Clean Harbors Q1 2026 Earnings Call Transcript

Quartr
Provided by Quartr
May 6, 2026

Key Takeaways

  • Positive Sentiment: Company beat Q1 expectations, with consolidated adjusted EBITDA up 6% to $248M and management raising 2026 adjusted EBITDA guidance to $1.24B–$1.30B (midpoint $1.27B), implying ~9% growth vs. 2025.
  • Positive Sentiment: SKSS outperformed materially — Q1 adjusted EBITDA rose 17% with a 320 bp margin improvement, driven by charge-for-oil actions and a late-quarter base oil price rally; management now expects SKSS ~ $165M of EBITDA for 2026.
  • Positive Sentiment: Environmental Services showed continued momentum: 16th consecutive quarter of margin improvement, strong project/PFAS work (landfill volumes +34%) and field-service expansion (opened branches), supported by a new PFAS framework and EPA/DoD guidance that bolsters the sales pipeline.
  • Positive Sentiment: Balance sheet and capital allocation remain constructive with cash and marketable securities of roughly $670M, net debt/EBITDA ~2x, $25M of share buybacks in Q1 and $575M remaining authorization, while management continues to fund strategic CapEx and tuck‑in M&A.
  • Negative Sentiment: Caveats and risks include persistent weakness/uncertainty in industrial services (refinery turnaround cadence), uncertainty around the duration of elevated base‑oil spreads, and typical Q1 seasonal negative adjusted free cash flow, which could pressure near‑term results if market conditions reverse.
AI Generated. May Contain Errors.
Earnings Conference Call
Clean Harbors Q1 2026
00:00 / 00:00

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Operator

Greetings, and welcome to the Clean Harbors first quarter 2026 financial results conference call. At this time all participants are on a listen only mode. Every question and answer session will follow following our presentation. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Michael McDonald, General Counsel for Clean Harbors. Mr. McDonald, you may begin.

Michael McDonald
Michael McDonald
General Counsel at Clean Harbors

Thank you, Christine, and good morning, everyone. With me on today's call are our Co-Chief Executive Officers, Eric Gerstenberg and Michael Battles, our EVP and Chief Financial Officer, Eric Dugas, and our SVP of Investor Relations, Jim Buckley. Slides for today's call are posted on our investor relations website. We invite you to follow along. Matters we are discussing today that are not historical facts are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Participants are cautioned not to place undue reliance on these statements, which reflect management's opinions only as of today, May 6, 2026. Information on potential factors or risks that could affect our results is included in our SEC filings.

Michael McDonald
Michael McDonald
General Counsel at Clean Harbors

The company undertakes no obligation to revise or publicly release the results of any revision to the statements made today other than through filings made concerning this reporting period. Today's discussion includes references to non-GAAP measures. Clean Harbors believes that such information provides an additional measurement and consistent historical comparison of its performance. Reconciliations of these measures to the most directly comparable GAAP measures are available in today's news release, on our investor relations website, and in the appendix of today's presentation. Let me turn the call over to Eric Gerstenberg to start. Eric?

Eric Gerstenberg
Co-CEO at Clean Harbors

Good morning, everyone, and thank you for joining us. Before we move into the results, I want to recognize our General Counsel, Michael McDonald, who will be retiring next month. Michael has been a trusted colleague and an integral part of the Clean Harbors team for more than 25 years, and his judgment and perspective have been invaluable. We thank him for his many contributions and wish him good health and happiness in the years ahead. Thank you, Michael. Starting off with safety, our team delivered an extraordinary safety results in Q1 by achieving the lowest quarterly total recordable incident rate in our history at just 0.39. While we invest in better equipment, technology, and company-wide programs to improve safety, you only get the type of results we are achieving with buy-in at the field level.

Eric Gerstenberg
Co-CEO at Clean Harbors

We are continually setting a higher standard for our company and our industry. For any employees tuned in today, thank you for all that you do, and keep yourself safe and your colleagues safe. Turning to a summary of results on slide three. We kicked off 2026 with better-than-expected Q1 results, including higher profitability in both of our segments. Despite challenging weather conditions that impacted our collection and services business in February, we exceeded our EBITDA expectations and improved the company's adjusted EBITDA margin by 60 basis points from Q1 2025. Within the Environmental Services segment, we demonstrated our resiliency by delivering the segment 16th consecutive quarter of year-over-year improvement in adjusted EBITDA margin and 18th straight quarter of EBITDA growth.

