Good morning, everyone. Happy to see all of you here today. Have a nice turnout, which is great to see. Whether that's here or on the web, appreciate you investing your time in Clean Harbors and hearing our story and meeting the management team. I mean, I think it's a great opportunity for everyone to hear from the extended team today. I know a lot of you know me. I'm Jim Buckley, the Head of Investor Relations, and been with the company for telling the story for a long time. I think everyone in the room knows me, but there'll be a number of management members that you haven't met yet, which I think will be a terrific opportunity, and I trust you're gonna find today is time well spent.
Just to take you through our safe harbor slide here. I know it's everyone's favorite, but wanna remind listeners that the presentation does have forward-looking statements under the Private Securities Litigation Reform Act of 1995. We're gonna use predictions, and obviously our Vision 2027 has five-year targets out there, and those are subjects to risks and uncertainties, and that could cause our actual results to differ materially. Participants here or on the webcast are cautioned not to place undue reliance on management's opinions, which are only as of today, March 29th, 2023. We're gonna also use some non-GAAP measures today, and obviously we use those as a way to evaluate the company, and we think that they're a reasonable measure of how we perform, and consistent historical information's been provided on those measures.
You can find that on our website, in our quarterly news releases that are, filed with the SEC. Just a quick review of our agenda for today. We're gonna start with Alan, welcoming everyone and kinda introducing to the company and then, move from there into the businesses. Mike and Eric, our Co-CEOs, are gonna come up, talk about the industry, talk about an overview of the company, and then we're gonna shift into the segments of the business. We're gonna have our Environmental Services segment. We'll start off with Loan Mansy. She's the EVP of Sales and Service and is responsible for a large part of that segment. Loan's gonna be followed by Robby Speights , who runs our Industrial Services Business, which as you know, has grown significantly in recent years, through some acquisitions.
Robby will be followed by Brian Weber, who's, many of you know, has been with the company a long time and done a lot of different roles for us. He's the President of Safety-Kleen Sustainability Solutions now, and will do terrific in that. Following that, we'll have a break, and then after the break we'll come back with Becky Underwood, who's been with us for about a year now and runs all of our facilities. She'll go through the plants and the re-refineries and kinda talk about what's happening there. Followed by Mel McDuffie, who's been a terrific hire that we have running our human resources function. Then we'll close the day with Eric Dugas, who is our new CFO. We'll have a kind of a general question and answer.
The way we're gonna structure it is, rather than have you hold all of your questions all day, we'll do a few questions after each speaker and just try to keep us on track, then we'll cut that off after a few questions, then kinda hold the rest for the end. At roughly 11:45 A.M., we're gonna stop the webcast, those of you listening on the web will be done for the day, the rest of us will kinda grab a quick lunch. As I mentioned, there'll be two shuttle buses, we'll send you guys off for a tour of the re-refinery, which I think will be terrific. With that, I wanted to invite up Alan McKim, our Founder, Chairman, and CEO for the past 43 years. Let you take it away, Alan.
Thank you, Jim. Good morning. Good morning, everyone. Thank you for being here today. Thank you for attending. As most of you know, this will be my final investor event, and I'm officially kinda stepping down at the end of this week and turning over the reins to Mike and Eric. This transition really has been ongoing for a number of years, and we announced this change back in November, as you know. Both Mike and Eric have been integral partners with me in running the business and certainly had a strong hand in the success that we've had here in the company. Today, the company really is in great financial shape. We have leading market shares in all of our core businesses, and you're gonna hear a lot more about that this morning.
The company also has a deep management strength and team, you're gonna hear and meet several of them today. While I'm confident you're in good hands with Mike and Eric, and I'm relinquishing my day-to-day responsibilities to these guys, I'm really not leaving the company. I'm gonna have a different role as Executive Chairman, really kind of focus on M&A strategy and particularly on technology, helping the team as we continue to grow and leverage the technologies we've invested in. Even with the changes at the top, Clean Harbors will remain as focused as ever on areas like continuous improvement and safety, margins and profitable growth. Over the past four decades, the company has repeatedly proven its ability to grow and be resilient in any market environment.
When you think back at 9/11 or the Great Recession that we went through, or the crude crash of 2014, and certainly most recently COVID, we have been really laser-focused on really driving our strategic plan and also taking advantages of whatever market changes or opportunities come about as a result of those kind of challenges that we go through. I mentioned safety. It's really an area where we're all always looking to improve and keep our people safe. And while I was seeing a lot in my career, one of the things that I'm most proud of really is our safety record. As you can see on this slide, we really have lowered our total incident re-rate by a substantial amount over the past 20 years, really to industry-leading levels.
While my philosophy remains that really not one employee should be injured, our accomplishments, I think, over the past decades really are clear and meaningful in how we have been able to reduce the number of incident rates and make sure that everybody goes home safe every night back to their families. We've really tried to integrate safety in every part of our company and really ingrain it into the culture of the company. Our Safety- Live It 365 program that we introduced really years ago has been widely successful for making it personal for employees and putting them in the right frame of mind to start the day so that they go home safely.
I know that safety isn't necessarily always the focus of our investors, but it really is foundational to everything that we do here at Clean Harbors. Here is how our stock has performed over the past same timeframe as that safety slide, basically 20 years. I wanna mention that we did several acquisitions before 2000, but the acquisition of the Chemical Services Division of Safety-Kleen in 2002 really was a transformational event. We were about $300 million at that timeframe. Since the 2002, I think our returns to our shareholders has really been impressive. I think this slide reinforces what I've said about our company, a culture of continuous improvement and profitable growth both through organic growth as well as through acquisition.
I think after today's Investor Day, that you're gonna be excited as I am about our future under the leadership of Mike and Eric and this management team that you're gonna meet too. I'll ask Mike and Eric to come up and take it from here. Thank you.
Thank you, Alan, and thank you all for attending our Investor Day presentation today and hearing about our Vision 2027.
Good morning, everybody. My name is Mike Battles. Today I'm the CFO of Clean Harbors, but as of Friday, there'll be a change where Eric and I become Co-CEOs. You know, couldn't be more excited to lead this business and, you know, looking at Alan's slide a minute ago, you know, our goal is to continue that trend. It certainly has a great return, and Eric and I have been part of it for, you know, He's been here for 34 years, I've been here for 10 years. You know, our goal is to continue that trend going forward. A little bit of background about myself. I've been with the company for about 10 years. I've been the CFO for seven years. I came in as the corporate controller.
You know, prior to that, I worked for a life science tools company, some finance, senior finance roles, a company called PerkinElmer. Prior to that, I worked for about, you know, 11 years at Deloitte, and I'm a, I'm a proud carrying CPA. You know, outside of Clean Harbors, I'm on the board of a public company, solid waste company, Casella Waste Management, where I serve on the audit and governance committee. When we talk about the Co-CEO structure, you know, I couldn't ask for a better partner than Eric Gerstenberg. You know, great leader, very thoughtful, has built a great team. You know, I really wouldn't wanna do it with anybody else. I'm really excited about what we can continue to do going forward.
You know, you think about it from an investor standpoint, the Co-CEOs is a little different. From the inside, this has been long time coming. You know, Alan has given us more and more responsibilities over the years, whether it be meeting with investors like yourselves, meeting with customers, doing operating reviews, getting ready for different things. It's very natural. Although it may be a little different on the outside, on the inside, I think it's just a natural progression and Alan getting ready, getting us ready, you know, for this, for this day. You know, the other thing I'd say too is that when you think about it, if I'm sitting in your shoes, you know, a CEO transition, you know, is creates risk.
You know, a new person, he or she may wanna turn the company kinda dramatically, kinda one way or the other. You know, I feel like Eric and I, you know, this is a de-risking that transition very well. I think that we'll be. You know, if you like what you saw and you like what you see in the financials over the past few, I think you're gonna see more of it. I do think that we are, that, you know, Eric and I have been involved in this strategy and I think we'll continue with this strategy. I'm, again, I'm really happy about kinda where we're gonna take this going forward.
Thanks, Mike. First, my name again, Eric Gerstenberg. I have been with the company 33 years. I started fresh out of college into field operations for the company. I then progressed into facilities operations, and then I transitioned and relocated multiple times with the company. In 2000, I relocated back to the Massachusetts area to be part of our corporate team right before the acquisition of CSD that Alan spoke about earlier. At that time, I was overseeing all of our facilities organization. In 2015, I became the Chief Operating Officer for the company. I was responsible for the Environmental Services segment, overseeing the sales and service, as well as the facilities, national trends, and the refineries. Really excited to be a part of the company. I've worked for Alan directly for 23 years.
I've worked with my Co-CEO for 10 years. As Mike said about how we're looking at this Co-CEO transition from Alan's leadership, Alan's gonna be an active part. He's gonna continue to focus on helping us with acquisitions and growing our technological platform. For you as investors, it's a seamless transition, the best transition you could ask for. We're experienced individuals. We work together as a team. We collaborate extremely well. We feed off of each other. We each have our swim lanes, but we work together extremely well. The team that we have here today is an awesome management team. You're gonna hear from each of them today. Great years of experience, great job, and they do really are very passionate about running their pieces of the business. Thanks, Mike. Moving on to the next slide. First, our mission as a company is based in sustainability.
We are people in technology creating cleaner, safer environment through the proper treatment, recycling, and disposal of all hazardous materials for our customers.
Here's a little bit of an overview of Clean Harbors. You know, 2022 results were about a little over $5 billion in revenue and a little over $1 billion in EBITDA. 85% of that revenue is generated in the United States, about 15% in Canada. We're the largest hazardous waste disposal company in North America. We're the largest re-refiner of used motor oil in North America. We are the solution to our customers' hazardous waste and industrial cleaning needs. You know, you'll see today from our great team that we are a market leader. We are the 20th largest commercial shipper in private motor carrier in North America, with over 15,000 trucks and trailers and over 32,000 pieces of specialty equipment. You know, we have over 20,000 employees serving 300,000 customers in over 700 locations.
I mean, a true market leader.
We have a sustainable business model with very powerful brands in the industry that we serve. As Mike just said on the previous slide, we have over 700 service branches. Starting with our business model from the left-hand side of this chart, we have those service branches that go out and service customers over 55 different lines of business. They perform those services, and they gather waste. Our environmental services branches are depicted in red. They are led by Loan Mansy. You're gonna hear from her shortly thereafter hearing from us. Robby Speights will speak to the industrial service branch types. Brian Weber will talk about his Bulk Products and Services branch types under the Safety-Kleen Sustainable Solutions platform. Each of those service branch types go out and perform those services, and they gather waste.
They, with 5,000 drivers in our network, transport that waste through the variety of trucks that you see on the screen into our group of facilities. Our group of facilities are led by Becky Underwood. You're gonna hear more from her today. Those facilities, the first thing that we do is we transfer and consolidate waste to gain efficiencies for long-haul transportation to our ultimate disposal facilities. First thing we do at our ultimate disposal facilities is figure out how we can extract more value out of those waste streams. How can we recycle? How can we refine? How can we squeeze metals out of it that can be repurposed? After we do that, we focus on treatment, landfill, and finally incineration for those waste streams.
A little bit about this slide right here, 'cause I really think it really speaks to the investment thesis of the company. You know, we have over 500 hard-to-replicate permits to dispose of hazardous and regulated waste. These include our incinerators and landfills that Becky Underwood's going to talk about, and there hasn't been a new hazardous waste incinerator or landfill permitted in North America in over 20 years. The reason why that's important is not just because they're hard to get. When a company generates hazardous waste, the regulators tell you kind of how you want to dispose of that. That makes our business a requirement for compliant disposal. It really is requirement for compliant disposal, and I think that underneath all of this is our proprietary software that has been years in the making.
You know, we stopped counting at $125 million. It's an investment state-of-the-art type of software that routes the waste through the network safely, so we understand, and in compliance with laws and regulations. In my mind, these permits and the investment that we make in these permits is a true investment differentiator in the market.
Once again, I'm gonna talk about our service branches. Again, over 700, and that's very powerful. Very, very powerful. Unparalleled in the industry. When we talk about our Vision 2027 to share with you, it all begins here. These branches are very unique, and there isn't another company in our industry that has a platform of what you see on the screen. Every major state, every state, every province has one of our service branches. We leverage our real estate platform by opening multiple branch types to service our customers. It's very common to be able to see a Technical Services branch, a Safety-Kleen Environmental branch, a Field Services branch out of one location that's servicing all the types of customers in that geographical area. What this also lends itself to is our ability to share assets.
Our assets of our people down at the branch level, that real estate location, the district level, also sharing our rolling stock at that branch level, the district level, the regional level, and we can support national customers through this footprint. This is our foundation of how we're gonna grow.
I wanna talk a little bit about our addressable market. You know, they said we generated about $4 billion in environmental services and revenue and about $1 billion in SKSS. You'll see from the charts today that although we're the market leader in all the industries that we play in, there's still a lot of opportunity to grow organically and through M&A. You can see here that the total addressable market is very large.
We have a very diversified portfolio, and that limits your risk as an investor. When you look at this slide, it shows our top 10 verticals and their history over the past thre years. In 2020, we were a $3 billion company. In 2022, $5 billion company. It starts at the very top with the chemical renaissance. The chemical vertical, if you do the numbers of that 15%-17%, has grown substantially. The chemical renaissance drives waste volumes into that network of facilities that you'll hear more about today. When you look at the refinery vertical on there, we had a major acquisition that Robby Speights will talk about later today, but that has drove growth through our HPCS group. Every vertical that you can think of produces some sort of environmental waste and needs our services.
Very powerful thing to think about. Even at the bottom, the list, you see retail, big part of the top 10. It's been growing every year. Customers such as Amazon and Walmart, believe it or not, they need our services. We're a major provider of managing the residual waste that comes from returns or off-spec products and providing emergency response services. Very compelling platform of verticals.
I wanna talk a little bit about sustainability. You're gonna tour our re-refinery this afternoon, but if you've gone to a hazardous waste landfill or a hazardous waste incinerator, it doesn't scream green. It's a big plant. It's loud. It's a little messy, you know, but when actually Clean Harbors is the greenest company you've never heard of. Sustainability is, as Eric just said, is at the heart of everything we do. You know, we actually remove twice as much CO2 from the environment as we produce. A few months ago, we issued our second sustainability report. It's SASB compliant. It's on our website. Feel free to take a look at it. It's SASB compliant. It has 2030 goals that we're making really good progress to. It has the ESG.
It has our ESG scores, which have improved every year that we started to measure ourselves. We're really proud of that. I think that, you know, I think that sustainability is not just the right thing to do. I think it's gonna be a growth platform for us over the years. When you think about companies trying to improve their scores, lower their footprint, you know, things like captive incinerators and re-refined motor oil, I mean, those industries are coming to us. That's gonna. I think sustainability is great. I also think it's a growth platform for Clean Harbors over the next five to seven years. I really do believe that sustainability is not just, you know, a chart and a, and a piece of paper, but actually a business model that we can grow from.
Lastly, you know, I talk to a lot of employees. We're all, including myself, very proud to work for a company that cleans the environment, making it cleaner, making it safer, something we're all kind of really proud of. It really helps us with retention, recruiting. It really is a great hook for people.
First, let me touch about our environmental services segment. In 2022, we were over $4 billion in this segment in a $25 billion market. We have opportunity to continue to grow. As you'll see here, as the presentations go on, you'll see our market share and how we're gonna continue to grow the company. We provide turnkey solutions in the environmental services segment with multiple lines of business for our service offerings. On a reporting basis, there are four different branch types in Environmental Services, starting with Technical Services. What do Technical Services do? They're the crews that go out customer sites, package waste, provide materials and supplies, provide transportation of those waste materials into our hubs and into our service branches to disperse throughout our network. Our Field Services groups, they provide major support to utilities throughout North America.
