Good morning and welcome to the CJS 26th Annual "New Ideas for the New Year" Conference. I'm Larry Solow, a research analyst and partner here at CJS, and I'm joined by the management of Clean Harbors. To briefly remind everyone of the format for our conference fireside presentations until early in the day, we're going to start with a 10-minute, 10-15 minute or so overview from the company. After that, we'll open the floor for Q&A, which I will be moderating. Please feel free to submit any questions you have through the portal. Don't be shy, and we will absolutely try to weave them into the conversation. With that said, I'm happy to welcome Clean Harbors this morning. As most of you know, they are a leading provider of environmental, industrial, and hazardous waste management services across North America. Very strong track record and favorable long-term growth outlook.
With us today are Eric Dugas, Executive Vice President and CFO, and Jim Buckley, Senior Vice President of Investor Relations. Gentlemen, please take it away.
Thank you, Larry, and good morning everyone joining us today. I hope that everyone had a great holiday season and the new year has kicked off nicely for everyone. And I really appreciate folks spending some time with us this morning. As Larry mentioned, this is Eric Dugas. I'm the CFO of Clean Harbors, and I'm joined today by Jim Buckley, our SVP of Investor Relations. Larry asked me to kind of just kick off for a few minutes here, and for those that may not be as familiar with the story of Clean Harbors, just give a little background and talk through the different aspects and key components and key strategies and what sets us apart here at Clean Harbors. So I'd like to do that. But first off, to just share the very basics of the company.
We are what we believe to be North America's leading premier environmental and industrial services provider. Our company has been around for about 45 years, founded by a gentleman named Alan McKim, who remains the chairman of our board today. Today, the company will finish 2025 with about $6 billion of revenue, and we employ approximately 24,000 people across North America. When you think about our business, we operate in two operating segments. The first one being the environmental services segment, where that is predominantly where we collect hazardous and other types of waste. We recycle everything that we can and then dispose of what we cannot recycle or reuse in any other way in a responsible manner. In doing that, a very large fleet of vehicles that we use to transport things, over 100 disposal sites, and a branch network that's well into the hundreds.
I believe about 700 branches is the current count across the company, so that is our largest segment, about $5 billion of the $6 billion of revenue. Our second operating segment, and I'll come back to ES in a moment, but the second operating segment is our Safety-Kleen Sustainability Solutions business. Approximately a $1 billion business where we are the leading collector of used motor oils and other lubricants. We bring that into the network, and just like we do on the ES side, we take that used motor oil, which in many states is a hazardous material. We bring that into our refining network and recycle that dirty lubricant into a clean base oil that then can go into other lubricant applications, including clean synthetic engine oils.
It's really a nice business, all centered around collection and then kind of feeding our large disposal and recycling plants. If I go back to our environmental services segment here and just kind of walk through, there's generally four business units underlying our environmental services segment. Again, think about $5 billion. The largest underlying business unit is what we call our technical services business. Technical services will do about $1.7 billion of revenue in 2025, just shy of $2 billion. That is the business unit that includes much of our rolling stock, includes those disposal assets that I talked about before. Probably the primary disposal assets that people think of and the most predominant ones in our business are first, our network of hazardous waste incinerators. We are clearly the largest owner, operator of hazardous waste incinerators in North America.
We currently operate 10 of 14 commercially licensed hazardous waste incinerators, and those truly are kind of the jewels of our disposal network. They can burn the nastiest of the hazardous waste streams, and we continually are finding more ways to increase throughput and burn these harmful materials in a safe and efficient manner. Other things included in tech services, which I would highlight as having a really good year in 2025, is our project work. This is remediation work, Superfund sites. I'm sure we'll talk a little bit later about PFAS, which is a huge opportunity for Clean Harbors. Much of the revenues around PFAS are in our tech services business.
Complementary to tech services, the second business unit that I usually like to talk about because it's very, very similar in terms of what they do with collecting waste and bringing it into the network, is our Safety-Kleen Environmental Services business. So that business, complementary to tech services, another kind of billion dollar plus business there, but think about it very similar to tech, although more of the medium and small businesses that generate hazardous waste. So think auto body shops, think machine shops, things like that where there's very much a routine, almost like a subscription business where we're going out to those sites. It could be once a month, a couple of times a month, once every couple of months, depending on the customer.