Eric Gerstenberg
Co-CEO at Clean Harbors

At the same time, our Safety-Kleen Sustainable Solutions segment benefited from our continued focus around charge-for-oil services and from a late-quarter surge in base oil pricing that lifted its profitability. Turning to the segments, beginning with ES on slide four. Q1 revenue in this segment increased by more than $40 million due to growth in project services, including PFAS-related opportunities and a considerable amount of emergency response work. We also continued to see healthy demand for our disposal and recycling services. Technical services revenue rose 5%, and Safety-Kleen Environmental Services revenue grew 7%, driven by pricing and higher volumes within its core offerings. Incineration utilization, including the new Kimball incinerator, was 80% versus 81% a year ago, reflecting scheduled maintenance days and weather-related impacts in both periods.

Eric Gerstenberg
Co-CEO at Clean Harbors

Continuing the trend of the past several quarters, we generated a sizable increase in landfill volumes, which rose by 34% on strength of project work, including PFAS-related cleanups. Field service revenue grew 7% in the quarter as we responded to a steady stream of customer emergency events across the U.S., including a large-scale event that generated approximately $10 million in revenue. We opened 18 field service branches during 2025 and plan to open 10 more in 2026. While these new locations will take some time to grow their revenue base, our investment speaks to the opportunities we see in field services as well as our ability to cross-sell across other businesses. Adjusted EBITDA was up 6% in the quarter, with ES segment margin up 50 basis points due to pricing, higher volumes, workforce productivity, and cost control initiatives.

Eric Gerstenberg
Co-CEO at Clean Harbors

Overall, our ES segment achieved positive Q1 results despite certain market conditions in the quarter, including weather and regional softness in our industrial services business. We exited the quarter with considerable momentum for ES in March. Revenues were approximately 10% higher than the same month a year ago. Turning to slide five. We wanted to take a moment to highlight our PFAS management framework that we issued in early April. The purpose today is not to cover the individual details of the framework, but to reemphasize that we have an end-to-end cost-effective solution for PFAS in all of its forms and concentrations. Over the past several years, we've had many customers, government agencies, and even community leaders approach us for advice on how to best address PFAS.

Eric Gerstenberg
Co-CEO at Clean Harbors

For example, they call on us when they want us to clean up contaminated water, remove stockpiles of AFFF firefighting foam, need someone to respond to emergency situations like fires or spills, or remediate a contaminated site. Customers have a lot of uncertainty around PFAS, and we believe our framework featured on this slide is beneficial to help them make smart economic decisions at all stages of the process. Our recommendations are based on years of institutional knowledge and the latest scientific data, including the PFAS incineration study we completed in conjunction with the EPA and the Pentagon. Our concentration-based framework provides for the proper treatment and disposal pathway for a range of scenarios. This tiered approach provides the ideal way to address complex contaminants at reasonable costs. We are starting to see considerable regulatory movement around these forever chemicals.

Eric Gerstenberg
Co-CEO at Clean Harbors

Both the Department of Defense in March and the U.S. EPA in April have issued PFAS guidance that included incineration as it is waste landfill and water filtration as recommended methods of treatment and disposal. The market is still developing, but having both the Pentagon and the EPA issue guidance that endorses high temperature for permitted incineration and our other PFAS offerings is critical. Those endorsements of our proven capabilities add to the momentum we are already seeing in our PFAS sales pipeline. As PFAS remediation accelerates nationwide, our integrated framework provides a practical and scalable model for industry and government partners. Today, we continue to believe that Clean Harbors remains the only company that can offer a cost-effective end-to-end single source solution that is commercially scalable for any PFAS need.

Eric Gerstenberg
Co-CEO at Clean Harbors

With that, let me turn things over to Mike to discuss SKSS, our efforts related to AI, and our capital allocation strategy. Mike?