They also provide emergency response services, both small and large. Our Safety-Kleen Environmental Services, you'll see later today that they really support manufacturing and automotive. Those are the two major verticals of Safety-Kleen Environmental Services, providing lines of business such as parts washers. Parts washers being able to support their automotive, their manufacturing processes. Finally, industrial services. You're gonna hear from Robby Speights. Industrial services, it's embedded in every large industrial plant throughout North America today, providing our cleaning solutions and removal of hazardous materials.
Eric just talked about the Environmental Services segment. I'm going to talk about the Safety-Kleen Sustainability Solutions segment. As I said before, it's about $1 billion in revenue. It is, you know, very simply stated, we take used motor oil, mainly from the passenger car markets. We transport that into our re-refineries. We're going to see one of those today. We have eight re-refineries. That dirty motor oil is re-refined and made into base oil, which is then sold back into the marketplace. It takes 75% less energy to make a gallon of base oil or motor oil from used motor oil than it is from crude. It's a great sustainable story. I think the market is coming to us.
Eric, I mean, Brian Weber's gonna talk about this later this morning, and I think it's a long-term good story for us.
We have six complementary growth strategies that are going to get us to that Vision 2027 and have gotten us to where we are today as a $5 billion company. First of all, cross-selling our solutions, getting embedded with every customer. I talked earlier about 55 different lines of business. Our salespeople, over a 1,000 salespeople penetrating into those verticals, cross-selling our lines of business, everything that we can offer that customer. We're also going to continue to expand our network, leveraging that real estate platform, opening more branches throughout those, more branch types in every real estate location. We are going to continue to pursue acquisitions. We as a company have done over 70 acquisitions in the 43 years history of the company. We're going to continue to execute on that.
You're gonna see pie charts later today of our market share and who our competitors are and who we can be able to gain market share and who we can look to acquire. We're gonna continue to focus on that. We're also gonna continue to divest some non-core assets. We also have been very powerful at executing on cost, pricing, and productivity initiatives. Every year as we go through our budgeting process and we look through the results of the previous year, we squeeze the ring. We look at where we can continue to drive out costs in our business, and we execute on that strategy.
Pricing, we meet every other week with all the different lines of business, the service branch types of how we can continue to manage pricing and improve pricing and improve our margins and keep up with inflationary costs. Then productivity throughout our facilities organization. You're gonna hear from Rebecca Underwood. She's gonna talk about how we're gonna continue to grow capacity and grow throughput in our incinerators, our re-refineries, our TSDFs, our treatment network. We also. We foster innovation through technology. That technology, Alan's been a huge part of driving technology. We have three common platforms. It begins with our WIN platform, our Waste Information Network platform, that starts at profiling waste from our customers, tracks that waste, and routes that as efficiently as possible to those ultimate disposal facilities. That WIN platform provides efficiencies for our team as well as our customers.
We also have a Salesforce platform that we execute and look at pipelines and drive our sales leadership through of our 1,000 sales folks through that Salesforce platform. We also have our Oracle platform, which supports our employees as well as our financial systems. Finally, we are going to capture large-scale projects, whether it be Superfunds or large industrial scale emergency responses.
A little bit about our capital allocation strategy. Eric Dugas will get into this kinda later in the morning, but it's really important to us that we, that we talk about this. You know, there's four major places where we allocate capital. The point of this slide is that we have used ROIC to drive those decisions. Whether it's, you know, building a new incinerator in Kimball, Nebraska, doing some M&A, buying back shares, or even refinancing our debt, you know, ROIC has driven us to make those decisions. You know, ROIC is a big part of our incentive compensation plan and part of our long-term plan, which makes a lot of sense as we try to drive value, you know, back to our shareholders.
If you look at the results for the past few years we've seen, I think we've done a pretty good job of doing just that, no matter how you measure it. A little bit on acquisitions. We put this slide in because we think it's so important. You know, I've certainly been around other companies that have done a lot of M&A. We have done a lot of 70 acquisitions over the past 43 years. We're gonna do more going forward. I wanna talk a bit about the process, 'cause I think it's important for our investors to understand how the process works. When we go and acquire a company, we do the diligence, make sure we're comfortable with the math and the offer.
We put a P&S together. From there it is all hands on deck to integrate that business. On day one, for most acquisitions, not all, of the 70, almost all, you know, we integrate everything day one. That is systems, people, processes, organizational structure, payroll, all that gets put on our great technology that Eric just spoke of a minute ago, and they bring us into the net. That change management is hard. That is hard for a new company to get all that in kinda early on.
We think it's very important because what that does is that not only does it help us attain synergies, which it does, but it also brings them into our processes, forcing us to connect with Clean Harbors' employees to learn how we do things. That's really important because you gotta get through that painful exercise so that they can be part of the team and be part of the culture, and that Mel is gonna talk about later this morning. In my mind, this is a gold standard of M&A because I really do think that this process, leveraging our technology and bringing these businesses in day one, is industry-leading.
Thanks, Mike. We have four macro favorable market dynamics that are gonna support this growth of the company, beginning with reshoring. I talked earlier about the chemical resonance. We're also seeing that in manufacturing driving more volume of waste into our plants. From the legislative side, continuing the infrastructure bill. The infrastructure bill, you look at spending for Superfund cleanups, $20 billion allocated over the next five years. We're gonna be a participate in those Superfunds. You look at the regulatory climate, greater enforcement, new rules, new regulations, continuing to hold companies to a higher standard, that will drive waste volume. Will drive services that we perform.
Of course, sustainability, as Mike articulated quite well. Our green solutions for all of our customers, from our closed loop products to our recycling of solvents, we provide a sustainable business solution for our customers.
This is our five-year financial targets. We label it Vision 2027, and I wanna spend the time kinda walking through this in detail. We started with the 2022 actual results, and this is the EBITDA and the cash flows from the 2022 financial results. We built two models. You know, the first model is, let's say, call it the organic growth model. That's, as Eric said, we're gonna grow revenue kind of faster than GDP through some of the catalysts he mentioned. We're gonna leverage our technology, our systems, our platforms to drive EBITDA faster than revenue.
This doesn't have any M&A, and of course, if you run the math out and do the math on the cash flows, you're gonna have, you know, $2.5 billion-$2.7 billion in cash, and you'll be negatively leveraged in this model. It's not really a realistic model, but we wanted to show kind of what would happen, let's say, organically with the business. We built, you know, what we call the organic and M&A model or the Vision 2027, if you wanna call it that. That's, in our opinion, reinvesting the cash back into the business through a substantive amount of M&A. You know, we put in the model, you know, $1 billion per year. I know that's not right.
Some years are gonna be more, some years are gonna be less. It's a mix of cash and debt. This doesn't have any equity issuances. At the end of it, with the cash flow generation, we maintain our 2x leverage. When we put this together, I think that the multiples from the M&A were conservative. I think the interest rates were conservative. I think the conversion is free cash flow conversion is conservative. I think we can do better than that. With a new incinerator coming online in 2025, we think we can really start generating some real good cash flows and some real good EBITDA, like we have with the El Dorado incinerator we put back in 2017. We think this is a very realistic model.
Also, I would say that if you look at these numbers, okay, doubling the business in five years. That seems fairly aggressive. Go look at where we've been. Eric Dugas is going to show some slides of where we have been the past five years, and we've done it. We've proven that we can do it. Go look at what Alan showed in his first slide. He talked about $300 million business. He's done it for 43 years. We have the management team, we have the people, we have the processes to get there, and I'm really excited about delivering on Vision 2027. Eric Dugas will talk more about it kind of later today. You know, in conclusion, we have some key takeaways for today.
The first of all is that we're really excited about you meeting some of the members of our leadership team and really understanding the breadth and depth of their talent. I'm really excited about the team, and you're gonna hopefully you are as well. You know, we are a market leader in all the markets we play in. That has a lot of value, and we leverage that. We have a very high barriers to entry as far as getting competition into the marketplace. I talked about the moat that we have in our permitted facilities. Impossible to replicate. Lastly, as Alan said, we have a highly resilient business and a history and a proven track record of growth and return to our shareholders.
From here, we're gonna move on to the next part of our journey, where we're gonna dig into our branch operations, starting with Loan Mansy, our President of the Environmental Services group. As we go through each of these presentations, they are gonna lay out for you what our traditional growth rates have been, how we've grown the business, the verticals we play in, who our competitors are, and they're gonna tie their business units back to the model, which Mike just eloquently laid out for you, of how we're gonna grow the business into 2027. Loan, welcome.
Thank you, Eric. Good morning. It's great to be here today. My name is Loan Mansy , and I am the Executive Vice President for our Environmental Sales and Service Organization. I've been with the company for over four years, and I have more than 30 years of experience in the chemical and waste management industries. I've run regional and global businesses for companies like Republic Services, Eastman Chemical, and Monsanto. I am also on the board of directors for Hudson Technologies, a refrigerant reclamation company. I'm excited to share with you the highlights of our environmental sales and service businesses and why we have the number one leadership position in the markets that we play. Customers, whether they're Dow or Walmart or your local automotive repair shop, they all generate waste, and managing hazardous waste is a technically challenging and resource-intensive task.
Customers rely on Clean Harbors' environmental sales and service crews to help them manage their waste safely and compliantly. Our organization is made up of three businesses: Technical Services, Field Services, and Safety-Kleen Environmental Services. We operate in a matrix organization where our business unit leaders develop the strategies and the go-to-market plans, and our five regional teams execute on those plans. We also have one of the most extensive national footprints in the industry. As you saw from Eric's map, out of the 700 branches, over 400 of them are dedicated to our sales and service businesses. Without question, our people are our most important assets. With over 6,000 highly trained, highly skilled sales and service employees, supplemented by our labor, asset, and driver pools, so that together we can readily service all of the needs of our customers.
Our first business unit within sales and service is Technical Services. That includes the collection, transportation, the treatment, recycling, and disposal of hazardous and regulated waste, especially focused to large quantity generators. Customers, whether they have solids or liquids or reactives, cylinders or even just household hazardous waste, our technical teams can take that waste and feed it into our network. Feeding the beast is what Mike Battles would always say. One of our key competitive advantages is the fact that we give our customers a one-stop shop. We can pick up the waste from our customer site and take it all the way to its final disposal destination, giving them a one-stop shop, taking it from cradle to grave, and giving customers peace of mind knowing that their waste was handled safely and compliantly.
Cradle to grave management and peace of mind are the two key value propositions that customers are willing to pay a premium for to Clean Harbors. In Technical Services, one of our largest lines of business is InSite S ervices, which is basically dedicated Clean Harbors employees and assets nested inside our customer sites. They work day in and day out alongside our customers, handling all of their environmental and waste needs. They're also integrating our customer service portal to give our customers visibility in all of the waste management activities that we're handling for them. I'd say the biggest value proposition in InSite is that it makes us sticky with our customers. We're already there on site with them every day, if a spill happens or if they have a new waste stream that they've generated, they're gonna call on Clean Harbors 'cause we're already there.
It allows us to deepen our customer relationship and grow our share of wallet with our customers. Technical resource, Technical Services has seen a really impressive 9% organic growth in the last five years. I would say the sustainable competitive advantage that we have is our vertical integration. It is our people servicing the customers, it is our vehicles transporting the waste, and it is our facilities disposing of that waste. Later on, you're gonna hear from Becky Underwood the fact that we have leadership positions in the commercial capacities of hazardous incinerators, landfills, and TSDFs. Because of this leadership position, we can prioritize which customers, which segments we wanna target. We use strong price discipline to ensure that we get the price premium that we deserve and have strong market pricing.
When you look at our vertical chart, one of the key factors that allows us to have an expanding addressable market and also resilience against business and seasonal cycles is the fact that we play in a broad portfolio of verticals. We're not dependent on one vertical or another vertical. We play in such a broad portfolio that our addressable market is endless. Speaking of addressable market, we believe that Technical Services has addressable market of over $5 billion where we have the leadership position. When you look at the market, you will see that is it's actually a concentrated market, where the top six players make up more than 80% of the market share. The key reason is because this industry has one of the highest barriers to entry. Three key reasons.
One, as Eric mentioned, it is extremely hard to get hazardous permits in today's world. Number two, it costs a lot of money, millions, if not hundreds of millions of dollars, to buy or build hazardous incinerators or landfills. Finally, it is even more difficult to earn the reputation of being a reliable, compliant service providers that customers will trust with their waste. The second business unit is Field Services, which includes the ongoing routine work that we do for our customers in the field. Work like vac services, tank cleaning, decontamination. Clean Harbors is also the leading provider of environmental emergency response. That was how the company was formed over 40 years ago. We've been building out our FS networks across the U.S., and we also have a 24/7 emergency operation center that would allow our crews rapid response to any event in any location on any scale.
We'll be there when our customers need us the most. Speaking of being there, Clean Harbors was there to help clean up New York City after 9/11. Soon after, we were managing the complex hazards of the anthrax attack on the US Postal Service. For the BP Deepwater Horizon, Clean Harbors deployed over 3,500 personnel to help with that oil spill cleanup. With the COVID pandemic, we conducted over 22,000 decontaminations, helping our customers keep their employees safe. In addition to these large events, Clean Harbors conducts over 6,000 smaller ER events every year. Field Services has seen a really impressive growth rate of 15%, significantly above GDP. In addition to the expertise and the capabilities that I shared earlier, we also have strong partnerships with government entities like the EPA and the US Coast Guard.
Just like with Technical Services, the verticals that we play in are plentiful, with the highest being in utilities and general manufacturing. In reality, everybody has emergencies. Everybody has cleanings that needs to be done. Again, our address market is wide, and we really focus on cross-selling our FS services across all of our customers. The addressable market for Field Services is about $3 billion. Again, Clean Harbors has a leading position in this space. You'll also see that the market has a lot of players in Field Services, and all that does is that gives us even more opportunity to grow. We can grow organically by gaining market share, or we can grow inorganically by bolt-on acquisitions. A perfect example is in October of 2021, Clean Harbors acquired HPCS' Utilities FS business, and we bolted it on into our existing FS business.
Our third business unit within sales and service is Safety-Kleen Environmental Services. Back in late 2012, when Clean Harbors acquired Safety-Kleen, it was a perfect marriage between large quantity generators and small quantity generators. Technical Services, as you know, focuses on the large quantity generators like chemical manufacturing plants. Whereas Safety-Kleen focuses and caters more to your small quantity generators like your local auto repair shop. Speaking of local auto repair shops, a lot of them utilizes one of our most important core lines of business, which is parts washer services. When our driver arrives to conduct parts washer services, the driver can also provide many of these other lines of business off the same truck for our customers. They can pick up waste drums, they can sell absorbents and wipes, and they can also sell our Safety-Kleen branded Performance Plus lubricant packages.
That allows us to increase our revenue per stop with each customer. Safety-Kleen has seen a 4% CAGR in the last five years, and our revenues have rebounded back above pre-pandemic levels. I would say what is attractive about our Safety-Kleen Environmental business is that it generates really high margins, and that's because it's based on subscription business with recurring revenues. Also, we strive very hard to have operations excellence in our route densities and route efficiencies. I would also say that vertical integration, just like with Technical Services, is key in Safety-Kleen because it drives recycling and sustainability in our businesses. Let me give an example. Our parts washer services require solvent and uses solvent as its cleaning fluid. When our drivers conduct parts washer services, he or she will come and deliver clean solvent while picking up the used dirty solvent from the customers.