But on that visit, that customer might have a parts washer, which is very much a central thing in this business. This is a machine that an auto body shop may have to help clean parts and whatnot in their normal service. We'll go out there, we'll change the fluids in that parts washer at a normal kind of six- to eight-week interval, as I mentioned. But at the same time, we'll collect any containerized waste that may be generated by the site. They'll often have drains and things like that where we may do some back services as well. So really a nice repeatable business for us. Over the last several years, we've seen this business grow around 10% per annum, and we're seeing about 7% in the latest quarter here in Q3.
Going back to tech services for a moment, we saw 12% revenue growth in Q3 in that business led by great disposal volumes and some project work. So those two businesses are really kind of key businesses, environmental services that are taking in waste and, like I said before, recycling what we can or disposing of it in a very responsible way for many, many customers, including much of the Fortune 500. If you think about the final two business units in environmental services, the first I'd like to talk about is our field services business. That business, again, another billion dollar plus business here in 2025 for us. Last year in 2024, we did a very strategic acquisition of HEPACO, which added another $300-$400 million of revenue for us in that business unit.
That business unit this year, a little bit slower growth rate than 2024, even on an organic basis. But in 2024, we really had a lot of large and medium-sized emergency response jobs. And so far in 2025, or as we close out 2025, the business continues to grow, but really difficult comp with 2024 because we just haven't seen large-scale emergency responses to the same level we saw last year. We're still seeing those emergency response work. The same number of them, it's just the preponderance of large ones are a bit lower. But really excited about this business and its growth prospects. We continue to open new field services branches. Much of the work that those field services branches is routine, regular tank cleanings and things.
So it's not just the emergency response work, but it's also a very much repeatable business that we get every year with a strong customer base that we have. The last business unit I would talk about is industrial services, about $1.3-$1.4 billion of revenue in that business. A little bit slower this year than we would have liked. We saw some of that in the recent quarter that we reported on in Q3, but it's really been a continuation in the last probably 12 months of the customers in that business unit really feeling cost pressures. These are largely refinery customers, chemical customers who have really been hit with some real good cost pressures. And the way they react to those cost pressures is they oftentimes reduce the scope of turnaround services.
What we do in this business is about 50% of the business on-site every day work where we'll work with the customer. We'll help them with their day-to-day maintenance needs with folks, with Clean Harbors employees that are on-site. Could be a team of four or five, could be a team as big as 10 or 12 where they're on-site helping the customer with their day-to-day maintenance. The other part of the business is more turnaround and specialty service work, which is often routine and repeating, but from year to year, the size and scope of those turnarounds can change. As I alluded to a moment ago with cost pressures that those customers are seeing here in 2025, the scope and size of that turnaround activity has been smaller than prior periods. It is a cycle that we've seen before.
We do expect that the cycle to break and the size and scope of these turnarounds to increase to more normal levels. When that will break, we're hopeful to see that here in 2026, but we're not quite forecasting that and probably won't until we see it. So again, a very complementary business shares a lot of the same customers with tech services. This year, it'll be rather flat on the revenue line, flat to down a little bit, but we're hoping that will reverse in 2026. And hopefully with improving crack spreads and a little bit of improvement on the chemical side, we will see that in 2026. Lastly, just touching on SKSS and that operating segment a little bit more.
Again, as I said, collection of used motor oil, turning that into base oil lube, as well as blended oils that can be used back in car engines or other industrial functions. Billion dollars of revenue. We'll do about $140 million EBITDA in that business in 2025. For those that are familiar with the story, this aspect of the business, the SKSS business unit, a few years ago, we did see upwards of $300 million of EBITDA. The catalyst for that were really the time period coming out of COVID, strong base oil demand from reduced supply as the Russia and Ukraine war kicked off and reduced a lot of supply in the marketplace and drove base oil pricing to levels we had never seen. And so when you look at the results, largely 2021 into 2022 and then on into 2023, really strong results in that business.