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Thanks, Eric, good morning, everyone. Turning to SKSS on slide six, the year-over-year decrease in segment revenue was expected and reflects lower market pricing for base oil and blended products as compared to a year ago. This was partially offset by an increase in charge-for-oil revenue as well as rising base oil prices toward the end of the quarter. That base oil price increase and the work the team has done to manage our costs over the past year has led to a meaningful rise in profitability. Q1 adjusted EBITDA and SKSS grew 17% to $33 million, with an impressive 320 basis point improvement in margin. We increased our CFO pricing sequentially from Q4 and more than doubled our rate from Q1 last year.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

We continue to provide high-level services to customers, even with a higher pay-for-oil, we collected 53 million gallons of waste oil to keep our re-refineries running efficiently. At the same time, sales of base oil and blended gallons were consistent with the prior Q1. We incrementally grew both our direct lubricant gallons and Group III gallons sold versus Q1 a year ago. Those gallons carry a premium value and profitability compared to our other products. Overall, our SKSS segment delivered better than anticipated results. Turning to slide seven. This morning, we want to briefly touch on the topic of artificial intelligence, an area of immense potential for us. Technology has been part of Clean Harbors' DNA and a competitive differentiator for decades. AI is the next practical layer of that.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

We have implemented AI-type functionality for years. We continue to see real opportunity to improve productivity, compliance, safety, and customer service over time. We use AI in many areas, including waste classifications, invoice audit, ready to bill automation, document processing, and field support tools. We are also evaluating opportunities in routing, scheduling, and supply chain logistics. Our approach is disciplined, governed data, human in the loop controls, and clear operating use cases. People and technology creating a safer, cleaner environment has been our corporate slogan for many years. AI will continue to be a key element of our technology journey. We expect our AI efforts to keep delivering meaningful financial returns for us in the years ahead. Turning to capital allocation on slide eight.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

We continue to look for internal and external opportunities to generate the best return on our shareholders' capital. In recent years, we have executed well against all elements of our capital allocation framework, and we expect 2026 to be no different. We closed the DCI acquisition at the end of Q1, and we're excited about other attractive candidates that could materialize in the very near future. We're also investing wisely internally to accelerate our growth, including our previously announced vac truck fleet expansion, SDA unit in East Chicago, and other smaller revenue-generating opportunities that have recently developed. We ended the quarter with an ample cash balance and low leverage to execute both facets of our growth strategy. We also continue to view share repurchases as an attractive way to return value to our shareholders.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Eric will detail our Q1 purchases. We continue to see our shares as attractive at current market prices, given the favorable long-term outlook for our business. We exited Q1 with momentum in a number of fronts. Within our disposal and recycling network, we are seeing an improving U.S. economic backdrop to drive our base business, sort of supported by growth opportunities stemming from reshoring, PFAS, and project services. With a large number of maintenance days in our incinerator now in the rearview, we expect to deliver mid to upper 80% utilization for the full year. SK Environmental should deliver another consistent year of profitable growth. Our field service business continues to strengthen its position as a trusted national provider for environmental emergency response.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Our industrial services business continues to operate in a challenged market, but initiatives we are undertaking now should position us for growth and better margins as conditions improve. For SKSS, we are capitalizing on elevated pricing and demand dynamics associated with global market disruptions and a continued focus on maximizing profitability while enhancing long-term customer relationships. Overall, we expect another year of exceptional profitable growth, margin improvement, and free cash flow generation. With that, let me turn it over to our CFO, Eric Dugas.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

Thank you, Mike. Good morning, everyone. Turning to slide 10, our quarterly results came in ahead of the expectations we outlined in February, driven primarily by SKSS outperformance and continued strong execution from the Environmental Services segment. Total Q1 revenue increased 2% to $1.46 billion, reflecting solid top-line growth for the quarter. Following some weather-related impacts in February that Eric mentioned, the ES segment delivered a record revenue month in March. Q1 adjusted EBITDA increased 6% to $248 million. Our consolidated Q1 adjusted EBITDA margin was 17%, representing a 60 basis point improvement from the prior year period as both operating segments contributed higher margins. This margin expansion reflected a combination of our ongoing initiatives, including disciplined pricing, leveraging volume growth, effective cost controls around labor and cost internalization, as well as network and transportation efficiencies.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