We take it back to our facilities, where we recycle and purify that solvent into clean solvent for reuse for our customers, giving us a complete closed loop cycle of our parts washer solvents. What a great recycling and sustainability story. Just like Technical Services and Field Services, we're not reliant on just the automotive vertical to grow. We play in all verticals, some of it being automotive, big in manufacturing. As you see, a ton of other verticals that allows us to continue to grow and deliver on our goals. The addressable market for Safety-Kleen is about $2 billion. You can see that Safety-Kleen has the number one leadership position with our second competitor being half of what we are.
It's a very fragmented business with a lot of players, and just like Field Services, we have lots of opportunities to gain market share and to have bolt-on acquisitions. In linking the Vision 2027 that Mike shared with us, as we strive to grow from $5 billion to $10 billion, I'll share with you some of the key drivers that are tailwinds to our growth. Without question, the industrial and chemical production are key growth drivers, growing at a rate of GDP and population growth. With the recent supply chain issues, we're seeing a resurgence in U.S. production, which has led to the U.S. manufacturing renaissance and the reshoring trends that we've seen in the past couple of years that has helped us catapult above GDP growth rates.
Unlike the other industries, regulation and compliance are actually favorable impacts to our waste management industries because our addressable market grows as more and more chemicals are declared hazardous. As we move forward on our journey to $10 billion, we will stay focused on key strategic priorities that will allow us to achieve top-line growth and margin expansion. For top-line growth, we will maintain strong price discipline, creating value and capturing that value to again ensure that we get the premiums that we deserve for the services that we provide. We will be relying on our sales team to cross-sell all 55 lines of businesses to all of our customers. As a route-based company, we will continue to drive operations excellence in our route densities and route efficiencies, and we will drive operational costs down.
In closing, Environmental Services is well-positioned to continue the growth trend that we've demonstrated in the past 40 years and in our journey to $10 billion. We have growing addressable markets. We have strong competitive advantages, and we have experienced strategic leaders that will drive our business to $10 billion. Thank you for your time.
Thank you, Loan. Great job. Now we'd like to open it up for a few different questions for Loan on Environmental Services. Go ahead.
I don't know if we're gonna do, you know, mics.
Nope. Just gonna repeat it.
Oh, okay. Sorry. Tyler Brown, Raymond James . Quick question. The market dynamics, the market structure, and the capital intensity are all a little bit different within Field, SKES, and Technical Services. Can you talk a little bit about the margin differential between those three lines? That would be very helpful, particularly at the technical piece versus maybe the other two.
Sure, Loan. Can you help Tyler understand some of the margin differences from our different business units underneath you?
Absolutely. Tyler, you're absolutely right. For Technical Services, which is asset intensive and hard permits to get, we really are able to obtain significant margins. I mean, significant margins. Whereas with our Field Services, depending on whether it's routine work or whether it's emergency works, margins vary according to that, with emergencies, of course, being your higher margins. Then with Safety-Kleen, that is a money maker, as I've mentioned. We also have significant margins in our Safety-Kleen business because it does include bringing in waste, and then being filtered and recycled in our facilities. Eric, anything more to add to that?
Yeah. I would also add that, when you think about the those three different business units, you have Technical Services, which has the waste component with it predominantly. There's not as much waste from the Field Services. Technical Services, you got the labor, the equipment materials that we're responding to our customers, picking up waste and leveraging margin from our disposal assets. Field Services has some disposal, so it's a lower margin platform, not as great as Technical Services. Great branch platform, repeatable services. Safety-Kleen Environmental, you look at that higher margin that Loan Mansy articulated as well. That has that disposal component as well. That differentiates a little of the margin profile.
Thank you, Tyler.
Yes.
Hi. Jim [ Schumm] with BMO. I was wondering if you could talk a little bit about the M&A that you see across the areas that we covered. If you could, I may have missed it, but is there any update also on the acquisition that you talked about in the last quarter?
Yeah. Thanks, Jim.
Yeah. We're always looking for M&A opportunities. I can't speak to the specifics here, of course, but all those players that you've seen in our slides are always conversations that we're always having. Regarding the recent or the upcoming M&A, actually Robby Speights will be covering that with the Thompson acquisition in the Industrial Services businesses.
Thanks. Dave?
Yeah, Dave Manthey from Baird. Thanks. Thanks, everyone. You mentioned a matrix selling organization, and I'm wondering about the cross-sell opportunities as you see. Is there any way you can quantify that in terms of what percentage of your customers use the full suite of services and where the opportunity is?
Is it Tyler?
Dave.
Dave. Dave. I don't have the exact quantity, but I can give you a story or an example. In our Safety-Kleen business, we have what we call Total Project Management, and it's basically our Field Services and Tech Services being sold to our Safety-Kleen business. In 2019, we were doing about $90 million of TPM. Just last year, that number has increased to over $150 million, a 60% growth, because we really put a lot of focus on really cross-selling our services. I would say all of our customers can use every single lines of business that we provide, all 55. Eric, anything to build on that?
Yeah. To elaborate a little bit more on our matrix organization that you're referring to, Dave. On the Safety-Kleen side, we have inside sales accounts managers that are selling into accounts. We have sales reps. We have account managers, both junior and senior account managers. And we have a corporate account program. All of those salespeople are growing the lines of business relative to Safety-Kleen. They're matrixed and participating daily with the senior leadership team on the Environmental side, the Technical Services side, which has a similar structure. We have field account managers, we have CAMs, we have specialists that also sell lines of business like Field Services as well. All of them are participating together in an account with overlap to be able to cross-sell all the lines of businesses of both those branch types.
Thank you, Dave.
You see. Jerry.
Thank you for having us. I want to ask, Across the company, you folks are targeting about 90 basis points of margin expansion per year. I'm wondering if you just comment how does that roll into your line of business? What sort of plans do you have baked in relative to that target? Separately, I'm wondering if you just talk about the M&A pipeline within your line of business. If you folks make acquisitions, within your area of responsibility, what's the profile of that type of business that we should be thinking about?
Loan, can you elaborate on the margin expansion within your businesses?
Absolutely. There are many ways to grow margins. When you look at the top line, it's really getting value for the products and services that you have. We really sell on value, and we get the premiums that we deserve for the businesses and for the work that we provide. We also definitely use the price lever because as inflationary cost goes up, we got to make sure that we cover our costs. We have done really effective price increases that have stuck with the customers. We look at other levers like recovery fuel, recovery fees, and chemistry fees in order to, again, make sure that we're covering the cost that is impacting our business. That is from a cost standpoint. I think you mentioned what is the new...
Did you ask about the new acquisition and how it impacts our businesses?
The M&A pipeline, potential acquisitions over the next five years if the company deploys capital within this area, what would make sense? What's the white space? What's up?
Yeah, absolutely. You saw all of our addressable markets and all of the players in that space. As we consolidate the industry, we're able to have strong market pricing and command the premiums that we deserve with the values that we bring to our customers. Eric, anything to add on that?
Yeah, I'd say, you. Obviously, Loan shared the pie graphs of where we have our market share, each of those lend itself to continue to grow. We'd like to get each of our market shares to 50%. On the disposal side, I think we've shared slides, and we'll continue to show more of that on the incineration side. We own 70% of the market share of incineration capabilities. There's a lot of areas that we can continue to grow, bolt-on acquisitions that's gonna drive volumes into our plants.
Eric, just a quick follow-up. You know, relative to the margin expansion targets for the whole company, 90 basis points a year, any of the businesses that you're looking for an outsized contribution? It sounds like here it's pretty similar to the overall average. Can you just maybe rank order for us, where do you see the most upside or is it similar across the board?
I think it's similar across the board. You know, there's some, more challenging areas might be in the industrial area. We've been, as I mentioned earlier, we meet on price on an ongoing basis and look at inflation, look at our cost structure every other week. We expect margin expansion in all of our lines of business, all the business units. Clearly on the disposal side, everything that's leveraging our assets, we have a little bit more margin expansion. On the sales and service, a little bit less. Industrial Services is probably on the lower end, if that helps. One more question, and then we'll.
Great. Thanks for squeezing me in. Hi, Noah Kaye with Oppenheimer. Thanks, Loan. That was a great business overview. You know, I think almost every conversation we have with investors of late seems to be about cyclicality and in particular cyclicality of ES. I'd like you to maybe address A, what you're seeing, you know, in the moment from the customer base in terms of the project pipeline, but when you think about some of the drivers that you laid out, you know, money from the government for environmental remediation, reshoring trends, how do you think about the cyclicality of the business today versus maybe what you've seen in the past?
Okay. Thank you so much for that question. I was able to hear that. As I mentioned, even though there are cyclicalities in the industries, we play in so many verticals that it actually kind of flattens out the cyclicalities that we see. Right now, I mean, I read the news just as everyone else, where there are concerns of recessions. We're not seeing it. The demand is still so very strong, all again, because of those growth drivers of the resurgence in the U.S. production. Demand for waste, demand for services is still very strong. We're not seeing it. Eric, anything to build on that?
No, that was great. Thank you, everyone.
Thank you, Eric.
Hopefully that was helpful. Thank you, Loan. Great job. Next, I'm gonna welcome Robby Speights to talk about Industrial Services to the stage.
Thank you, Eric. Thank you, everybody, for being here. Certainly appreciate the time. That's a hard one to follow. Loan Mansy, you did a fantastic job. Thank you very much. First and foremost, I am Robby Speights. I'm President of the Industrial Business for Clean Harbors. A little background about me. I have 34 years in the industrial business, dating back to Dowell, which was a division of Dow Chemical, moving into HydroChem after they consolidated with the Halliburton industrial business, staying there for 17 years, and most recently, my last five years has been with Clean Harbors. A lot of questions around what is industrial. I guess, by definition, what is industrial? The industrial business is servicing the large industrial complexes all across the U.S. and Canada.
Refining, chemical, petrochemical, steel, all the very large industrial facilities. We do that from pre-commissioning, to turnarounds, to routine maintenance, to emergency call-out, to our nested resources. We touch all pieces of the business. A little history on Clean Harbors and the industrial business. Obviously, everybody in here probably knows that Alan started the business in 1980. Through organic growth, as well as cross-selling the waste business, the environmental business into the industrial sector, they began to build the business. In 1994, they added a acquisition strategy to that organic growth. They made several acquisitions through the years. Most recently being the HydroChemPSC acquisition in 2021. Really good cultural fit for the organization. The integration has went really well, and we've accomplished our $40 million worth of synergies to date. We have the Thompson Industrial acquisition closing on Friday.
We're excited about the opportunity and the geographical expansion that gives us as well. It also puts us in different verticals of the business. Verticals such as pulp and paper, steel, power generation, things that we can expand and continue to cross-sell with all of our lines of business. I'm not gonna go through all of the lines of businesses that we currently have in the business, but I will touch on three of the core businesses that we actually execute. One would be the high-pressure hydro blasting. It's from 10,000 psi to 40,000 psi of pressure, from 10 gal a minute to 500 gallons a minute. Small scale cleanings to very large scale cleanings. We also have our turnaround group.
Our turnaround group, a turnaround and a shutdown in an industrial site is when they come down for maintenance, and they clean either a unit or the entire facility to get it back to top productivity. We have a team, 400-500 people, that go out 90 days to six months in advance, helping pre-schedule that work, making sure we have the right resources and the right people to go out and execute on that work. Lastly, our chemical cleaning business. Our chemical cleaning, we have our own proprietary chemistry that we blend, which is really unique to the market and really gives us competitive advantage in all of our sites. The most important thing I think on this slide, though, is to talk about Clean Harbors creating the largest industrial cleaning company in North America.
$1.3 billion is what we're currently at, and obviously, after Friday, it'll be more than that. We have over 7,000 employees. In a time when you think about labor being so difficult to get in the U.S. and Canada, in a time when supply chain holds things up. The great thing about being publicly held is that we make long-term investments. Those long-term investments come in the way of what we invest in our employees, being able to drive our retention of our employees, to the investments we make in our equipment, our refurb facilities across North America, refurbing our equipment, putting it back to work, whether it be vat trucks or whether it be high pressure pumps. Secondly is our long-term investments that we make in our employees.
I talked briefly about it. In our industry, taking that turnover, which is industry average is around 60%-70%, down to something more reasonable at 25%, 30%, keeps experienced people on the job sites working safer and more productive. Lastly, the R&D facility. We have the only R&D and technology facility that's focused just on industrial in North America, the only one in the industry. What does that mean? That means that we create and build our own tooling, our own technology, and we're working with the clients to find solutions to their needs. Loan talked earlier about the InSite programs. The InSite programs that we have as well are probably some of the most important accounts we have. She said it earlier, it makes us sticky.
When you think about the business, we have together consolidated over $1 billion of our revenue comes from these InSite programs. We have over 1,000 of these programs across North America, we have over 2,500 employees that work in these InSites every day. We get the first opportunity to understand about upcoming work, projects, specialty work, which again, specialty work is something we'll talk about later. It's really add-on work. It's special projects. It's unique to the business where you're really driving much higher margins into that space. When you look at this, again, it controls the churn of the business. It makes us much stickier. It gives us the ability to manage overhead in the business and reduce overall costs for the clients. Specialty services. Our specialty services business is an add-on type work.
It's usually very unique to the industry. I'll mention a few of these here as well, one of those being tank cleaning. It's a complex tank cleaning because we do it all automated. We are the only organization that can actually have a turnkey process from cradle to grave. What does that mean? That means we can use our specialty mechanical team to come in, unbolt the manway, use our cleaning crews to come in and do the cleaning, take the waste out, separate the waste with our centrifuges, put it into our containers and take it to our waste sites. No other company in the industry can do that. Second is our vapor control, water filtration, and our leak detection and repair team. Those are all in place to help our clients with environmental compliance. Super important.
Lastly is our material processing group. Our material processing groups works in the refineries, typically as a fixed-based operation, taking the bottoms, taking what's left, and being able to take good product that's left, putting it, injecting it back into their systems where they can reprocess it and minimizing the overall waste that they have to deal with. We talked about size and scale and what it means. This map I think is really powerful in our business. We are 4 x larger in scale than any other competitor we have out there. If you look on this map, you can see the Thompson acquisition are in blue in the southeast corner. Another 1,000 employees, round numbers, 26 locations, it also puts us in a different vertical.
It's important to understand that because that vertical, we don't play in that space much. We see it as a huge opportunity for us to be able to cross-sell the legacy Clean Harbors and HydroChemPSC lines of business into their verticals and their unique specialty services into our verticals. As you can tell, the industrial business has had a really nice growth rate over the last five years of 23%. The majority of the work that the space we work in is in the refining and chemical sector. We're servicing clients in our refining sector like Exxon, Chevron, Marathon, blue-chip clients. In the chemical sector, our largest clients are Dow, BASF, 3M. All of these very large blue-chip clients is where we do the majority of our work.
When you look at this, when you see it a year from now, you'll also see the verticals we work in that we're going to take a new leadership role in with the Thompson acquisition: steel, pulp and paper, power generation. The addressable market. We think that the addressable market is around $5 billion in the space that we work. In the United States, that space is about $3.6 billion. We have about 25%-30% of the overall market, so there's a lot of opportunity to continue to expand in the States. We have about 30%-35% of the market in Canada at a $1.3 billion addressable market. Both, as you can tell, we have a lot of opportunity to continue to expand through acquisition or organic growth. The market trends. The refinery utilization is at an all-time high.
We've talked about it. Loan spoke to it. The chemical renaissance. When you think about those two in itself, it's gonna keep this business continuing to grow year-over-year from, again, the new renaissance, onshoring, pre-commission cleaning, new InSite, a lot of opportunity for the business. The third, biofuels investments. We talked about the green and how a lot of organizations is moving that way. We have partnered with our largest clients and are already taking a leading advantage to the biofuels facility that are actually operating. We do all of Valero's Diamond Green facilities, which is three at this point, and it's a great opportunity for us because they do a lot of industrial cleaning, but they also have a lot of waste that we send to our facilities.