Since that time, base oil pricing has continued to drop at a pretty good clip. We've been able to manage through that difficult pricing environment through changing our used motor oil pricing on collections upfront. So one strategy that we adopted a little over a year ago now was when we looked at this business, we looked at what we were charging customers for used motor oil collection, it was actually in a pay-for position, meaning in November of 2024, we were paying for used motor oil. Since that time, the team has been entirely dedicated to changing that pricing structure, continuing to provide good service, but charging for used motor oil gallons that we collect. We had to do it because of the economics. We continued to provide good service to customers, and we were able to execute on those pricing strategies.
Again, flashing back to last November of 2024, we were probably in a pay-for oil position of about $0.05, and we've transformed that. Today, we're nearly. I think the latest numbers are close to $0.50 a gallon. Just an extraordinary thing that the business has done there. People have continued to execute well from an operations and delivery of services perspective, and we've been able to do that, stabilize the business, and deliver about $140 million of EBITDA both in 2024 and 2025. That's been a real success for us in the current year. A couple of last comments as I look out, close out 2025 into 2026. Some of the tailwinds we are looking at here in 2026 and believe will help us grow, continue to grow the business is certainly reshoring activity. We've talked about that.
As more reshoring projects take place, begin, and come to completion, all that requires materials and the process of building those. There is hazardous waste generated, and we're starting to see customers and some of that activity come to us. Obviously, PFAS is a very large opportunity. In 2025, we did about $120 million of PFAS-related work. We expect that business line to continue to grow at about 15%-20% annually, and we see a really strong pipeline. In the recent Q3 quarter and on into Q4, we continue to see good movement and good growth there, hoping to see some more legislation and some more rulemaking around PFAS to really help grow that business.
And then lastly, I should have mentioned it a moment ago, but our new facility in Kimball, Nebraska, our new incinerator that we opened up about a year ago now continues to ramp up well. It contributed, probably it'll contribute close to $10 million of EBITDA here in 2025. And we look to for that EBITDA contribution to double in 2026 as we continue to ramp up that facility. So hopefully that provides a great oversight for folks here. Again, I want to thank folks for joining us today. And Larry, I guess I'll turn it over to you for any questions.
Yeah, no, great. I really appreciate that, Eric. Very good comprehensive overview. Quick reminder for folks out on the webcast, if you have any questions, please type it into the portal, which I'll get them into the conversation.
I guess, Eric, first question for you, Eric and Jim, kind of more just a high-level question we're asking our presenters today. And you discussed a bunch of the kind of puts and takes for 2025, but just as we sit here today, current environment, as you look out over the next 12 months plus versus where we were when we sat in front of this very same fireplace a year ago, if you will, how do you think, how would you compare progress or where we stand today versus last year?
Yeah, it's a great question, Larry. Obviously, thinking a lot about that right now as we're finishing out the year and beginning 2026, I guess I would say a couple of things.
I think if we go back a year here, and maybe I'll talk about kind of the entirety of Q1 2025, administration change, I think a lot of uncertainty around tariffs and things like that. I do believe that that created a lot of what-now type questions for some of our customers that made it difficult to plan. When you think about some of the customers that some of our largest customers, manufacturing, chemical, folks that supply to the entire world, really kind of that tariff uncertainty led to operational uncertainty and folks not quite knowing, not having as bright or clear a crystal ball a year ago. And I think we saw some of that in some of the volumes that have been available to us in 2025.
I think we've seen some of those nasty bulk streams coming out of chemical and things being slower than we would like, but we've made up for it in other areas, growth through retail waste and things like that. So even among that difficult backdrop of 2025, we were still able to grow our volumes. But again, going back to a year ago, tariff uncertainty, administration change, crack spreads, particularly as it relates to our industrial services business, but crack spreads related to our refinery customers, really tight. Those all led to kind of, I think, an environment that was difficult for most of 2025. If I flash forward to today, continuing to see those large tailwinds that I think will continue to allow us to grow. But I think some of the tariff uncertainty has loosened up a little bit.
