half of 2026 will be awesome. I mean, but I do think that you can't defer these forever. This type of maintenance needs to happen. The plants are still running at full capacity.
And so they're creating opportunities there. You know, obviously, an unplanned shutdown is actually the best thing that could happen for us because we'll get kind of emergency response rates. And so you kind of like they're playing a game of chicken right now, slowing down some of their turnaround work or limiting the amount of work they're doing during a turnaround in an effort to kind of lower costs and kind of get back at it. You know, we did see some in Q1, some timing issues. I mean, people just say, "Look, come back in a month type of thing," so I'm hopeful Q2 is good.
Now, if you know Noah, you know, maybe some of our people on the call also know that we had a bad Q3 last year with lower oil prices and some push-outs of some very large amount of project work. And so we'll have a good V in Q3 in industrial services. For the full year, there's going to be modest growth in industrial services. So even though Q1 was negative 10% on the revenue side, I think we'll still have a pretty good year. It's tough to come back from that tough start, but we're hopeful that we're modestly profitable for the year if you're doing some form of waterfall.
You know, I want to ask about how you are evolving the capabilities of industrial services. There's been some notable acquisitions where you've talked about that, like HPC. You also highlighted a pretty tight labor market and automation and technology becoming a priority as trends. So maybe help us understand, what have you done since that investor day to improve technology usage? What are the areas of technology advancement within IS going forward?
Yeah, I'll start on that one. I mean, when we bought HPC, they came with an R&D center. So it was something far beyond anything that we had as legacy Clean Harbors Industrial. And the real focus has been in a couple of areas. We do a lot of high-pressure washing and cleaning. And this is not your father's pressure washer that you clean the siding or anything with. This is the type to take a limb off if you're not careful. And so one of the things has been to move a lot of that water jetting to where the operator is behind a joystick as opposed to actually holding the device or risking getting in that line of fire. So there's that level of it. There's also a lot of risk with confined space entry, which we do quite a bit of.
There's been a push internally to get the robots in there and have them do some of that confined space, at least the inspection side of it. You could do some of that with flying drones inside the vessels. We get really sophisticated drone technology that we've been advancing over the last several years. It really goes back to the whole common discussion I was like earlier about safety. The challenge with us is that some of our injuries can be very catastrophic, particularly in the industrial services world, because you're in an area where you might be under a nitrogen blanket on a respirator, or you're in an area where you've got a PSI wand spraying 1,000 per square inch that can do some severe damage. This isn't spraying ankles and pinch fingers. This is severe.
So the movement within has been guided quite a bit by how do we make our people safer. It's not so much about, "Hey, you have a three-man crew. Can you get that down to two?" There's a little bit of that, but it's really more about keeping our people safe. And the customers, that's what they want. And a lot of those folks, whether that's the Shell's or others of the world, their whole thing is safety. And so it creates a competitive advantage. That's another thing that comes out of our TRIR is that it gives us a leg up on some other folks that don't have the track record we do.
Can I just unpack that for a little bit more, Jim? It sounds like you're saying the way that you're using some of that technology, not really a change in labor hours, labor utilization. They're just using the same tools and kind of using the tools in a more safe way. Are there material opportunities to reduce time on site, reduce labor intensity, and get those people out to more jobs through some of these technology innovations? Is that a feasible opportunity for the company?
Sure. We've introduced last year, just to get into an example, Total Exchange Management, where we actually take the bundles from the customer site and actually bring them off-site or on-site and dump them in a tank that, using sonic technology and other things, will actually clean. You put something in that waste. For example, they gave us 12,000 tons, and then you pull it out and it's 10,000 tons or 8,000 tons. So all that contamination came off. It's a safer, better way to do it. In the water jet world, the example the team is, it's not necessarily more efficient, but you get better outcomes.
And so, if you were to take a heat exchanger, which for those that don't know has just got thousands of tubes running through it, and you try to do that manually, as historically was done, the industrial guys would tell you the way of doing it before was kind of one, two, skip a few. Whereas if you mapped the whole set of pipes inside the heat exchanger on a CAD/CAM type design and then punch it into the robotic arm there, it's never going to miss a single one. And so you get a better outcome for the customer. You get a safer outcome for us. And so we're looking for both of those kinds of things as we use our R&D center to advance with new offerings.
That's an example. Thanks, Jim. One of Field Services, HEPACO, that was clearly a win for Field Services. And it looks like you're now investing even more in the business, opening up new locations. Just talk a little bit about the impetus behind that investment. What's going on with you trying to do strategically in growth?
I mean, Noah, that's a great example of an area that's still pretty fragmented. I mean, whether we can go out and buy another incinerator is a debatable topic. But I think that field service, as you know from our investor day deck, is still a highly fragmented industry. And so our ability to go do M&A is still very relevant. But we felt there was a great opportunity given our large footprint. We're in over 700 locations. We could add new field service branches based on the market need for that area into an existing site. And so an acquisition like HEPACO said, "Hey, HEPACO is using a third-party resource there, and we should just open up a branch and compete with that." So that really is the impetus. Normally, we open up five to 10 new field service branches a year.