We're already contracted to do the PBF biofuels facility down in Chalmette, Louisiana, and we have discussions with Phillips 66 about their biofuels facilities in the West Coast. Our strategic priorities. What do we wanna focus on? We wanna take what we've learned with our acquisition of HPC, and we want to continue to move it across North America. We've really been able to improve the overall margin of the business in the first year of that integration, and we think there's a lot of opportunity to continue to move that across Canada and our other segments as well as Thompson, and continue to make those margins better in the business. We want to complete the Thompson integration. Again, I'm flying out of here going down there Friday, and we'll start that integration on Saturday morning. We're looking forward to that.
We think that, again, Thompson will give us a lot of opportunities to cross-sell between verticals as well as all the lines of businesses back and forth. We have to get more pricing increases. This business takes a lot of capital, both in the way of having to pay the employees and the equipment that we need to execute the work. We have to make sure we're partnering with our clients to get paid what we deserve. We also have to find opportunities to continue to move margin through rental spend. We've opened a system of rental hubs, internal rental hubs across North America. Those rental hubs house all of our equipment that is excess in those areas, which gives us the ability to move those very quickly when the phone rings to be able to execute that work without having to go out and rent equipment.
Same as the next line with labor pools. We're continuing to build labor pools. We have a labor pool currently that's just a floating labor pool of almost 500 people. We're gonna continue to open those geographically around North America, again, to be more responsive when the phone rings to have those resources and not have to go to temporary labor to help support our work. Lastly, we wanna leverage the size and scale of the organizations. We are 4x larger than our closest competitor, and we need to leverage that size and scale. I'll close with the one comment. I think now that we have, and I think that you'll see that we have the largest organization. We're publicly held. We're growing the business.
I think the growth, as you can tell from the things I've listed, is going to continue to be strong for this group. I think you'll continue to see the margins in this business improve to help accomplish the overall goal of getting the organization to $10 billion.
Great. Thank you very much, Robby. We'll take questions for Robby on the Industrial Services segment. Tyler.
Hey, Tyler Brown, Raymond James. Thanks, Robby. This was great. Couple questions. First off, can you help us understand the cyclicality of this business? It kinda goes back to Noah's question about this. It seems to me that this is more driven by turnarounds.
Mm.
Can you just talk about how that business kinda flows?
Mm-hmm. For sure.
a little kind of there.
Yeah, for sure. Yes, we do have peak seasons in turnaround. They're a little bit different between the US and Canada, which helps offset it. We obviously start our turnaround season in the United States earlier because of weather than say Canada would, which gives us the ability to have a four or five-month type turnaround season in the spring and kind of the same thing in that back end of the year. We also focus on projects and where can we move that labor and equipment next. With the labor pools we talked about, the great thing about Clean Harbors is we can always use people. We'll take that labor that's available. Our competitor lose those people during the down season 'cause they can't keep them busy.
What we do is we put them to work in our TSDFs, our Safety-Kleen business. Wherever we may have a need for labor, we'll use that labor across the entire North American market to keep them busy.
Yeah. I think I'd just add that, you know, obviously, the second and third quarter are heavy turnaround seasons that Robby's businesses is supporting our clients. The InSite business that he talked about earlier, that helps maintain our footprint in those clients and level it out.
Mm
... that we can participate in those turnarounds and also embed our specialty services.
Yeah. I think that it's important to say over 50% of our overall revenue comes from those InSites.
Yeah.
Those are nested resources there every day doing maintenance work or responding to spills.
Perfect. Second question. I don't know if this is a real metric or not. I'm not sure exactly how you look at it. What is the internalization of the waste that comes out of industrial services that goes back into your own disposal network? Is that an opportunity? Because I was under the impression that HydroChemPSC was using other disposal sites, and maybe there was an internalization effort, but maybe you could talk a little bit about that. I have one last question.
Sure. Yes, we did internalize the majority of that where we could. There are cases where the client had relationships, and we continue to work on those. In most cases, we did internalize it. If we had the opportunity in every case to cross-sell waste and have a solution that's end-to-end, we do that every time as well. It's dependent on the client, what the relationships are that they have, but we absolutely do it. I don't have a number, but I know that we do it in every case we can.
Okay, perfect. Last one. This one's for Eric. If I go through the slides and I look at Tech Services, Field, Industrial, and SKES, if I sum up your TAM, it's about $15 billion.
Mm-hmm.
You started with it being $25 billion-$30 billion. What is that difference, that $10 billion-$15 billion differential? Is that a service offering that you don't offer? Just can you talk a little bit about the difference between those two numbers?
Yeah. I think as we progress through the day, you'll see a little bit more from some of the other presenters that are driving environmental services.
Clearly, Robby's a huge portion of it when you look at his $5 billion, both U.S. and Canada. We got that. In the one, multiple different businesses, if you add up the Technical Services, the Safety-Kleen Environmental, and the Field Services, you get close to that $20 billion. Then you're addressing also when we get to Brian Weber's group, the Bulk Products and Services, they also have environmental needs as well that is feeding material into our sites. I think that's the other component that adds up to that, Tyler. Yes, sir.
Robby you talked about the need to drive pricing.
Yes, sir.
I wonder if you could characterize the past year in terms of price increases across some of the businesses.
Sure. Yeah, from the industrial side, we were successful at about $45 million run rate of price increases. We certainly targeted this year to do the same thing over again. In our world, obviously, price increases are not as easy to get in most cases, and they're also harder to get in their systems 'cause most of our clients use invoicing systems such as Trax, and that whole process just takes much longer than a typical situation. We have been very successful in getting those price increases.
Yeah. I think I'd just add to that one thing that Robby has done an outstanding job of pushing pricing, there are some customers that the margins don't support us doing business for. He's got a risky business. If they're not going to be able to accept or don't want to accept our price increases, there's some business that on the industrial side that we have to walk away from. We have other places to relocate his people, his assets for other customers. It's not across the board. Sometimes we have to make some strategic decisions there and that's all.
That's right. That's absolutely right.
Just as a follow-up question, a lot being discussed about reshoring, and I'm wondering if there's a way to think about the opportunity across some of your verticals as it relates to some of the reshoring trends that we're seeing.
The opportunity?
Yeah.
The big-
In terms of where you're seeing the most activity, if you're seeing it yet.
Yes. The majority of what we're seeing in the chemical sector and the majority of it's across the Gulf Coast outside of Pennsylvania. Shell obviously had a very large expansion they did in Monaca, in Pennsylvania, which we immediately stepped in and do all of their work from an industrial side, container side, as well as the waste side. It's been a nice add-on for us. We actually go all the way into their engineering piece, which would be the opportunity for us to do pre-commission cleaning, which is before startup.
There's a big project side of it with high margins that we can take part in and play in that space as soon as they start breaking ground and start developing the engineering specs with the intent of developing that relationship to become the next InSite and routine maintenance site for us.
Thank you. Another question.
When I sort of look at, the commentary associated with the HydroChemPSC acquisition, that's sort of being mid-teens margins. Your business wanted to get to that level over a certain number of years. You also have the $40 million of synergies. I'm sort of assuming your segment's around $250 million of EBITDA. Can you kind of talk about, as part of the 2027 plan, what that is of moving from $1 billion to $1.4 billion is how significant the opportunity is to drive more EBITDA to your segment?
Yes, to your point, our EBITDA is around a 15%-16% EBITDA currently. We saw a significant improvement in 2022 with what we learned in the best practices around the HydroChemPSC acquisition. We think through the years forward, we're going to move this business to 19%-20%, we're going to do it through price improvements, we're going to do it in contract leakage opportunities, we're going to do it in fuel recovery. We think the business is a 19%-20% business.
One more.
Thank you. Do you mind telling, going back into the history, maybe you can share some insight from how did this particular segment of business fare during the 2018 and 2016 industrial recession?
how did-
I'm sorry. Can you repeat that question, please?
Would you mind going back a little bit in history and telling us how would you manage the business in a downside, such as back in the 2016 and the 2018 industrial recession?
In a recession impact, what do you think the recession impact would be on your business?
Yeah.
I mean, historically.
Yeah. From our routine maintenance side of the business, which is about half our revenue, we would see very little impact. The majority of the impact, if we did go into a recession, we would see it, for the most part, in delayed turnarounds, delayed projects, that they just don't have to do. Now, the flip side of that is we saw that in COVID. What happened during COVID was they run to failure. When they run to failure, it actually increased the overall revenue that we were able to generate with the clients because of emergency outages, emergency turnarounds, and even larger project scale once they did do the projects.
Yeah. Good point. Okay. I think we'll end the questions for Robby at this point and move on to our next. We have a break at this point, Jim? Brian. Welcome, Brian Weber, to the stage, our President and EVP of our Safety-Kleen Sustainable Solutions. Thank you.
Thank you, Eric, good morning, everyone. I'm Brian Weber. I'm the President of Safety-Kleen Sustainability Solutions. While I'm just getting started in this new role, I've got 33 years of experience with Clean Harbors. Started alongside of Eric, fresh out of college, have done a variety of things with the company around operations and administration primarily. Most recently, I led our corporate development function. It's great to be here with you all today. I thought I'd start by providing a little bit more color around what Safety-Kleen Sustainability Solutions is all about. We created this segment a little over two years ago now by separating the used motor oil collection, re-refining, and product sales out of Safety-Kleen Environmental.
As you saw from Loan's presentation, Safety-Kleen Environmental had a number of different lines of business that they're focused on, and the oil business wasn't necessarily always at the top of the list. We thought by creating an organization that's really full-time focused on managing the waste oil and re-refining business, the entire value chain, was the right move to make, and it certainly has proven out that way. You look at the left side of the chart, the Bulk Products and Services division, that's really our service delivery arm, or think of that as the front end of the spread that we talk so much about. With a fleet of over 500 route trucks, we go out and collect waste motor oil. We collect 5 million gallons a year of waste antifreeze.
We collect thousands, hundreds and thousands of drums of used oil filters that we can recycle. It's this group that also sells finished lubricants back to the same customers that generated the waste oil. We call that our OilPlus Closed Loop program. On the right-hand side of the slide, think of Safety-Kleen Oil as the group that sells the products that are made at our re-refineries. They're sort of the back end of the spread, so to speak. We're the largest collector and re-refiner of used motor oil in the world. In fact, the East Chicago re-refinery that some of you will tour later today is the largest re-refinery in the world. We really think the closed loop model that I mentioned is a true differentiator for us. What is the closed loop?
It really starts and ends with the customer. We pick up about 250 million gallons of used motor oil from about 90,000 generators across North America. We transport that used motor oil into one of our 80 terminals, where we can build full loads. We can also dewater the oil. It goes from the terminals, typically by rail, into one of our eight re-refineries, where we make a Group II+ base oil that then gets blended and packaged and sold through one of our 20+ distribution centers to the very same customers that we picked up the used oil from. It's a really a super efficient, environmentally friendly model that no one in our industry can replicate. I should also maybe take a minute and talk about the spread on this slide.
We talk about managing the spread a lot in this business. Basically, the spread is the difference between what we're able to sell our base oils for and what we pay or charge to pick up used motor oil. Obviously, that spread can fluctuate. When the price of base oil comes down, what we pay for that feedstock or what we're able to charge changes as well. There's typically a little bit of a lag that it takes a little bit of time to execute those price changes with our customers and to work through the inventory that's always already in our tanks. There can be a month, a two-month lag when you see those kind of fluctuations. I just thought I'd mention how that spread works. KLEEN+ is how we brand our re-refined base oil.
It's a new brand that we launched in the middle of 2022. Part of the reason for launching that new brand is that re-refined base oil historically has had maybe a little bit of a negative perception. People think, "How could it be good as virgin base oil if it's made from used motor oil as a feedstock?" The reality is that our feedstock is much better than crude. It gets better and better every year as more synthetics are introduced into the waste oil streams that we pick up. Through the technology of our re-refineries, coupled with that continuously improving feedstock, we think the base oils we make are superior to virgin base oil. It's a much more environmentally friendly oil as well. As Mike mentioned in his remarks, 78% lower carbon footprint than refining virgin oil from crude.
I think given the superior quality as well as the sustainable nature of our oil really is an opportunity for us to command a premium for that product going forward. I should also mention that we use re-refined products, the products that we manufacture in our own fleet of over 15,000 vehicles. As Mike mentioned, we're the 17th largest private motor carrier in North America. I think it's a real testament to the quality and the reliability of our products that powers our own large and extensive fleet. You saw a lot of maps so far today. Most of my colleagues have shared our impressive network. The same is true really for my business.
We have an unparalleled network of re-refineries, oil terminals, blending facilities, and distribution points across North America, all of it backed and supported by an extensive rail network, which gives us some rail transportation and logistics cost advantages over our competitors. You'll also notice that the re-refineries, the red dots on the chart, very nicely geographically dispersed. This gives us sort of a buffer for weather events or other disruptions that are prone to happen. I think for our customers, it gives them peace of mind and certainty of supply. We wanted to share the vertical markets that we participate in really on both sides of the business.
On the left, you'll see these are the gallons that we collect in the market, with about 30% coming from big box service centers, significant amount from DIY auto retailers, heavy duty equipment, dealerships, quick lubes certainly make up the balance. In that other segment, we're primarily dealing with industrial locations, industrial oil generators in that space, as well as the Federal Government in more specifically military. On the right side is where we sell those gallons that are coming out of our re-refineries, and you'll see, a little bit over 1/3 goes into passenger car engine oils. Almost an equal amount goes into industrial lubricants and the heavy duty fleets combined. The re-refining process also generates some valuable byproducts that we can sell into the fuels, roofing, and paving markets.
Number of key growth drivers that we track in the SKSS business. Regulation and compliance certainly at the top of the list. Used motor oil is a regulated waste in every state and a hazardous waste in some states. Generators can't just dump that oil down the drain. They need to rely on companies like us to manage that in compliance and responsibly. Vehicle miles driven is an important metric. Obviously, the more people drive, the more miles they drive, the more oil changes that happen. Oil changes are good for our business because it gives us an opportunity to pick up that used motor oil. Obviously, more oil changes create more lubricant demand, which is also good for our closed loop. Industrial production, kind of a key metric for that industrial oil segment that we manage.
I think with the growing trend for sustainable products and services, companies are coming to us looking for us as a sort of a end-to-end solution. We think that will provide a real tailwind for us. While our focus has been, and for the near term, will continue to be on the North American marketplace, we are starting to get inquiries more internationally about this closed loop model. I think that gives us some optionality into the future if we wanted to entertain expanding internationally. The Department of Energy released a study back in 2020, actually, that says that about 1.3 billion gallons of used oil are generated each year. We're by far the industry leader, collecting 3x more than our closest competitor, and we've listed some of those competitors on the page here.
Those would be competitors that both collect and can re-refine used motor oil. About half of what gets collected goes through re-refining, with the other half going into various applications as a supplemental fuel. It's a highly fragmented market as well, as you can see, with over 400 other collectors in this space. That gives us obviously an opportunity to grow organically by hiring more drivers, putting more trucks out on the road, but also kinda gives us a rich landscape of potential M&A tuck-in opportunities, which we've done throughout our history in this space as well as others. In terms of the re-refining production capacity, Safety-Kleen is the leader by far in North America with over 60% of that production capacity.