SG&A expense as a percentage of revenue in Q1 increased year-over-year to 14.2%, partially due to higher incentive compensation and insurance costs in the current period. For the full year, we still expect SG&A expense as a percentage of revenue to be in the high 12% range. Depreciation and amortization in Q1 was $116 million, up slightly from a year ago. For 2026, we expect depreciation and amortization in the range of $460 million-$470 million. First quarter income from operations was $119 million, up 7% from the prior year. Net income in Q1 increased 8% as we delivered earnings per share of $1.19.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

Turning to the balance sheet on slide 11, we ended the quarter with cash and short-term marketable securities of approximately $670 million, providing ample flexibility to execute on the capital allocation priorities that Mike outlined. We closed the quarter with a net debt to EBITDA ratio of approximately 2x. While our debt currently carries a blended interest rate of 5.2%, our balance sheet remains in terrific shape as we move into the more cash generative quarters of the year. Turning to cash flows on slide 12, cash provided from operations in Q1 was $6 million. CapEx, net of disposals, was $97 million, down roughly $20 million from the prior year. Included in this quarter's CapEx figure is approximately $15 million of cash investments in strategic growth projects, including the SDA unit and our vacuum truck fleet expansion.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

Adjusted free cash flow, which excludes spend from these strategic projects, was a negative $76 million in the quarter and in line with our expectations. As a reminder to folks, due to seasonality, negative adjusted free cash flow is typical in Q1 for our company. For 2026, excluding our expected $85 million of spend on the SDA unit and $25 million related to our fleet investment, we now expect net CapEx to be in the range of $350 million-$410 million, with a midpoint of $380 million. This represents a $10 million increase versus the guidance we provided in February due to some investments related to attractive growth opportunities in select markets and geographies. We are accessing these opportunities by making additional property investments and adding capabilities at certain sites where we see immediate returns.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

As such, these investments require a modest increase to our 2026 capital plan. During Q1, we bought back approximately 87,000 shares of stock at a total cost of $25 million, or an average price of approximately $287 per share. At March 31, we had approximately $575 million remaining under our share repurchase authorization, reflecting the expansion of that program by our board in February. Turning to our guidance on slide 13. Based on current market conditions and our Q1 results, we are now guiding to a 2026 adjusted EBITDA range of $1.24 billion-$1.30 billion, with a midpoint of $1.27 billion, or an increase of $40 million from our prior guidance.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

Given positive trends and market factors which have developed late in Q1 and on into Q2. We now expect meaningful increases in both of our operating segments and are confident in our revised outlook. At the midpoint, this updated 2026 guidance now implies adjusted EBITDA growth of approximately 9% versus 2025. Looking at our annual guidance from a quarterly perspective, we expect second quarter adjusted EBITDA to grow 5%-9% year-over-year on a consolidated basis. Looking at how our annual guidance translates into our reporting segments. At the midpoint of our guidance range, we now expect our 2026 adjusted EBITDA in Environmental Services to grow 5%-8% for the year. We exited Q1 with increasing demand across disposal, recycling, mediation work, and our SK branch offerings.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

Our facilities network is positioned to process record volumes this year with strong execution from our sales team and a market backdrop of reshoring activity, robust project work, and expanded PFAS-related work. We also expect to see continued expansion in our field services business. This 2026 guidance midpoint now assumes that our SKSS segment delivers approximately $165 million of adjusted EBITDA, up approximately 20% from 2025 and higher than the $135 million we provided in February due to the increase in base oil prices. There is significant uncertainty around the duration of the overseas conflict and its impact on petroleum-derived products such as base oil. We believe $165 million is an appropriate assumption at the current time, given the wide range of potential outcomes.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