We're having discussions with customers that are talking about increasing their production in 2026. So that's a great sign. Going back to crack spreads for a moment, those are improving. So hopefully those loosen the purse strings of some of our refinery customers. Certainly, a little bit of interest rate help here late in 2025 on into 2026. That should spur increased capital spending of customers and generate waste streams. And then lastly, some of the things we saw from the One, Big, Beautiful Bill Act. There's a lot of positive things out there that should give us momentum into 2026. So I think you look at Clean Harbors, even through the difficult times of, you could say last year was slower. A few years prior to that, we had pandemic. We've had oil slowdowns.
The company has always been able to kind of grow through those difficult periods. So we're hopeful that here in 2026, with the long-term catalyst still in place and some of these changes in the environment turning in a positive way, that we can, again, kind of deliver growth and profitability.
Great. I appreciate that. Second, a very high-level question. Just on the AI, market increasingly talks about AI build-out. And just what does that mean for Clean Harbors? I feel like for you, probably in the early innings, but maybe a little discussion there. Is it benefiting you? What areas are you kind of targeting?
Yeah. On the surface of the question, I think people don't instantly make a connection between AI and data centers and things like that being a catalyst for Clean Harbors.
But I would ask folks to kind of think about it this way from a couple of different angles. One, all these data centers need to be built. And so the materials that are going to go into building these data centers, hazardous waste is created in that process. And that will benefit Clean Harbors as we build out these large data centers and that network. Secondly, these data centers are going to require a tremendous amount of electricity. On the field services side of the business, we do a lot of work. Electric companies and power generators are some of the largest companies on our customer list in the field services business unit. And we see an opportunity providing services to the data centers.
The third piece of it I would point at, and Jim may know the technicalities here, probably does a little bit better than I, but when you think about these data centers and the HVAC systems and the cooling systems, they require certain, I believe, solvents and other things to operate, and we can help customers kind of recycle and dispose of those types of fluids and things on a regular basis, so I think there are truly a lot of catalysts kind of from the AI data center side that should provide growth to our revenues as well.
Great. All right. Why don't we dig in a little bit more just into Clean Harbors itself?
And obviously, the environmental services, the larger of the two segments and the driver of a lot of the great performance last few years, particularly margins too, and EBITDA have been on the rise last few years. Maybe you can give us a little more color on that, the margin expansion. I think it's been driven by a couple of things, mix, price, operating efficiencies, but maybe peel back the onion a little bit for us on that one.
Yeah. So it's been a great story, something we've worked really hard on and see some really strong results. So when you look about our entire environmental services segment, Larry, based upon our guidance for the full year 2025, we'll probably land at operating margin or EBITDA margins of about 26%, which would represent about a 70 basis points improvement from last year.
I believe last year was a similar-sized margin improvement. So at 26% here, finishing off the year or thereabouts, we've already exceeded some of the margin, the EBITDA margin goals for environmental services that we set out in our Vision 2027 a couple of years ago. So what I mean by that is at 26%, we're exceeding our EBITDA margin that we had for fiscal year 2027 in that model. So it's really been something that the company focuses on and a great story. Now, I think contributing and driving that margin growth, a couple of underlying things you mentioned. Certainly, pricing has been something that we've been pointedly focused at over the last couple of years. I think we've always been able to price kind of disposal pricing, incinerator pricing. We've always been really good at that.
However, I think coming out of COVID, high inflation really kind of ramped up our game from a data collection, market intelligence, and tracking perspective internally. And so what we've been able to do across the environmental services segment is get more data down to the customer level, looking at all of our customers, looking at the types of services we provide them, looking at the job profitability that we see by customer, looking at the market rates that are available out there, and taking all of that information and setting very specific margin and pricing goals for all the work that we do, and so we meet as a team on a monthly basis today. We monitor our pricing strategies.
We communicate what we think are appropriate pricing to our sales and operating folks and ask them to go execute that pricing strategy, ensuring that we get the margin that we believe we deserve based upon the work that we do. And so that's been a really good success story. I think some of the best things we've done is once we do implement pricing, we track it and we make sure that we're hitting our targets and we adjust accordingly when needed. But really, just I think night and day as compared to six, seven years ago in terms of what the team is able to do because of the information that's provided.