When you combine re-refined production capacity with conventional refining capacity, though, we're a relatively small player at only about 5% of the market. What I don't show on this slide, but I'll mention it, is re-refined in total only makes up about 10% of the production capacity. That re-refined oil is really a pretty scarce commodity. As more and more customers look for a green solution, a re-refined sustainable oil, that scarce commodity that we have should be able to command a premium for us. Number of strategic priorities that we're working on, certainly continuing to be laser focused on managing that spread that I described earlier. It's a key lever of our profitability.
We're gonna continue to grow our used motor oil collections by adding trucks, adding drivers, taking share, and through tuck-in M&A, as I mentioned earlier. We wanna continue to grow the finished lubricant sales. Selling finished lubes is less price sensitive than base oil and more profitable, so we wanna continue to grow in that space. We've got a number of capital projects around our re-refineries that are designed to increase throughput, increase productivity, and really continuously improve on the quality of the products that we make. I think all of these kind of strategic priorities and initiatives are in line with us meeting our five-year projections that Eric and Mike shared with you earlier today. You know, I'm really excited to lead this segment.
I'm really excited about the progress we've made and the performance of this segment since we launched it just over two years ago. Hopefully, as you can tell by the slides I just shared, I'm really bullish about our future. With that, thank you very much.
Thanks, Brian. We'll open up questions for Brian P. Weber.
Good morning. Larry Solow, CJS. Brian, you touched on the spread management, you've had a dramatic improvement the last, I think, 10 years. I remember going back when you first bought Safety-Kleen right after Hurricane Sandy, I think. Can you just talk about sort of from a high level some of the initiatives you've been partaking in to sort of improve that spread management? Can you discuss a little bit more recently IMO and some of the other stuff that has helped and the sustainability of that going forward? Thanks.
Sure. Yeah. Thank you for the question. I think a number of things have helped to drive that improved spread. Certainly, the creation of the Bulk Products and Services division two years ago was a way to get a team really full-time focused on the oil business and all the dynamics that take place in that business. Brought a lot of pricing discipline. We've used tools and technology to really track sort of what our competition is doing, what the RFO outlets look like, and using that intelligence to really be just smarter about how we manage the spread. I think IMO was a 2020 regulatory change that limited the amount of sulfur that can be burnt in shipping fuel. Prior to that regulation, a lot of used motor oil went into the bunker fuel market.
It can't go into that market anymore, which has created sort of more used motor oil available to us at better economics, which has been an overall sort of winner for us. I would say those things all combined in us being able to manage the spread better than we had historically.
Thank you.
Yes. Jerry Revich , Goldman Sachs. I'm wondering if you can talk about the long-term margin expansion targets that you folks laid out. As a company, can you expand margins off of these levels even if, you know, refining spreads on a virgin basis compress? Can you just talk about how you're thinking about the full cycle margin range for your business as well given the factors you just mentioned?
Let me try that one, Jerry . When you think about the 2022 results, excellent results, spread super wide, and really excited about, you know, kind of the results we did. You know, we guided, as you know, a few weeks ago, down a bit. You know, over the next few years, it's tough to think about margins for that business because we can't control the price of the base oil. It's better to think about it in absolute EBITDA dollars. If you think about an EBITDA dollars over the next five years in the Vision 2027, we have that business just getting back to where it was in 2022. It really is, you know, the spread was wide. We took advantage of that. Spread's gonna start to normalize.
What normal is, I've answered that question many times for people in this room, very hard to determine. At the end of the day, we do have a modest growth, I think, in the SKSS business, and that's driven by all the things that Brian just mentioned, whether it be good discipline on the spread, adding increased capacity, doing some M&A. I mean, all those things I think really help us get to that answer.
Can I ask, with the 60% market share of the re-refined market that you folks hold, is there an opportunity for you to get paid for the attractive recycling elements of the business? You know, recycled plastics can trade at a significant premium to virgin plastic. I'm wondering to what extent could that be an opportunity? How are you folks thinking about setting the pricing point versus virgin material?
You know, I think there are other opportunities like plastics, as you mentioned. We're participating in a pilot, with a coalition right now to manage, all of the plastic bottles that come out of the lubricants industry in environmentally friendly manner. Being able to manage and recycle those products for, some of the major oil companies is something that we're piloting right now.
Sorry, in terms of pricing your product, do you think you can get to a point where you're pricing it at 10%-15% premium to virgin product?
That's certainly the vision, I think we're starting to see companies in the market come to us. It's an easy way to meet your sustainability goals if you put our re-refined oil in your fleet. I think that's really starting to gain traction. Because we have a scarce resource there, we think we should be able to get a premium.
Thank you.
You know, Jerry, in one or two contracts we've already signed recently, it is designed so that if they use this oil as a sustainable product, then we get a premium for it. That's already in contracts today.
What premium, Mike, in those contracts?
It's a small price increase based on what they use it for and how they market it.
Thank you.
Jim Ricchiuti with Needham. You talked about the lag effect in terms of what you charge in, presumably in a market environment like this, where we're seeing oil prices come down. Talk to us about how is there any control that you have in terms of that lag effect when we've seen the kind of movement that, you know, relatively rapid changes that we've seen over the past few months?
No, I think the control we have is the pace at with which we change those, the price of that input cost, either what we pay or what we charge. you know, we try to be nimble, we try to execute on that as quickly as we can in a changing market environment. I think the inventory lag we have somewhat less control over because it just takes time sometimes to work through maybe that higher value inventory that's in our tanks. We try to keep some safety stock, so to speak, on hand. We always wanna have more inventory in our tanks than we need for the foreseeable future, 'cause that gives us a little bit of a buffer.
Noah?
Yep. Thanks, Brian. You know, one of the possibilities that's been held out over the last several years, you mentioned the increasing quality of the feedstock. The idea that over time the product actually could potentially go into a Group III, you know, qualification. I guess, can you help us think about how real or how near-term that opportunity might be, and what the potential is for pricing uplift off of that?
Sure. Yep. I don't have a timeframe on when we think we'll have a Group III product. I can tell you that it's certainly a priority that we're working on with our refineries and their production technologies. We're also trying to separate the feedstock. I mentioned we manage a lot of industrial oils. We're trying to manage that on separate routes than crankcase motor oil. I think by doing so, we'll improve that quality of the feedstock and help us get to Group III quicker. Certainly a priority. We've got a number of initiatives around how we get there. I think in terms of what that would do for us, right now, Group III is at about a $2 premium to Group II+. It's a well worthwhile venture for us.
Mike, that's not in the numbers for 2027?
No, it's not in the numbers for 2027.
All right.
Noah, you'll see this afternoon when you tour the East Chicago re-refinery, what the plant manager would say is that our feedstock gets better and better every year. As we use more and more synthetics into the soil and more... the quality of his input gets much better. We're getting closer and closer. Brian's right, we do need to have some way to separate kinda industrial oils from passenger car motor oil to kinda get to that Group III level.
Great.
Certainly very lucrative.
Good. Thank you.
Thank you.
Would you mind expand a little bit on thinking about investing in re-refinery production capacity? Are you thinking about brownfield opportunity or you're thinking about more through an acquisition perspective?
The question was, Brian, when you think about kinda growth in the business, is it a brownfield, build a new one or buy something?
I think we can grow our production capacity in our existing re-refineries through capital projects and various improvements we make. We kind of do that every year and can usually squeeze out another 5% or 10% of capacity organically through investing in capital. We'll also continue with M&A. We bought a new re-refinery in June 2022. That's our newest refinery in Kingsland, Georgia, that came with a UMO collection business as well. I think both organically and through M&A, we can grow that capacity.
Hi, Brian. Thanks. Could you just talk about your Closed Loop Program, maybe just the amount of customers that are actually on that, what sort of opportunity you see with that, and, you know, how does that create stability in the margins within that business?
Sure. Yep. We have in the thousands of customers that are in the Closed Loop program right now. We'll sell over 12 million, closer to 14 million gallons of finished lubes through that Closed Loop on the direct side. We also have what we call our indirect finished lubes business, where we're selling more to wholesalers or other distributors. That's another 20+ million, 25 million gallons. I think as I mentioned, it does give us some price stability because blended lubricants, finished lubricants don't tend to fluctuate like base oil pricing does. That's what makes it such an important part of our growth story is to continuously grow the amount of finished lubes that we're selling.
That's it for questions. I think we are out of time. Jim, is that the deal? We're going to take a 15-minute break and get right back at 10. Oh, you want to take-
Sure.
All right. John, we can slip one in.
Yeah. What about DoD as a market for re-refine?
It's a market for us today. We sell a lot of finished products into the military.
Their adoption was early and strong?
It was. In fact, they have mandates that they must use certain amount of re-refined in the military fleets. So we've been a good partner there.
Great. Thanks.
Okay. We're gonna take a 15-minute break, come back around 10:00 A.M. Jim, is that right? That's. Yeah. Around 10:00 A.M. 15 minutes for people on the WebEx.
Can we get everyone to grab their seats? We're gonna start in 30 seconds here.
Ready? Good morning, and welcome back. My name is Becky Underwood, and I'm the President of Facilities for Clean Harbors. I joined Clean Harbors about one year ago. I've got 20 years of experience in engineering, operations, and supply chain. Over my career, I've held high-impact leadership positions at companies like Air Products, Honeywell, and most recently Covanta. I spent over half my career in Asia and worldwide building, leading, and developing teams to drive operational excellence and performance. I've done this in times of unprecedented growth in the semiconductor, solar, and chemical industries. The waste industry is no different. I'm super excited to leverage my experience and continue to help Clean Harbors transform and grow to its fullest potential. As you saw in the business... Make sure I got it.
As you saw in the business model that Eric presented, my teams handle and process all the waste collected for the entire company, we have unmatched network of recycling and disposal assets across the industry. We have over 3,500 highly skilled and passionate employees operating more than 100 facilities across North America. With our great geographical coverage, our assets are perfectly positioned to accept all the different types of waste volumes from our branches and our customers. Every person from our plant GMs to our frontline operators and everybody in between focus on safety, compliance, and efficiency every day to maximize these assets. We have the best people and facilities in the industry. We hold over 500 hazardous and non-hazardous waste permits, as Mike Battles mentioned earlier, these are extremely hard for others to get.
This is a major competitive advantage for us in our network. We have the best overall network that handles the most complex waste streams in the industry. Here we highlight and show that we have the largest share of incineration, landfill, treatment storage, and disposal volume in the total market. We are the only company that has assets and expertise in volumes in all three areas. No one even comes close to our scale and operating capabilities. We are the one true large-scale, one-stop-shop provider for comprehensive waste disposal and recycling services in the industry. We are the market leader in environmental services because we safely handle these incredible amounts of waste volume and continuously drive for increased throughput of all our assets while we also do good things for the environment.
I think you would agree that we have an impressive track record of being able to accomplish over the last 10 years 3 billion gallons of waste recycled, over 5 million tons processed, and 34 million drums of waste that was collected and moved through our network. These are just extremely staggering metrics, I'm super proud of them. We have a long history of always pushing to the most efficient and effective operations to create value for the bottom line, I think it shows here. Myself and my team are proud of our ability to really extract every part of the value from our waste streams and do our part to better protect the environment. We have unrivaled hazardous waste incineration capacity. We have five locations and nine large commercial industrial-grade incinerators processing over 2/3 of the available waste in the market.
These facilities are our crown jewels and a major part of driving our profitability in the company. With industry capacity at a shortage, we're constantly looking for ways to increase our incremental capacity. We're doing this by focusing on our optimization efforts, reducing downtime, and driving higher utilization and throughput. A great example of how we added shredding capacity at El Dorado and Aragonite shows that we've been able to increase our throughput of higher value containerized waste. We're also making bigger step changes in adding capacity with our new incinerator at Kimball, which I'll talk about in a minute. Another way that we're trying to increase this capacity is by taking advantage of the captive incineration market. The way I would describe this market is there's approximately 700 commercial tons of commercial capacity with nine Clean Harbors incinerators and five of our peer site incinerators.
There's an additional 700 tons of capacity consisting of 41 incinerators that are owned and operated by our customers to handle their internal waste needs. This is down from over 100 captive incinerators from years past. They continue to close due to high operating costs, ESG concerns, lack of expertise, and lack of internal volumes to feed these units at high utilization rates. We understand this dynamic. We've been cultivating strong relationships with every single customer that owns a captive incinerator. It's through these relationships that we're able to capture their volume into our network and increase both volumes and price. 3M is a great example, as this delivered over 40,000 tons of volume into our network. As our customers with captives continue to close, this volume is continually pushed into an already capacity-limited network.
This is an opportunity for Clean Harbors, so we can fill our Kimball capacity as well as possibly acquire some of these assets to support our future growth. I'm really excited about our new incinerator at Kimball. We are confident that we're gonna be on time and on budget, and we're leveraging the team that also built our El Dorado facility in 2017 for continuity purposes. This $180 million investment adds 70,000 tons of capacity in our network and shows that we're serious about investing in our facilities. 2023 is gonna be a great year for this project, as all the major pieces of equipment are getting delivered.
You can see in the picture, we have the kiln here that's being fabricated down in Kentucky. It will be shipped to the site this summer. We'll be starting the erection of all of these parts. We expect this project to really be a home run and allow us to rapidly gain more volume in the market when it starts in 2025. This is another example of us making investments in our capacities to support our five-year growth initiatives. With per- and polyfluoroalkyl substances, or PFAS as it's known, and forever chemicals becoming a growing concern as it relates to public health, we independently conducted a groundbreaking study to prove that our high-temperature thermal destruction in our incinerators is the most effective way to destroy and eliminate these PFAS compounds.
The study was one of the most comprehensive of its kind and was validated by multiple experts and scientists. It's also demonstrated that stack emissions were over five orders of magnitude below any state or federal air quality guidelines in existence today. We've been very proactive in sharing our data with government agencies and regulators, which is helping them to influence the regulation around PFAS. Our customers are excited that we can provide this type of solution, and we're getting a lot of positive feedback and interest. As regulators are considering recategorizing PFAS into a hazardous compound, this is potentially a great opportunity for us. We're ready for it, and we have ample capacity. It's important to note that we are the only proven commercial scale technology solution in the market to deal with PFAS. This puts us ahead of all of our competitors.
Today, we already take waste of several of our customers, and it's another example of Clean Harbors leveraging the technology and assets to solve problems that we face in the industry and protecting our public health. We're a long-term solution for PFAS, and it's opportunities like these that are gonna help Clean Harbors grow from $5 billion to $10 billion in sales. We also have eight Subtitle C permanent hazardous waste landfills that are strategically located and positioned with or near rail services to support our customers' large-scale projects. They utilize the latest technology in liner design and go above and beyond regulation requirements to provide peace of mind to our customers. Like incineration, these assets are hard to replicate and are well managed. We have a strong pipeline of event work, and we have plenty of airspace to meet the customer demand for long term.
Our treatment storage and disposal facilities are another critical part of our facilities network. Some of our biggest TSDFs are shown here in these pictures. While incinerators get the most headlines, these assets paired with our national transportation team, which is the 20th largest in the North America, enables us to safely move over 350,000 drums efficiently and effectively through our networks to the end disposal location. How do we do this? We collect material from our branches and customers that Loan talked about earlier. We aggregate, consolidate, and shred this material to prepare it to be safely transported and routed to the final destination. These facilities are difficult to permit, they're EPA regulated, and they have high barriers to entry.
This is why these teams and our assets are what I call our secret weapon to quickly capture volume growth in the industry. With eight comprehensive multi-stream recycling operations and just a couple shown here, we recycle everything from spent solvents, parts washer solvents, to antifreeze and coolants. Demand for recycling continues to grow, these assets are another piece of the overall value proposition and driving our profitability and sustainability for ourselves and our customers. We recycle over 250 million gallons of used motor oil at our eight re-refineries and are part of this closed loop system that Brian described in such detail earlier. The volume through East Chicago is approximately half of our total network, making this the largest re-refinery in the world, we're super proud about this.