Within Corporate, at the midpoint of our guidance, we expect negative adjusted EBITDA to increase by approximately 3%-6% compared to 2025. This modest growth is primarily driven by higher wages and benefits, costs to support business growth, increased insurance costs, and acquisition-related impacts. Looking at it as a percentage of revenue, we expect Corporate segment results to be flat to slightly down from the prior year. For 2026, we now expect adjusted free cash flow in the range of $490 million-$550 million, with a midpoint of $520 million. That represents a $10 million increase versus our prior guidance, reflecting the higher adjusted EBITDA we now anticipate this year and considering the revised CapEx assumptions.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

We're off to a strong start in 2026, and our Q1 performance has led us to raise our full year expectations for both operating segments. We expect the positive demand environment we are seeing today to support strong, profitable growth through the balance of the year. We're encouraged by our growth trajectory and remain focused on executing against our long-term vision and goals as we move through the rest of 2026. With that, Christine, please open the call for questions.

Operator

Thank you. Our first question comes from the line of Noah Kaye with Oppenheimer. Please proceed with your question.

Noah Kaye
Noah Kaye
Analyst at Oppenheimer

Hey, good morning, all. Thanks for taking the questions. Great start to the year. You know, I'm just trying to think about the growth profile across business lines, you know, here in the second quarter in the guide. You know, clearly, I think you mentioned, you know, improving trends, really accelerating trends across segments, you know, in March. I think you said 10% year-over-year revenue growth within ES in March. You know, base oil prices improving as well. I guess if we just unpack kind of the midpoint of the EBITDA guide for 2Q. You know, how do we kind of think about that, if possible, from a segment perspective?

Noah Kaye
Noah Kaye
Analyst at Oppenheimer

Because it seems like your exit trends imply, you know, a pretty good amount of upside to that.

Eric Gerstenberg
Co-CEO at Clean Harbors

Yeah. Noah, this is Eric. I'll start. When you think of our different business segments, clearly, as Mike pointed out, there's still a lot of fluctuation in what's gonna happen with base oil. We're cautiously optimistic that that segment's gonna continue to overperform. When we think about our Environmental Services segment, as we saw in Q1, our growth rates of our Safety-Kleen business, our technical services business, our field service business, all are north of mid-single digits and higher. Industrial Services, we continue to be cautious about looking at how that business will perform, especially in light of how refineries these days and turnarounds are producing.

Eric Gerstenberg
Co-CEO at Clean Harbors

Are trying to maximize the production of fuel and diesel and jet fuel. That business we expect to obviously have a stronger second quarter and third quarter, but probably pretty flat year-over-year.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

I think to address kind of the Q2 question you had, Noah, in terms of the segments, you know, to agree with all of Eric's points. To put a little bit finer point on Q2, I think when you look at the Environmental Services segment, Q2 last year, strong. Q1 this year, you know, kind of in that 5%, 6% range. Very similar growth pattern as we move into Q2 here for Environmental Services. A little better than what we thought three months ago. That's nice to see. On SKSS, obviously the year-on-year growth in Q2 greater than that, probably in excess of 10%, due to the increase in base oil pricing predominantly.

Noah Kaye
Noah Kaye
Analyst at Oppenheimer

That's super helpful, guys. Thank you. I want to pick up on your comments around the field expansion, the branch expansion and the cross-selling opportunity there. Can you talk a little bit more about that? Like, how do you generate cross-sell from the field expansion? How does it translate, you know, across the business? You can give us some examples. That would be helpful.

Eric Gerstenberg
Co-CEO at Clean Harbors

Yeah, absolutely. When you think about our technical service business going out and collecting waste and packaging and bringing it back, those same technical services customers have the larger ones have environmental needs to have us respond with field services to clean their production tanks, to perform vacuum services above and beyond those baseline disposal and transportation lines of business. You think about our Safety-Kleen Environmental customers, we're seeing the same things, where those smaller customers, smaller locations still have tanks and still have emergency response events, still have fleets that need our field services to respond to their fleet emergencies or minor spills that they have as they transport goods throughout the country.