And as I said, we've always been good with disposal pricing, but now we're also going out and getting pricing on our labor, on our equipment, and all the other components of our revenues here across the environmental services segment. The other thing that I would point to in pricing is probably the largest contributor, but right behind it is volume growth. So when you look at the last several years, we've seen incremental volume growth and utilization across our network. So not just incinerators, but utilization at our TSDFs, utilization on balance at our wastewater treatment plants. We're just getting more volumes into our largely fixed cost network and getting those volumes through our assets and driving more revenue and driving more EBITDA and therefore greater margins that way too.
When you look at kind of revenue growth at 4%, but EBITDA growth at almost double that on average last few years, that really speaks to what we've been able to drive through the network and drive greater margins and greater EBITDA. Obviously, there's been things and part of our DNA is looking at our costs every single year, trying to use technology or other objectives to drive down costs. It's like, as I said, part of our DNA, it always will be. And so we set out cost savings goals every single year. We continually look to internalize as much labor, as much transportation, as much disposal as we possibly can. And we've done a nice job there. And then lastly, technology. Technology is at the core of what we do every day. We're continuing to improve our technology.
We're leveraging AI and other more current technologies to drive more efficiencies, save costs, and drive more revenues, and ultimately increase margins. So a great story. Like I said, this year should be about 70 basis points of margin growth. Long term, 26% today. We see no reason that longer term we can be a 30% plus margin in this business. And if you look back five years, we've increased our margins over 500 basis points in those five years. So certainly the ability to do that, and that's kind of our new long-term goal is to exceed that 30%. The timing on that, I can't speak to specifically, but that is what we talk about here at Clean Harbors today.
Gotcha. And you mentioned, obviously, the volumes have been strong across verticals.
And I just want to speak a little bit more about incineration in particular, and obviously one of your anchor assets just on the disposable side. I think that's helped the opening of El Dorado seven, eight years ago now. It's getting up there. Obviously, I think has helped mix improvement over the last few years. And now your Kimball is ramping. And maybe just an outlook just on that side of the business and as well as potential captive closures that could help the volumes.
Sure. And so, as I said, volumes have increased across the network.
One thing I would say, and I alluded to it earlier, is maybe the nature of the volumes here in 2025 are a little bit different with some of the slowdown with chemicals, some of those bulk, nasty streams, probably not growing at the same rate as we would like, but we're finding other waste streams that we can capture and bring into our network to make up for that. And that has led to the growth in tech services that I point to earlier and ultimately the margin expansion. When you think about Kimball, Larry, you're exactly right, kind of opened that facility about a year ago now. We're hitting all of our throughput goals here. We have hit them in 2025. It has contributed about $10 million to the network here by opening that facility.
That facility is really a blueprint of the incinerator, which was new at the time and that we opened in 2017 down in El Dorado, Arkansas, and so we knew what to expect. It's got a few extra bells and whistles and things, but largely a very, very similar blueprint, so very happy with its performance here and its contribution in 2025, and we're looking to grow on that in 2026, so EBITDA contribution, we're looking for it to double to be $20-$25 million of EBITDA contribution here in 2026, and so really excited about that and see a pathway to get there. Ultimately, as we exit 2026, we believe we'll be around a $40 million run rate, and that'll be the expectation for the EBITDA contribution for that asset into fiscal 2027 and beyond.
So it has many benefits beyond just that EBITDA generation, but also to have another plant that can handle the type of waste streams that it can handle. It improves our routing. So transportation costs should see some benefits. It improves our handling. Waste streams don't need to be touched as much as they move through our network. So really a lot of positives there. And today, our network utilization, we've seen some quarters here in 2025 where absent the new incinerator, we're at greater than 90% utilization and kind of in that low 80% or excuse me, high 80%, low 90% utilization rate is where we want to live there in the utilization network. And certainly, we believe that the incinerators, they'll play a key part here in the future with PFAS opportunities.
Right. And a good segue into PFAS. I know we have a few minutes left.