We have redundancy and comprehensive blending capabilities at East Chicago and Breslau, producing some of the highest quality blended products in the market. We continue to grow our network with our recent addition of Kingsland, which added over 20 million gallons of UMO just last year, again, demonstrating our ability to increase capacity and meet the growing needs of our business. You will see firsthand later today when we take you to Chicago, their culture of continuous improvements and why these facilities are world-class. I hope this gives you some insight into our facilities, why they're important to our success, and that we can confidently and safely handle any volume demands of today as well as for years to come. Our five-year strategic priorities are extremely clear.
We've got to go after maximizing incineration utilization and throughput by leveraging our TSDF network secret weapon to move high volumes of waste to our end disposal facilities. We've got to continue to grow capacity through optimization, strategic waste routing with our Kimball expansion, as well as leveraging these captive partnerships. We've got to continue innovating and expanding our recycle assets to drive increased sustainability for our customers. We've got to continue strengthening our operational excellence around increasing reliability and contingency planning. I'm so excited to be a part of this team, drive increased performance, and really build on the legacy of Clean Harbors into the future. Thank you.
Thank you, Becky. Nice job. We'll open it to questions. Tyler.
Quick question. Tyler Brown, Raymond James. PFAS. You talked a little bit about it. Currently, how much are you doing, and is that in the longer term guidance? Is there contemplation around, you know, growth or significant growth in PFAS?
We do take PFAS today from some of our customers as they're trying to get out ahead of this trend and concerned about their products. I'll let Eric answer maybe a little bit about is it included in our guidance going into the future.
It's not. The opportunity of PFAS is not really included in our guidance, where the volumes, our pipeline has continued to grow. There's a larger opportunity out there. Literally, what we've baked in is the incremental volumes that we've seen over our past five-year history here.
Okay, perfect. Just a follow-up question, on incinerator utilization.
Mm-hmm.
You talked about driving that higher. It's bounced around a little bit, but what kind of is practical capacity utilization? Is it low 90% or whenever you say maximize that?
Mm-hmm. Yep.
... you know, where does that play out longer term? Thanks.
It really ranges between, and we target between 85 and 90%. This really is a factor of the type of waste that we're processing and whether it has high BTU levels, low BTU levels, as well as, whether we're bringing in more drum versus bulk waste into the incinerator.
Great.
Has there ever been a history of captives not being so captive? Like the 3M example, was there an opportunity for you to use that outside of the 3M captivity, I guess, if you got all that waste, if they closed it down, if someone else closes theirs down?
I'm sorry, can you ask that question again?
If captive incinerators like 3M closed theirs, was there opportunity for you guys to run that since they couldn't do it?
Yeah, great question. The way we looked at that opportunity with 3M is we looked at a few different strategic approaches. One of them was trying to run and operate and commercialize the incinerator. Based on the regulatory environment that they had in the state of Minnesota and the position of 3M wanting to be able to close that site, the best alternative for them was to be able to move their waste into our network and have us help them may close the site. Every opportunity we look at with working with the captives, which also are our customers, we go through that strategic evaluation. Is there an opportunity for us to take that incinerator, be able to leverage it, open up commercial incineration through it? It is part of the thought process as we strategically work with them.
Just adding to that, we have an extremely strong compliance team. Again, we work with all the different regulators on an ongoing basis. When these opportunities do arise, we're gonna be ready to try to work through those and find a path to looking at those opportunities further.
Dave?
Yeah. Thank you. On the incineration of PFAS, if you can kill this material to, I guess, six, nines-
Mm-hmm
is that enough when it looks like the EPA MCL guidelines are looking like a few parts per trillion? Just wondering, technically, is that enough, that you're killing?
We believe that it is, and we continue, again, to work with the regulators. We've shared all this data, and really are trying to make sure that as the regulation does get defined, and we work with EPA, it is about how do we define, you know, how much is clean and is it clean enough?
Yeah. I would say that the trillions that you're talking about there, Dave, is really around the drinking water.
Water, yeah.
Much different than managing contaminated soil, incinerating that through our network. Six nines is technically proven adequate disposal efficiency for that, as looked at by the EPA as they continue to do their studies and set regulatory parameters for PFAS contamination.
That's helpful. Thank you.
Just to follow up, on the PFAS, I know it's not in your numbers or just a little bit based on current trends, but can you just give us, like, an idea of the scope, what the size of this market might be in five years? Or, you know, even without putting a time horizon on it per se.
I would say, I'll start, I think it's a little too early to tell. We do think that this is a huge growth opportunity similar to PCBs, that as we look... You know, this really is a long-term opportunity for us, and we think it's gonna continue to grow as we go forward.
Yeah. To add on to that, it really depends on how the EPA decides to set the standards of how clean is clean for all the PFAS contamination that is out there. There is a lot of contamination out there, it really has to be narrowed down as to what those parameters are gonna be to drive our solutions. Another question. One more.
Thank you. Just a question on the opportunity with the captives, and I know you can't be specific, but give us a sense as to how the types of conversations you're having. Are you hearing having more conversations? Walk us through how long it took on the 3M side to, you know, get that piece of business. What can you tell us about the opportunity there?
I mean, these conversations are years in the making, and I think probably, Eric, you might be a little bit better positioned to answer that question.
Yeah. 3M, we were a major handler of hazardous waste from their network above and beyond what they were processing through their incinerator. We were embedded there, we had a great relationship, and they were evaluating their strategic options, and we worked with them. Over the course of a year, we spelled out the numbers. We looked at capacity, we looked at what they were managing. Working together as a team with them, we were able to help them make the best decision that they did. They wanna focus on making products and sticky stuff. They want us to focus on managing their hazardous waste. The whole process took over a year to get to the point of them committing to shut down that incinerator. We evaluated other options.
All the other captives that Becky showed on the slide, we evaluate on a monthly basis. We have a cadence of looking at the spend that that customer has with us currently sending waste to us. We meet and try to work up their organization to get at decision-makers, to help evaluate their cost structure, how their long-term liabilities work, and continue to keep in touch with them on an ongoing basis. It takes time.
Was the 3M more of a unique template as opposed to some of these other opportunities, do you think?
No. No, I wouldn't say so.
Okay.
One thing I would say is that on the captives, there's different types of captive units. Some of them burn all liquids, some of them are rotary kilns, so there's different types of incinerators. There is, when you look at the waste that they're currently managing and how it's going to fit into our network, you have to take that technology into account. You have to look at transportation economics. Each of them, the template is standard, but the waste streams and the technology that they deploy is a little bit different.
Our teams are very well integrated into those conversations, especially on the technical side, as we work with the commercial team to determine, you know, what do those potential, commercial, structures look like.
Great.
Just going back 10 years or so, pricing of incineration, do you have, like, a CAGR we can work with on the history of pricing within incineration as volume has more or less been flat-ish? How big is incineration as part of Technical Services, pure incineration business, if you can share some of that?
Yeah. The CAGR has certainly accelerated over the past few years, as capacity has been very tight. Also, when you look at the capacity in our network and the amount of volume being generated across the network has really launched off over the past three or four years as we've come out of COVID. There's been the manufacturing and the chemical renaissance. Our incineration, looking at our overall disposal, manages about 1/3 of our disposal of the waste that we feed into our network. Hopefully that helps.
Can you hear this? Oh, there you go. Just to follow up on the capacity strategy, maybe you could talk about, you know, I think Kimball is a little less than 10% of capacity addition to the incineration structure. Maybe give us a little bit more color on how you are expecting to double EBITDA over five years, and whether that includes, you know, other efficiencies or other capital projects in addition to Kimball and how you're thinking about getting to that target.
There's a lot of things that go into that. One, it's about making sure that we're getting the waste that needs to go to the incinerators is the only waste that needs to go there, and using the rest of our network to actually leverage and capture all the other waste. It's about routing optimization. It's about continuing to look at everything from combustion controls and how we're actually processing the waste through the incinerator. Also, as we mentioned, right? That's part of the incremental capacity. Some of the other opportunities are continuing to evaluate, based on market demand, is there a need for another expansion and/or to acquire other assets.
Yeah, I'd just add to that and also say that within our network, when you look at our capacity, overall capacity of disposal types of facilities that Becky articulated, the margin platform is similar. From incineration to wastewater treatment to landfill, we're leveraging all those assets. As Becky just said, routing the waste to the right facility that's gonna add the most value, part of our WIN platform that allows us to do that, we look at the whole thing. Customers are not just generating incinerator waste, they're generating all types that feed our network. Important to keep in mind.
Thank you.
Okay, thank you. We'll move on to our next presenter. Mel.
Thank you, Eric, good morning, everyone. My name is Melkeya McDuffie, I am the Executive Vice President and Chief Human Resources Officer here at Clean Harbors. I've been with the organization for one year. Prior to joining Clean Harbors, I worked for companies such as Wells Fargo, Quest Diagnostics, and Waste Management, where I spent 15 years of my career serving in a variety of different HR leadership positions. I'd like to start here today by sharing with you our HR mission, which is really centered around creating a competitive advantage through people, and we do that through our strategies around how we attract, develop, engage, and retain talent that helps to drive our organizational success.
I wanna spend time this morning really walking through who we are as an organization, the things that we're focused on today, the things that we value, and then our go-forward strategy. We are an organization that is 20,000 employees strong, and in 2022, we grew our overall headcount by 9%. We added 1,300 net billable headcount, and half of that were drivers that we added to our network. These drivers are critical to our business, and by adding capacity to our driver network, that positions us to most effectively service our customers. We also grew our global capability centers, where we house all of our back office operations in India, by more than 55%, taking our employee headcount in that facility from 650 employees to over 1,200 employees in three cities across India.
I'd like to share with you our human capital framework, which is comprised of five strategic pillars. They are centered around how we attract talent to the organization, how we develop talent within our organization, our performance management and our coaching for success process, our focus on employee engagement, and our alignment to our core values, our culture, and our focus on diversity, equity, and inclusion. Like many organizations, we have some of the same challenges around talent shortages, turnover, and an aging workforce. To be able to effectively combat that, we've engaged in strategy as it relates to talent acquisition, talent engagement, and talent retention. Specifically, we spend a lot of time focusing on bolstering our employer value proposition. We have a strong sustainability focus. We know that this is an appealing value proposition to millennials who make up the majority of the labor force today.
We're also hyper-focused on cultivating relationships with the military and trade organizations because we recognize that where talent is not readily available in the marketplace, that we have an opportunity to grow our own talent. We also wanna make sure that we are engaging and investing in technology enhancements so that we're creating a white-glove candidate experience for applicants. We wanna make it easy for new hires to be able to engage with us. From a talent engagement perspective, we really value the voice of our employees, and so we have regular employee engagement surveys that we have, and we also have a focus on action planning, taking action on the feedback that we receive from our employees. We focus heavily on developing our leadership capability because we recognize that effective leaders are the linchpin to our ability to attract and retain key talent.
We also focus on our post-acquisition cultural integration. We are highly acquisitive as an organization. We wanna make sure that we're maximizing the investment of these acquisitions by ensuring that we are engaging with and retaining the talent that we acquire. From a retention perspective, our focus is to cultivate a coaching culture. We wanna also make sure that we are offering rich and appropriate total rewards offerings to our employees that'll best position us to attract and retain the talent that we need. We focus heavily on training, growth, and development because we wanna be able to mobilize talent throughout the organization. We're confident that these strategies have worked well for us because we've seen that in our turnover numbers. You know, as you measure turnover from Q2 of last year to date, we've seen more than a 400 basis point decrease in our turnover.
We've also proudly promoted more than 2,000 employees internally throughout our organization. We're investing heavily in employee development. We have two key pathways that we're looking at. One is centered around leadership development. It's our program called Leadership Excellence Acceleration Planning, or what we affectionately refer to as our LEAP program. It focuses on new leader success. We wanna ensure that any new leader joining our organization is ramped up so that they can be successful as quickly as possible in their new role. We're also focused on leadership succession. We wanna make sure that our high-potential leaders are equipped with the skills, the resources, the exposure that they need to best position them for their next opportunity.
As it relates to leadership excellence, this is really focused on leaders who are already in key jobs and critical roles, and this is an opportunity for us to really hone their capabilities and strengthen the impact that they have in their leadership role today. As it relates to the broader organization, we have career pathways that we're building, and it's centered around core competencies that are required for an individual to attain to move from one position to the next. This is an opportunity for us to really invest in the capabilities of our workforce and retain them by mobilizing them from one position to another. We're also investing heavily in performance management, and this is not just about what gets done, but it's really also about how the work gets done.
It starts first with investing in technology so that we can standardize and optimize the way that we approach the goal-setting process. It also is about equipping our leaders as coaches. We wanna make sure that they are proactively providing feedback to their employees, providing them with the support and the resources that they need in order to be successful. We also wanna make sure that that feedback is not one-dimensional, but we wanna understand how our employees are interacting with their direct reports, with their peers, and with customers. At the end of the day, our focus is around continuous improvement. Again, we wanna make sure that we're not just focused on what gets done, but we wanna make sure that the behavior aligns with our core values.
As I mentioned, the voice of our employees is critically important to us. We are so proud of the fact that our employees continue to trust us. That's evident by the fact that they continue to show up in large numbers as they participate in our employee engagement surveys. In 2022, we saw more than 14,000 of our employees participate in the survey. With that, we saw our employee satisfaction index increase by more than 14%. We recognize that in order for us to be able to compete effectively for talent in today's marketplace, that we have to have a keen focus on attracting and retaining a diverse workforce. We are incredibly proud of our seven employee resource groups that are highly engaged in supporting us around these efforts.
We also are incredibly proud of the fact that we've been recognized for three consecutive years by Women In Trucking as a best place to work for women. As a result of these efforts and as a result of this focus, we have realized more than 200 basis point improvement in our ethnic diversity representation. As we think about our path forward and where we go from here, we will continue to focus on executive succession. We wanna ensure that every key job and critical role either has an identified successor or an identified succession plan. As we focus on executive succession, we wanna ensure that we're keeping an eye toward leadership diversity. It's imperative that our leadership ranks are representative of the front lines of our organization.
We also want to ensure that we continue to focus on building our employer brand awareness and really focusing on our value proposition. We are an amazing company with an amazing story to tell, and we want to make sure that we are making Clean Harbors a household name. Lastly, we want to ensure that we are leveraging technology to inform the strategy and to measure the impact and the ROI of the investments that we're making as an organization. You know, I'll leave you with one thought. My colleague, Loan, said in her presentation that our employees are our most important asset. Without having a strong human capital strategy, which that's a key enabler for our ability to be able to grow our organization from $5 billion-$10 billion. I thank you for your time this morning.
Great, Mel. Thanks. Do we have any questions for Mel? Tyler.
Yeah. Curious if you could talk a little bit about the labor environment? Have you guys seen peak inflation on the wage side? Just, has labor gotten easier across the board?
Yeah. We've definitely seen increase in wages, but we also recognize that that's not a game that we can win, right? We're not going to continually increase our wages as our competitors do. That's why we're hyper-focused on our employer value proposition because there are so many things that we offer as an employer. As I mentioned, there's the career pathing. It's a great place to not just work, but a great place to grow your career. Another opportunity that we've really leveraged is that we are focused on growing our own talent, right? Where talent is not readily available in the marketplace, we've seized opportunities to help candidates to get their CDL licenses and help them to grow throughout the organization. Building the talent where it's not available.
Jerry, go ahead.