Eric Gerstenberg
Co-CEO at Clean Harbors

Our job is to make sure that as we grow out our footprint, that when we have a technical service branch footprint or a SKE branch, that we're complementing that by building out all of our field service branch capabilities in those same locations and growing our cross-sell with all of our lines of business. We have about 60 different lines of business that we service. When you think of the types of technical services customers, they consume about 20-25 lines of business. Safety-Kleen customer is about five to six of those business unit lines of business. Field services complements both of those business units by responding to their needs, and that's why we continue to build out that field service footprint.

Eric Gerstenberg
Co-CEO at Clean Harbors

It also, I would say, is that, as we talk about field service branches, we're strategically trying to make sure that we are always the first call for any emergency response, large or small. Our team has been doing an excellent job of positioning us with emergency response agreements with large and small customers that we can be there from our needs. Those, those efforts, the team's done a great job there and they're really paying off. That's to come back around and answer your question, Noah, our field service business is really complementing those other business units.

Noah Kaye
Noah Kaye
Analyst at Oppenheimer

That's great insight. You know, I'll leave it there and looking forward to having you guys at the conference tomorrow. Appreciate it.

Eric Gerstenberg
Co-CEO at Clean Harbors

Talk to you tomorrow, Noah. Thanks.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Thanks, Noah.

Operator

Our next question comes from the line of Bryan Burgmeier with Citi. Please proceed with your question.

Bryan Burgmeier
Bryan Burgmeier
Analyst at Citi

Hi, good morning. Thanks for taking the questions. Just on the 2026 guide, the updated 2026 guide. Just curious if there's any impact from kind of rising diesel costs. You know, it's maybe an impact to 1Q or 2Q as you kind of pass those costs along to customers or maybe that's kind of happening in real time. Just any thoughts on that would be helpful.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Yeah, Bryan, this is Mike. I'll kick it off with the, you know, the diesel cost. We have a recovery fee that covers many different things, including the price of diesel. That gets reset monthly. We tend to offset the cost of the diesel prices with that recovery fee. It really is, it's really been a long-standing process we've had for many, many years. It's based on the underlying price of diesel and I think it's been a well understood and well accepted by our customers. Again, it moves every month. I think that the rising price of diesel as it relates to Environmental Services, you know, the rising price of diesel has a kind of an immaterial effect on our profitability, on our margins.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

It's almost a pass-through. On the SKSS side, obviously, it's a very much more material.

Bryan Burgmeier
Bryan Burgmeier
Analyst at Citi

Got it. Yeah, that makes sense. you know, I appreciate the kind of overview and your thoughts on AI. just maybe from a high level, you know, where do you see the greatest opportunity right now? You know, would you say it's maybe on top line, you know, bottom line? Is it, you know, efficiency or safety? Just, you know, some general thoughts on where the opportunities lie. Thank you. I'll turn it over.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Sure. I'll start. The, you know, when I think about artificial intelligence, what's interesting as we prepared for this call, we started wanting to talk a little bit more about AI. We went back and looked, and we were actually talking about AI and robotic process automation back in 2017. You know, we've been actually having, you know, these types of technologies in our systems, in our processes. As we said, we think we're a leading in technology in Clean Harbors and AI is just the next iteration of that. Again, we've been talking about it for many, many years. All the things I laid out in my prepared remarks. They're all part of the reason why the margins have gone up 16 straight quarters for four straight years.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

They're all that and many other things we do as an organization. That type of, you know, safety, compliance, and profitability drivers, whether it be, you know, invoice audit, automation, factored profiles, I mean, the list goes on and on. I mean, we're making a more concerted effort here in 2026, a little more money, not a lot more money. You know, there's many different projects out there that help us, you know, from a safety and compliance standpoint, as well as, you know, profitability. And it's hard to put a real number on that, like how much is that related to it? It isn't a huge spend, but we do see it as a great opportunity.

Operator

Our next question comes from the line of Jerry Revich with Wells Fargo. Please proceed with your question.

Jerry Revich
Jerry Revich
Analyst at Wells Fargo

Yes. Hi, good morning, everyone.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Morning.

Eric Gerstenberg
Co-CEO at Clean Harbors

Morning.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Hey, Jerry.