As you mentioned, we did about $120 million last year. It's been growing nicely, and I think the backlog has been even growing faster. Perhaps you can just discuss sort of the current market. I think people believe this can grow exponentially over the next few years. What are some of the milestones to look for, perhaps even as early as this year? Maybe you can also briefly touch on just the National Defense Authorization Act. I think there were some positives in there as well. So I'll give you a couple of minutes on that.
Good morning, Larry. It's Jim Buckley at PFAS, one of my favorite topics. So I can start on this one and Eric can jump in. In terms of 2026, there's a few things we'll be looking for. You mentioned the Defense Authorization Act within that.
There was some language that the secretary has to come back to Congress in 180 days. The bill was signed in mid-December, so by the end of the first half of this year, we should see the Defense Department or War Department, whatever we're supposed to call it now, come back with disposal and destruction guidelines for PFAS at the 700 or so military installations that are contaminated. That's going to be an exciting opportunity for us. We believe that our high temperature thermal destruction at our incinerator facilities are the answer, the best answer, but certainly, we just want to be part of the puzzle solution here, and so we've been working with the DOD. They were at our last incineration study on PFAS and participated in that on site.
And so we're having discussions with them now, and we expect within the next few months for at least some preliminary guidance to come out and then have Secretary and his team present that to Congress. So that's one thing to look for. There's also the EPA track, which isn't on a timetable like that, but they've given us drinking water standards that everyone is conforming to now, and we're looking for some soil rules. So there's a potential for that to come out this year. I know that Eric Gerstenberg and Mike Battles hosted the Secretary of the EPA, I'm sorry, the Administrator of the EPA at our Deer Park incinerator, which was subsequently followed by the study being published by the EPA. So in those discussions with Lee Zeldin, he mentioned he's still committed to PFAS, and it's something he wants to go after.
And so there's the EPA sort of track, which is separate from the DOD track. Then you've got a number of states making rules. It's hundreds of bills around PFAS that are currently in process. You have New York State kicking off a take-back program that may become a model for the rest of the country. And so we'll see how that proceeds. You've got a big trough of litigation happening, and so you've got all kinds of settlements. In terms of the addressable market, you didn't ask that specific question, but that's one that we get a lot. There's already up to $40 billion that have been allocated either through 3M putting up some funds. You have the Infrastructure Bill had $10 billion earmarked for PFAS. You've had a number of other earmarks. I think the DOD is up to $12.9 billion set aside.
And so our PFAS total solution lays across a lot of that. Whether that grows and how fast it grows, that's a challenging question. We always say, "Hey, we grew 20% last year. We're probably going to grow 20% or better for the next several years." Difficult to model when we would hit an inflection point, but we certainly have had some great progress in all the areas where we play. You may have seen our announcement about expanding our installation in Pearl Harbor, which is our largest water installation. So we got momentum on the carbon filtration side of getting PFAS out of drinking water. We've obviously got momentum on responding to AFFF changeouts and ERs and opportunity set there, as well as kind of taking it and ultimately destroying it. So a lot of momentum. As you mentioned, our pipeline is probably growing faster than that 20%, Larry.
There's just so many tentacles to this, whether it's been at airports or what do you do with leachate coming out of solid waste landfills, and there's just a big opportunity set for us here. The market's going to take decades to kind of get through all this, but I think we've got some significant momentum. We'll be providing guidance in the next month, and I think we've been very careful not to hype PFAS because it's been quite a slow road to get here. You and I have probably been talking about it for seven or eight years now, but it looks like things are coming over the horizon, and the opportunity set for us is large.
Great. I appreciate all that color, Jim. All right. Well, we're just actually about out of time. I had a couple more questions, but we'll have to pass on those for today.
I want to thank you both and just want to give you back the floor if you have any closing remarks you'd like to share.
Just like to thank everybody for joining us. Truly believe that the company is well positioned in the future for future growth and increased profitability. And if you're an investor already, thank you so much. And if you're not an investor, please keep considering Clean Harbors. Thank you all.
Thank you. Thank you, everybody. Have a great and productive rest of the day.