Thank you. I'm wondering if you could just talk about as you look at your business today, and all of the third parties that you use, what proportion would you ideally, if you were able to hire people, would you like to insource? In other words, where the economics make sense and within your willingness to undertake cyclical risk as a result.
I don't know if you want to take that.
Yeah, sure, Jerry.
I will add on.
If you think about it, you know, we're constantly on the lookout for direct labor headcount to run our business. We have open recs. Now, even though Mel said we've done a great job of both hiring direct labor and drivers, and we've done a good job of lowering our voluntary turnover, there's still a lot of open positions that we can use people on. You know, Robby Speights said it earlier about labor pools, putting people in central locations to go. We'd like to have those guys just be in the branches servicing their customers. We still use a fair amount of third-party labor. We got to lower that number down and internalize those margins.
It's really consistent with our culture of trying to use our own people to do the work, trying to hire people and retain those people, as Mel just said. That's because they're safer. They know what they're doing. They've been trained properly. I think that's been a key differentiator, and it will continue.
Mike, is it possible just to put a number around that? Ideally, we want to have 10% more labor, or just can you frame for us the third party versus internal?
Yeah. You know, we talked about having 2,000 positions open, and I don't want people to kind of run away saying, "Geez, they have this gap of 10% of their headcount." We're constantly trying to hire people because although we've done a good job of lowering our voluntary turnover, there's still people, it's still high. It's still in the, you know, high 20s, low 30s, we have to do a better job of maintaining that. We're hiring for, you know, headcount that we're going to need over the next six to nine months. It's hard to put an exact number of how many open heads are there. Yes, it's a pretty big number, but some of that's just normal churn as people come off of turnaround season. We lose some people, and they go different places.
It really is... I don't think it's, I don't think it's a gate to growth per se. It's a gate to more profit. I think we do use temporary labor when we have to, and we still service our customers. We just want to internalize that work and grow our work, you know, by servicing our customers better. Hi, Noah.
Thank you. Just women in the workforce, you know, pretty low number, obviously, just like the rest of the industry. What is Clean Harbors doing to sort of attract women and, you know, what has it been doing in the past?
Absolutely. We are intentional about cultivating relationships with organizations that are rich in women in their pipeline. For example, we have a very strong partnership with Women In Trucking, and we try to partner with organizations like Women in Engineering and so forth. The other, I think, key ingredient to creating an environment where women are attracted to come and work for us is by really putting on display the women that we already have in our organization. We try to be intentional through our marketing, employment marketing to highlight the many women that we have on the front line as well as in leadership. Because people tend to look for someone who looks like them as they're considering an employer as a place to work.
Dave?
Thanks. The churn number seems high. It's higher than I would have thought it would be. You mentioned you can't get into the cycle of just raising wage rates for folks to retain them. It would seem like given the technical specialized nature of many of the roles at Clean Harbors that might be a better idea. I mean, you come from waste management. A waste management truck driver makes $92,000 a year. It would just seem that if you could reduce the churn by a significant portion, you could afford to pay those people more if you could retain them longer. Any thoughts on that?
Yeah. Point of clarification, our people are paid quite well, and we're proud of that. Also, you know, we have seen a significant reduction in turnover. As I said, year-over-year, we've seen a 400 basis point reduction in turnover, and our turnover numbers overall are about 32%. When compared to the industry, that's lower than the average. We will continue to focus on efforts around how we further drive that number down.
Dave, we pay market and where we compete. In the local market, we have a good HR organization at a very local level, determining what the right pay level is for different levels in the local market that we play in. We certainly are very competitive. Okay, we're going to move it on now to wrap it up with our Chief Financial Officer, Eric Dugas. Eric?
Great job, Mel. Mike, thank you for the introduction. For those of you that don't know me, my name is Eric Dugas. I was just recently named the new Chief Financial Officer here at Clean Harbors. I've been with Clean Harbors for nine years now, in my prior position as Chief Accounting Officer. Obviously, I headed up much of our finance and accounting, but also worked very closely with this executive team on many other issues and many other projects, whether they be strategic, acquisitions and things of that nature. Prior to my time here at Clean Harbors, I spent 14 years with Deloitte & Touche.
As I looked out in the audience this morning, a lot of familiar faces, people I've met at investor conferences or spoken to on the phone over the course of the last few years. For those that I haven't met yet, I look forward to working with you all going forward. Thank you for joining us today, and I'll be the final presenter here. The first thing I want to start with is just kind of a recap of 2022. When you think about 2022, just a fantastic year financially for Clean Harbors. You heard about a lot of the great successes operationally we've had this year, but a tremendous year financially.
If you just look at Q4, you know, we grew revenues in Q4 by 14%, that would be 15% organically, and our adjusted EBITDA grew nearly 30%. Really just a fantastic trajectory. Really, Q4 was a continuation of an extremely strong year. Again, you can see on the slide, revenue grew 36% in total, 21% organically, which is a tremendous number. Our adjusted EBITDA increased just over 50%. Maybe the most exciting thing on the slide from last year is the 19.8% consolidated margins. That was 200 basis points greater than the year before.
If you think about how we entered the year at the beginning of 2022 with some real headwinds from inflationary pressures, it just really speaks to the resiliency of the business and what we were able to accomplish. Adjusted free cash flow, nearly $300 million, and that included $45 million of investment in our Kimball incinerator, which Becky spoke to. EPS nearly doubled. Just a tremendous number that we probably don't pay a whole lot of attention to, but just a tremendous feat. You know, 2022, although it was a fantastic year, it was really just the latest chapter in five years of really tremendous performance.
If you take a look at this chart, we've got 12% CAGR over the last five years, and I would point to that 2020 year, which is a COVID year, where you see a dip. It really created opportunities at Clean Harbors. You know, what I'm about to speak to really exemplifies how we manage the business in hard times and the resiliency in the business model. Obviously, in 2020, under the COVID conditions, many of our business lines had a negative impact. Those COVID conditions gave us an opportunity, and basically from scratch, we built out a COVID decontamination emergency response business that since that time has done 22,000 responses for over $200 million.
Really, that was just the latest opportunity for this company and that part of our business to respond when our customers and our country and the world really needs us most. It was great to see. You know, earlier, Loan shared many of the emergency response projects that we've done over our history. And one of them that she highlighted was the BP oil spill back in 2010. If you look back to 2010 and that BP oil spill, since that time, we've done $800 million of revenue for emergency responses. Just a huge, huge number over that time. If you think about our Vision 2027 model that we put forward earlier today, we've not really factored in any large emergency responses like that.
As we mentioned, several on an annual basis, more than 6,000, we really didn't model in these large things that we know are gonna happen. We're just not sure when and where, we also know that we'll respond. Similar chart, just looking at adjusted EBITDA. Again, an even steeper line from a CAGR perspective, about 19%. You can see the orange line depicts our, gross profit or excuse me, EBITDA margin going forward over the five years. Really, when I look at this slide, what I speak to when I go to this slide is really the platform that this business, what we've built with this business to support growth, whether that be organic or acquisitive.
When you look at our financials and you look at our SG&A spend and our corporate segment, you can see that as a percentage of revenues over this period, there's a noticeable decline there, really speaking to the leverage that we have in the business. As we bring on, as we increase revenues or bring on new business, we really see that EBITDA margin grow, and this is gonna be a focus of ours going forward to continue driving that margin. A few notes on the balance sheet. Obviously, Mike and I have been absolutely devoted to having a strong balance sheet. Both of us have felt over the last five years this is a incredibly important part of our business, and I'm 100% dedicated to keeping a strong balance sheet going forward.
Just to highlight a few areas, over a $500 million of cash on hand. You know, I think in the company's history, we have a motto here at Clean Harbors. If you read Alan's book, you may have read it a few times in that book, that cash is king. We enjoy having these cash balances available to us that really give us the opportunity that when tuck-in acquisitions, opportunities for tuck-ins or when larger scale acquisitions are out there, we're able to capitalize on those opportunities. You know, working capital in 2022 increased, consistent with the overall growth in the business as was exhibited in the last two slides.
We have lots of projects internally that I head up and others head up, really looking to maximize and really using working capital as efficiently as possible, and we'll continue to do that going forward. The last point I wanted to make on the balance sheet, and it's really a question that we get from time to time from people that aren't as familiar with our story, but the bottom line here on environmental liabilities. What these are is really, these are estimates of costs that we think that we're going to incur long into the future. We have sites in our portfolio that may have contamination or environmental work that needs to be done on them, and when we close them or at some point in the future, we'll need to take care of that.
Honestly, who's better to take care of that than Clean Harbors? That's what we do for a living, right? That spend on an annual basis is about $12 million-$15 million over the last few years. Not a huge spend, but again, we do get questions on it from time to time, and I wanted to give it a little color. Free cash flow. We spend a lot of time speaking about free cash flow. We're absolutely dedicated to free cash flow, and it's a metric that we spend a lot of time on here at Clean Harbors. You know, typically, we target or we'd like to target a free cash flow as a percentage of EBITDA to be in the high 30%-40%, and we've achieved those levels in recent years.
In 2022, we took a little bit of a dip there in that ratio as we have that strategic investment in Kimball, and as I said, we spent $45 million this year. Also just a use of working capital from the tremendous growth that you saw. Again, we target 40%. We're looking back to get to those numbers. I think, you know, when we, when we finish off that Kimball incinerator project, which Becky spoke to, set to be finalized in 2025 after $180 million of total spend. Once that project is behind us, that asset will be generating earnings, and we will see a meaningful uptick in our free cash flow from that.
Obviously, a strong balance sheet and strong cash flows that I just spoke to, that's resulted in a very strong credit rating profile. We maintain a very healthy, what we believe to be a very healthy debt level. We closed the year at just under 2x EBITDA. That is a level that Mike and I, and I'll continue to feel comfortable around. I think we target, we will target an EBITDA, a debt to EBITDA level between 2x and 3x . I think we'd also feel comfortable if the right opportunities arose to increase that into the 3x-4x range, to do acquisitions and things like that.
With that comes, you know, a path or a plan down back to kind of into that 2x or 3x margin, or excuse me, 2x turn. It's exactly what we did with HydroChem when we purchased it in late 2021. As you can see, we went above three for that, and we're back down below 2x presently. Really a good story here. The last point I'll make on our leverage is if you look at our ratings, we really are on the doorstep of an investment-grade rating. I wouldn't call it an immediate goal of ours, certainly an aspiration and something that we'll look to think more about.
I think, in this environment with rising interest rates, becoming an investment-grade company would provide us with cheaper borrowing rates, and that's something that is certainly attractive to us. You know, I think our size, over $5 billion and growing, and our free cash flow generation is really a good catalyst to that. Again, in our Vision 2027 model, you know, we used borrowing rates that are fairly similar to where we are today, and that is just over 5% total borrowing cost across all of our debt. And we used rates a little bit higher than that, but certainly an investment-grade rating would help there as well. Opportunity for upside to the model. Just thinking a quick picture here on our overall debt.
I will say that right now, after our very successful refinancing that we did in January, where we replaced some term loan debt, with some senior notes at a fixed rate, very successful transaction, very oversubscribed on the date of execution. Overall, right now we sit at 80% fixed-rate debt and about 20% variable-rate debt. From a fixed-rate perspective, probably a little bit higher. We've generally targeted about 75%, but in the current environment, you know, probably a good place, not a bad place to be. Happy with this portfolio. It's well scheduled out into the future, so we don't have any relative giant targets or towers that we need to take. Obviously, the most meaningful, significant, tower that we have here isn't until 2027.
Feeling really good with where our debt levels are right now. You know, capital allocation, obviously, Mike spoke to this earlier in his prepared remarks, and being smart in our capital allocation has been something that we've been able to do, and it's really driven a 275% appreciation in our stock price over the last five years. When you think about capital allocation, it really starts with the targeted internal rates of return and the ROICs that we look for, whether that be an organic internal project or an acquisitive acquisition. It's also our share repurchases, right? To date, under our current share repurchase program, we've purchased back nearly $500 million of shares. We have about $100 million left in that program.
We have discussed with our board perhaps expanding that program, and it might be something that we do in the future. As you can see on the slide, you know, with a weighted average price of $60, you know, well below what we're trading at today. Feel like that's been a successful program, and we look to continue to be strategic with our share repurchases in the past. I mentioned our debt portfolio, but I did just wanna spend one minute reiterating something that we spoke to earlier today, and that is our acquisition history and strategy. As Mike alluded to, over the 40 years, we've really developed a playbook to do acquisitions. It's been a huge part of our growth.
It will continue to be a large part of our growth, as you saw in the Vision 2027 model. It really gets at looking for companies that are complementary to us, both from a cultural perspective and operational perspective, and make financial sense. Those will be the pillars in the playbook that we'll continue here in the future. Just getting back to the Vision 2027, returning to this fabulous outlook that we showed earlier. You know, I hope, as my colleagues have spoken today, you've taken away from each of their presentations our ability to achieve this model.
You know, I think one of the exciting things for me is that this model doubles our EBITDA and more than doubles our free cash flow over the past five-year period. I think with each of the presentations, you saw where we stand in the marketplace, the strategic assets and strategic advantages we have to continue to grow. Hopefully, you walk out of here today understanding that this Vision 2027 goal is achievable, and it's something that we're devoted to as a management team. The last point I'll leave you with on the Vision 2027, and perhaps some of you have kinda done the math in your head already.
You know, if you really just look at this EBITDA growth over five years and you apply a conservative multiple, 9.5x-10x, and you look at our debt and you keep it at 2x, and you look at a flat share count, you really start getting into the very high $200s approaching $300 a share. That's exciting for all of us, I think. Lastly, as I wrap up our management presentations here, I wanna leave you with five reasons to continue to invest in Clean Harbors and why I think we'll continue to deliver strong shareholder returns. One, we're a market leader in all businesses in which we operate. We have hard-to-replicate assets, where demand for these services in today's world is only going to increase.
In fact, with tailwinds like reshoring and supply chain expectations of strong long-term growth prospects in North America, we expect the demand to continue to grow. Two, given these catalysts for growth, we expect to be able to continue to grow at CAGRs consistent with history and greater than GDP, and we will continue to be a growth company. Three, over the past 40 years of operations, we've cultivated a strong identity and management philosophies that encourage intelligent and strategic capital deployment aimed towards growth and serving our customers under the umbrella of constant and continuous improvement. This new leadership team, and I'm not sure that's the right adjective, 'cause as you've heard, many of us have been here for quite a while. We'll continue to grow these strategies and embrace opportunities as they arise going forward.
Fourth reason, our company story is one of sustainability and dedication to ESG principles. Our mission is to make the world a safer and cleaner place and improve the lives of our employees, customers, and the communities in which we operate. I think that's a truly admirable mission. Lastly, as I wrap up, I'd like to harken back to some of the comments that Alan made at the very beginning of the day. Our business model has been and will continue to be one promoting growth and profitability, and has proven to be resilient. Whether that's coming out of historical hardships, all historical hardships, whether it's economic slowdown, oil crashes, recent pandemic conditions, each of these instances, we came out of stronger than when we went in, and we will continue to deliver considerable value to shareholders in the future. With that, I'll conclude our management presentations.
I wanna thank everybody for joining us this morning. I think it was a great morning. I know myself and my colleagues were excited to share some of our plans with you all. We're also excited to kinda show off the largest refiner in the world in East Chicago this afternoon. I hope that many of you will be joining us for that, if not all. With that, Jim, I think we'll invite the rest of the management team and my colleagues up on stage for a more widespread Q&A.
Okay, great. Thank you. I'm just wondering if we look at the M&A opportunity, you know, pretty sizable, is there a scenario in which you folks would consider adding a third leg to the stool, or is this, you know, mostly within the existing business bolt-on? Can you just talk about what it would take for you folks to do something meaningful and expand the line of business?