Jerry Revich
Jerry Revich
Analyst at Wells Fargo

I wonder if you just talk about the cadence of demand that you're seeing in industrial services, especially on the refining end market, given the improved spreads. I'm wondering what you're expecting over as we head into turnaround season, and what's the potential upside in that line of business now that the customers are a lot more profitable than a year ago.

Eric Gerstenberg
Co-CEO at Clean Harbors

Yeah, Jerry. To start the year, we went out with our sales team. They did touch points with over 12,000 customers that have both small and large foundry type turnarounds planned for the year. Our overall turnaround count seems to be consistent with last year. However, with what's going on with the Iran conflict, we're also seeing that those refiners really want to run full out to make as much fuel and diesel as they can. Preliminary trends that we're seeing exiting first quarter seems to be that those are more of pit stop related refinery turnarounds, shorter in duration. While the count seems good, they have been shorter in duration.

Eric Gerstenberg
Co-CEO at Clean Harbors

We have had a few that have expanded in scope that we've seen, and we think that that's primarily due to last year, they were also constricting their spend. You know, we're cautiously optimistic. We're staying close with our clients. We're making sure that we manage all their needs. Our specialty services is growing when we perform those turnaround services as well. We'll continue to, I think 90 to 120 days from now, we'll have a better outlook of what we're seeing.

Jerry Revich
Jerry Revich
Analyst at Wells Fargo

Okay. Thank you. Mike, can we just circle back to your comments in the prepared remarks on the M&A pipeline? Can we, to the extent you're comfortable, just talk about the sizes of potential deals that you're looking at. Is it one large deal? Is it multiple deals? Any color that you could share or willing to share on what are the key signposts from a timing standpoint that we should keep in mind?

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Yeah, Jerry. When you think about M&A, it's been another busy year here at Clean Harbors. It's just like it was last year, we just weren't as successful. You know, we got the DCI acquisition over the goal line. That closed here in Q1. There's many other opportunities out there, you know, all in our swim lane, primarily in Environmental Services, you know, that have permitted facilities that feed our network or have a large collection network. You know, these are, you know, many out there. I think some are very close to closing. There's plenty in the offer. Mostly, you know, smaller deals, tuck-ins type of transactions. I think those have been plentiful this year.

Jerry Revich
Jerry Revich
Analyst at Wells Fargo

Thank you.

Operator

Our next question comes from the line of James Ricchiuti with Needham. Please proceed with your question.

James Ricchiuti
James Ricchiuti
Analyst at Needham

Hi. Thank you. Good morning. Just based on what you're seeing in the industrial services turnarounds in the energy market, which I think you just characterized as kinda like pit stops in nature, does that suggest something more meaningful in the back half? Will we see some change in the overall pricing environment for a while?

Eric Gerstenberg
Co-CEO at Clean Harbors

We don't see a change from the pricing environment, no. Could suggest that in the back end that it might be a little bit more heavily loaded on turnarounds in Q3 and some bleeding into Q4. Obviously, as mentioned earlier, they're running hard right now. We're staying close with those customers, making sure that we're available for all of their needs, and we'll be there to service them.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Certainly, certainly hopeful that that pattern comes to fruition, Jim. Just to be clear, kind of in the, in the guidance as we have it laid out right now, you know, we don't have large turnaround activity coming back in the second half. Again, hopeful that that happens. The way we have it laid out right now is pretty flattish year-on-year.

James Ricchiuti
James Ricchiuti
Analyst at Needham

Got it. Just with respect to the activity, the more positive trends that you're seeing in ES in March, can you give any color on, and maybe more broadly in the quarter, which market verticals are you seeing changes versus your expectations, say, entering the year?

Eric Gerstenberg
Co-CEO at Clean Harbors

Yeah, James. We're seeing very strong trends with multiple verticals. Chemical, a little bit too early to tell. In other areas such as healthcare and retail, we are driving expansion of those businesses. Pharma has been showing a lot of strength. Manufacturing, we're seeing volumes being really strong. A number of areas in our verticals that are pushing volume growth across the network in both technical services as well as SK Environmental. Other things like universities and household hazardous waste days pretty confirm good spending trends. The number of quotes overall that we're seeing across the business is continuing to grow substantially. Our pipeline is strong in various areas, including project services. A number of verticals we're seeing expansion in.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

You know, Jim, the only thing I'd add to that is that, you know, you've been covering us for a long time, we've been doing this for a long time, and normally we don't raise guidance after 90 days in the quarter, unless there's an M&A or something like that. The fact we're raising guidance on both segments here just after, you know, after just giving guidance, you know, six, seven weeks ago should tell you about our view as we think about the rest of the year.