This is. We're closer to 30 this year. We did 10 in Q1. And these are small. It's a branch manager and a few drivers with a lay-down yard in a location that already has existing Clean Harbors sites with low cost. And that's helping us defray some of the cost of travel to those locations, and then you grow it from there. And what we've seen is that you give them a chance, you give them a target, you go say, "Go find it," and they go find it in that local jurisdiction. So I think that's been a win for us. You know, it is a bit of a, you know, the day-to-day work is good margins, high teens, low 20. It's when we have an event. And an event, then it's top.
And so having more locations and being first on the scene usually wins the work. And so that really is having that larger footprint allows us to have the larger events that we have seen in the past year or so and going from there.
Yeah. I'm not going to try to do math on this call, but adding 30 locations on top of 700, that's a good sign of what you think the growth may do in field services and operations.
Yeah. You just want to be smart about it because it is a cost to put people there, and it's not free. You want to make sure that you do a market analysis to ensure that when we get there, there's enough work for us to be competitive. And that's why HEPACO is such a great acquisition for us because they were using third parties in that region. So we know that there's work there for us to do.
On SKES, record containerized waste services in the first quarter. Any industries you'd highlight as kind of driving that demand growth? I mean, I think it kind of goes to your point earlier about the macro headlines versus what you're seeing in the business.
Yeah, I would say that that business continues to perform very, very well. I mean, that business, whether it be vac services, containerized waste, parts washers, I mean, that business continues to go at a pretty good clip. If you look at the quarterly revenue numbers that we publish, you do some form of trending, you can see a really consistent steady growth rate. Some of that's price, some of that's volume. And really what comes down to is that, especially with containerized waste and vac services, is route density. Can we get the route density that we need to drive that? Because me going to Noah's auto body shop and then going to Jim's auto body shop next door, I mean, that incremental stop cost is nothing because it's on the same route.
And so that incentivizing the team to go get that waste and go knock on those doors has been a good unlock. And that not only are we driving incremental price because these drums $500 now cost $525 is not a big deal, but it's really getting the team to be more entrepreneurial and do the work and get the data to do the stops and drive density.
I think maybe bridging to SKSS, you touched on it during the earnings call. Just how effectively do you cross-sell between SKES and SKSS? Can you talk about some of the efficiencies that are on the operating and service side of the crossover?
Sure. I could start with that. We actually saw that when we were out in Las Vegas visiting local branches, and they talked about, what's the term I could use? These guys are very coin-operated, right? The drivers. And I think the key to this, though, is that you and others looking at our reporting statement see them as two separate entities. To the customer, there's just one Safety-Kleen. There's no Safety-Kleen oil. There's no Safety-Kleen environmental. And there may be two different drivers.
Mike may be the oil driver, and I'm the environmental driver, but there's no greater cross-sell than I show up and they say, "Hey, my oil tank's almost full," and I'll say, "Send Mike out." And so for them, it's just one engagement with Safety-Kleen and whether it's selling vac services or picking up containerized waste or picking up waste antifreeze or my oil filter bin's almost full or I've got some spill I need responded to. It's really just one engagement. And we talked to the team about how they're working together and how the incentive programs could be tweaked to be better to make the symbiotic relationship between the two really good. And so for us, it's all one entity on an internal at the actual level, customer engagement level, whereas at a reporting financial level, it looks very distinct. And the management's different.
The two different management teams with priorities. They're trying to maximize the oil guys trying to maximize the Charge- for-O il, and they're trying to sell the branch guys are trying to sell parts washers.
Helpful. Thanks. I guess just ending on SKSS, switching to Charge- for-O il position in November, and then you doubled, I think, CFO per gallon from end December to end March. So with base oil prices kind of, I guess, flattish or maybe even softening, does Charge- for-O il have to keep moving higher throughout the year to support spreads? Can you just tell us what's embedded in your reiterating the $140 million EBITDA target for the full year?
Yeah, no. So when we put together the guide, as you may know, we had a decent beat in Q1 in SKSS. We beat it by $5-$8 million of EBITDA. And so we didn't raise the guide on that because once is not a pattern, once is an accident. So let's think about pricing. But what we did do, when we thought about base oil prices, normally summer driving season, base oil prices normally climb a little bit, and then they fall for the back half of the year. And that's how we normally model. We normally model that we have a small increase in April, May, June, and then in the fall, October, November, it starts going down a little bit.
This year, we just said, "Look, given the pressure on crude pricing and the pressure on the business, let's model flat to down over the course of the year and not model a bit of an uptick," and that hopefully covers for some of the softness we see in the crude market, maybe some softness in base oil as well, but so that's really a switch this time. That's really a change because we felt that we need to hit that 140. We need to start growing from that. We need to change the paradigm and start charging our customers for the waste, the services that we're doing, and the good news is we are the 800-pound gorilla in this space by a factor, we're the largest collector by a factor of six or seven, and really, that is something we should act like that.
That's exactly what happened. So I'm of the view that the new paradigm is that we're going to be able to charge for oil. Even as oil prices start to recover, we'll be still in a good spot.
forward to seeing that play out. Great conversation, wide-ranging. Mike, Jim, thank you both for the time. We hope everyone has a great day at the conference. You can follow up with us, of course, if you have any follow-up questions or directly to the company. Thanks. Have a great day.
Thank you, everybody.
Thanks, Noah.