Yeah, I'll take that one. Our vision today, what we've laid out today, is really focused on staying within our 55 different lines of business. The core competencies of Environmental Services and Safety-Kleen Sustainable Solutions. We're focused on that. We really don't have any outlook to move outside of those segments at this point.
Yeah. First of all, thank you all for putting this on. It's very informative. Jim and your team, thank you for organizing it. It's no small task, so thank you. I spoke with Brian a little bit about the M&A structure here going forward, and $600 million clearly is no small feat between here and 2027, taking part of Brian's role as sourcing deals in the corporate dev area, and then I guess allocating that some to Alan, and then some to the Co-CEOs, maybe the new CFO. I'm just trying to understand how that process is gonna work. It's my understanding that Brian is still handling the integration of acquisitions in addition to his new role.
Could you talk about the structure of that sourcing team? Because it seems very important relative to that $600 million number.
Brian, you wanna take that?
Brian, you wanna take that?
Sure. Yeah. As I've mentioned to some, the best thing about my new job is I get to keep certain elements of my old job as well, M&A being one of them, and it's something I've really enjoyed doing. It's episodic, as you know, but it will be increasingly more important to meet our 5-year vision. Alan has always been very active, very strategic in terms of M&A and will continue to be so in his executive chairman role, as have the two Co-CEOs. They've been my partners in every deal that we've done. I think collectively we'll work on sourcing deals, evaluating the right ones. Then I'm fortunate to have a great group of folks that work for me on financial modeling, due diligence, integration planning, and post-merger support as well.
Certainly, Eric in his new role, Eric Dugas as CFO, has played a key role in M&A in the past and will do so going forward.
Great.
Yeah. Tyler Brown, Raymond James. I got a couple of questions. The first one, I just wanna talk about the numbers a little bit and about the organic growth model. It looks like you're looking for about 6%-7% EBITDA CAGR, but more like a 15%-16% free cash flow CAGR. I think the free cash flow conversion is expected to go something like, you know, 29% to up in the low 40s. Can you just kind of put those building blocks together? I know that Kimball's a part of that, but can you talk about how free cash flow grows so much faster than EBITDA? That would be helpful just to start.
Want to take that one, Dugs? Nope. Okay, I'll take it. Good question, Tyler. You know, what happened in 2022, as Eric said, we grew incredibly fast. As you know, in the 2022 financial statements, you know, that working capital was a pretty large hurt. In the, let's say, in the organic growth model, let's call it that, you know, that has working capital kind of moderating and going back to, let's say, historical levels.
That, along with Kimball being built and more in a maintenance mode, maintenance CapEx mode, which is, you know, a much smaller amount than the $180 million we're talking about to build it, and the EBITDA and the cash flow generation that that new plant provides, along with what Loan said and Robby said around pricing and margin expansion, I think is how you get there, and it's not crazy assumptions to get there. In the model, it includes interest rates still at 5.5%, and as Mr. Dugas just articulated, I think we might get to, you know, investment grade organically over the next few years, which would obviously take down kind of our interest expense. Tax rates are kind of relatively normal level.
You know, I think that it's a pretty decent model that kind of gets you there without a lot of imagination.
Perfect. When you talk about the M&A plus the organic growth model, if we can switch over to that, you talked about the $4 billion of capital deployed. To be clear, that is $4 billion deployed on acquisitions.
Yes, correct. We, you know.
Okay
... we didn't distinguish to say, "Hey, is Becky gonna wanna build a new incinerator?" Or, "Are we gonna try to expand something?" Or, "Are we gonna try to add more capacity to our re-refineries?" We're gonna In the model, we have $4 billion, and we look at it based on ROIC, of course, and that's gonna drive where it is. As we built it, just for simplicity's sake, we kept it in the M&A world.
Okay. let's talk about that with ROIC. it looks like it adds an incremental $600 million of EBITDA. That's about 6x-7x implied multiple. I'm curious, is that very realistic? It seems like there's gonna be some chunkier stuff in there. Can you just talk about that a little bit?
I'll tell you one thing, Tyler. The model we have now will not happen as it is. We put that in to help educate ourselves and you as to where we think it could go and what Eric recognise vision is for the company and its growth trajectory. It may be chunkier, it may be a lot of, you know, kind of bolt-ons. It's probably a lot of both, is what it really is. We have it going in as a $1 billion a year over the next four years, pretty simply stated at a 9x multiple, getting to with a 15%, you know, EBITDA margin and growing from there.
Now just to finish here, which is, that's all helpful. From a free cash flow perspective, it looks like it's a $4 billion spend to add $200 million of free cash flow. I mean, that's what the numbers show.
The challenge you have is, what we tried to show and tried to be very realistic about this, is when we do larger acquisitions or you do acquisitions, it takes capital to get those assets kind of, let's say, up to Clean Harbors standards. We tend to buy assets, as you know, Tyler, you know, a little distressed. That's what we like. We can think we can make money off of that, we've proven that we have. That takes a little capital. Sometimes in year one, Robby Speights will say this himself, it took a little more capital than we thought to get the HydroChem assets to, let's say, to Clean Harbors' caliber, if you will, which is very normal after you're buying a lot of smaller deals.
The idea is maybe the free cash flow accretion is.
That's right.
... once it gets focused in.
As you get beyond, as we have Vision 2035 or whatever the next...
Okay.
Whatever the next vision is.
Okay, perfect. Thank you.
Again, thanks for all the presentations today. Really helpful. First, can you sort of help us key in on the assumption on organic top-line growth in Environmental Services? When I hear everything that we've heard today, no big ER contributions assumed, no PFAS assumed, some people might say, "Well, you know, what's there to drive the growth?" At the same time, you look at the revenue CAGRs over the last five years and 15% in Field Services and 9% in Tech Services. I guess just, one, what's the right range to think of? Two, talk about the blocks that you really see. driving that?
I'll start, then I'm sure the rest of the team can add in. When you look at our Environmental Services segment, and you look at what's been happening with volumes that we've been collecting through our Sales and Service branches and feeding into our network, it's easy to expect that we would continue to see the 5% to 6% to 8% revenue growth. We've shown that history. When you look at break apart the lines of business, as Loan articulated, as Robby articulated, you see the past history CAGRs that are driving that growth. Safe to assume with the chemical renaissance, the manufacturing renaissance, waste generation volumes are continuing to increase in North America, that's really what's gonna drive that revenue growth.
Right. The implication is that SKSS sees some normalization off of 2022, more so on the potentially the revenue side, just because of what base oil prices might do, but less so on the EBITDA side because you're managing the spread and improving quality. Is that a fair way to sort of summarize the outlook?
That's right.
Okay, thank you.
Thanks. I think you talked a little bit about this, but I'm wondering as we think about future M&A and the Vision 2027 model, is there a way for us to think about adjusted EBITDA margins, your willingness perhaps to sacrifice some lower margins in the near term? It sounds like there could be some chunky deals, and I'm just wondering how we think about M&A on some of these larger deals?
You want to?
All right. I think as we built out the model with the acquisitions included, I think we did look at some, you know, buying some companies that would have a lower margin profile than our overall consolidated profile right now, and then extracting synergies out of them at the right price. You know, when we modeled the business, we were kinda thinking, "Hey, the companies that would be out there at the multiples we'd be willing to pay are probably in the 14%, 15% range." We'd grow them from there up to closer to our overall corporate margins in whatever segment that they're acquired into.
If you go that route, and there are some acquisitions that have that kind of a profile, the logic, the rationale behind some of that, is it, potentially to build out some holes in the portfolio that you want to expand? Is it more, some geographic in nature?
Yeah. Yeah. Could be, could be geographic or as Robby pointed out kind of in his presentation with the acquisition of Thompson, moving into some new industrial areas. With the Thompson acquisition, kind of paper and pulp, and mining and power generation. Looking to do that in all business lines, geographically, as you mentioned, but also kind of customer base. The last point I would say on the model itself, right, is it is a long-term model. You know, we understand that there could be some lumpy things in there. Maybe we buy some businesses that are already at 18%, 19%, 20%. Maybe we buy some that are at 10% or 11% and really work on them.
Again, how this plays out, you know, tough to tell, but overall it felt like a good model with some built-in conservatism as we tried to express some upside.
Thank you.
Hi, Eric. Just a quick question on your topic on the credit side. You said, like, you're on a doorstep to become IG. Could you please develop a bit more what the credit agencies are looking at your balance sheet right now for you to become?
Sure.
-IG?
Sure. To provide a little color, I think we speak to the credit agencies at least once or twice a year, just formal catch-up meetings. Then as we do deals, as I mentioned, we did a deal in January where we wefinanced some debt, we speak to them and I would say the topic of investment grade has come up over the last few years where we've asked questions to them. They've brought the topic up to us.
I think what we're seeing now is given the size we've grown to, you know, given a $5 billion company, given a history now of some pretty decent free cash flow conversion, and given where we are from an overall leverage perspective at just under 2 x now, and then, you know, a commitment from us, you know, as I said in my remarks, to kinda stay between that two and three range, maybe go above that only with a plan back. I think all those things are giving us the feeling that, you know, we're kind of on that doorstep and certainly something that would be attainable kind of moving forward. Does that answer your question?
Thank you.
Great. All right. Come on, you have the whole team. You wanna wrap it up, Eric?
Thank you.
Of course. Just the organic growth model. Just wanna get a better idea of the assumption there. I mean, Mike, you talked about all the moving pieces there, but the free cash flow, you talk about there being a lot of cash reserve built within that model. What is really the upside, let's say, if you decide to prepay debt or, you know, increase the share repurchases? How much of that conversion, how much does that actually improve? What level can you get it to?
You know, Noah, it really is driven by kinda ROIC. You know, whether it's paying down debt or buying, you know, more capacity into our plants, building more capacity into our plants, doing buybacks, I mean, that's all driven by ROIC. It's hard for me to say today, you know, we built a, let's say, an organic model, relatively straightforward. Hey, the cash just piles up on the balance sheet. That's not a realistic expectation of anybody, right? We're gonna be doing stuff with that. In the model that we show, the organic growth and M&A model, we put that back in the business. We're a growth company. You know, the purpose of that model is to show them what our commitments are, and also to show the investing community what Eric and my strategy is around how we're going to deploy capital.
It's a clear and ambiguous, in my mind, a clear and unambiguous signal about how we think we can grow this company. It was important for us to share that with you this morning.
Just to add on to that, I think one of the other underlying assumptions in the use of cash in that model is continuing with some of our share repurchases. Largely kind of buying back at least a float was something that we've done, you know, in the last couple of years, and it's an assumption that we built into this model as well.
A question on the industry incinerator model. If there's 1.4 million tons of capacity, and the industry's growing at GDP plus, which I would think the plus given environmental and regulations and all, you are the only capacity expansion at 70,000 tons. Seem to me that would be absorbed in about a year or two. Where does the industry get the capacity it needs if no other commercial suppliers are adding, and the captives may be shutting down and therefore shrinking capacity?
Yeah. I'll take that. A few comments. We are, there is another commercial incinerator coming online being built as we build it, as we're building our unit in Kimball. There's another one coming online in Gum Springs, Arkansas. Between the combined units, we're bringing on about 140,000 tons a year of capacity. We will continue to add on to our capacity. We have initiatives to continue to grow our existing plants and increase our throughput. That accounts for about 5,000-10,000 tons a year. We have other opportunities to continue to look at how we grow our network. The captives that we talked about, there's opportunities there of how we might maybe commercialize or work with those vendors to expand capacity.
There's a number of different levers that we can continue to keep up with what's gonna be driven into our sites.
Still sounds like the industry is short, 15,000-20,000 tons a year. You go out a number of years.
It's clearly tight. Looking at other ways that we repurpose waste, add to our network, leverage our TSDF network, wastewater treatment, how we look at all the different waste streams are part of that as well.
You know, John, another important point is, you know, since we own such a large market share, you know, we wanna be the last to add capacity, right? Because we get impacted by that the most. It's important to us as we thoughtfully expand, as Eric said, you know, with Kimball and adding capacity into our network, that we do so very thoughtfully because it impacts us the most.
Thank you.
Hi. Can you just talk about the range of outcomes in terms of potential major brownfield investment opportunities over the next four or five years? What's feasible? You know, is the returns profile similar to, you know, the 5x EBITDA essentially that we're looking at at Kimball? Can you just maybe frame that for us? And that's across the business, not just incinerators.
Yeah. I think it's. Based on the permits that we have today and what's going on in the regulatory environment, along with environmental justice, I think it's extremely difficult to think about brownfield investments. We wanna add to our existing permits, our existing capacity to grow with the network. Just like we've done in El Dorado, we've added an incinerator there. We're adding an incinerator in Kimball. That's where we don't see other investments coming online and building from the ground up. You gotta really have to bolt on to your existing permits and capacity.
Sorry, Eric. What can that look like in terms of over the next four to five years? How much capacity could we add if we think about re-refining incinerators across the board?
Yeah. Obviously, we could complement on another incinerator on top of what we have and what we're building out today. We could look to do that. We have the sites. We have a footprint, probably on the West Coast. Our landfills, we have enough capacity. We have enough cells to continue to grow our capacity. Our TSDF network, we wanna add additional throughput to our TSDFs. We'll do that. From our wastewater treatment capabilities, we're building out a platform. We do vac services. We're building out, extending our platform to handle wastewater treatment volumes at additional sites throughout our network. All that is in play.
Thanks.
Definitely helpful to think about the, you know, sort of longer term targets. Just curious, anything you could do to comment sort of on how things are trending sort of, you know, more near term or how you're thinking about sort of confidence in the 2023 plan or on Q1?
Yeah. We have in, you know, nothing new to say, Jeff, from what we talked about back in the earnings release back in Q1. I would say, though, that as Loan said, she said demand is strong, and that's what we said, you know, in March first, and I feel very confident in that answer as well.
Okay.
Go ahead, Eric. Wrap it up.
One more.
Hi. I have a question regarding the Industrial Services. I know you guys are the national market leader, like, with, like, over a 25% market share. Do you mind commenting a little bit more on the local economy in terms of, like, specifically within Gulf, who are you guys competing against on the local level? The market share in that.
Yeah.
The Gulf Coast area?
Yeah.
Do you wanna comment on how the Gulf Coast is doing in growth competitiveness? Is that-
For industrial.
Y-yes.
For Industrial Services.
For Industrial Services or our Industrial Services?
Industrial Services.
Okay. Yeah, the expansion that we've talked about in the chemical renaissance is obviously the majority of it is in the Gulf Coast area. The refining capacity and being at an all-time high, that's majority in the Gulf Coast area. The opportunity for us to continue to expand our services now that we have 25%, 30% of the market, the biggest opportunity we have is gonna be in that same Gulf Coast area.
It will be about the same as the national level market share, like at around like 20%-30%.
Yes.
Yeah.
Yeah.
Once again, thank you everyone. We appreciate the opportunity for you to attend our 2023 and our Vision 2027. Mike and I, along with the rest of the Clean Harbors and team, are looking forward to delivering on those results. Alan has been obviously driving an excellent company here to grow us to the $5 billion. He'll continue to be intimately involved in growing our technology platform, but also, as we've talked about, helping with acquisitions. We're excited to deliver. We're excited to also have you come and see our re-refinery, the largest re-refinery in the world. You'll see there some incredible base oil production, taking that used motor oil, converting it to base oil. I think it'll really wow you on how our product really differentiates ourselves as a re-refined product.
Mike, any further comments?
I thank you all for coming and, looking forward to talking to you later in, later in the day.
Thank you.