James Ricchiuti
James Ricchiuti
Analyst at Needham

Yeah. It does, and I appreciate that additional color and, congrats on the nice start.

Eric Gerstenberg
Co-CEO at Clean Harbors

Thank you.

Operator

Our next question comes from line of Larry Solow with CJS Securities. Please proceed with your question.

Larry Solow
Larry Solow
Analyst at CJS Securities

Good morning, everybody. I was gonna follow up on that question just 'cause, you know, I know you mentioned the economy too, the backdrop seems to be improving, and you gave a little more color on that. You know, I just question I had was, has there been any hesitation from any customers, you know, through the kind of just the Iran conflict going on? Has that interrupted you guys at all? It doesn't feel like much. Obviously, you know, we talked about the oil effects, but outside of that, has any, you know, customer behavior changed at all due to maybe inflationary pressures they're feeling? Obviously, your energy customers are kind of drinking from the fountain there, from the hose, but just outside of those customers.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Hey, Larry, this is Mike. Thanks for the question. I guess I would say that, you know, we haven't seen a lot of disruption because of the conflict. As a matter of fact.

Larry Solow
Larry Solow
Analyst at CJS Securities

Yep

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

you know, one would think, logic would tell you that you're getting kind of more U.S. production, that that should be.

Larry Solow
Larry Solow
Analyst at CJS Securities

Yep

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

if anything, a short-term pop. From a short-term from a manufacturing standpoint, you want to be closer to your customers. You're worried about supply chain. I mean, those types of things that happened during COVID, frankly, that, you know, may be happening again. You certainly if you look at some of our larger customers and read their earnings releases and their transcripts, you come away with that impression that they are definitely, you know. Whether or not the de-demand environment's changing, I don't know, but that's still kind of muted. Certainly as U.S. manufacturing should grow in the short term because of, you know, because of this conflict if you were betting then.

Larry Solow
Larry Solow
Analyst at CJS Securities

Right. Okay. Just a question more, you know, mid to longer term on PFAS, and I appreciate all the, you know, all the color and the framework that Eric provided there. So the DoD, the EPA, obviously they've given kind of guidance. It still feels like it's interim though, right? 'Cause they're not really establishing actual requirements. You know, they're just kind of laying out the options, right, for removal. Are we still waiting for like a more finalized guidelines or requirements for customers that might actually, you know, accelerate growth, you know, over the next couple years?

Eric Gerstenberg
Co-CEO at Clean Harbors

Well, Larry, I'll start. Certainly, we've talked about in the past the revenue that we did in 2025 was about $120 million plus.

Eric Gerstenberg
Co-CEO at Clean Harbors

Our pipeline was continuing to increase by 20%. To start the year based on the activity and the announcements over the past couple of quarters, we're seeing an accelerated pipeline. Our whole reasoning behind putting out that recommended guidance was because we see customers responding to that when they have PFAS needs, like changing out AFFF fire suppression systems or fire departments need to change out their fire trucks, or an airport is gonna be remediated because they're gonna put a new runway down. We're using that guidance, and they're accepting it. They accept it because of who we are and what we know and how we utilize our network in order to perform those responses. I think that the point is that we're seeing that framework being enacted.

Eric Gerstenberg
Co-CEO at Clean Harbors

Customers acting more and more responsibly, regulatory agencies acting more responsibly. There definitely seems like there is more momentum going into this year than a year ago at this time then too. Even though there hasn't been any formal specific guidance like what we put out, we're acting by that.

Larry Solow
Larry Solow
Analyst at CJS Securities

Right.

Eric Gerstenberg
Co-CEO at Clean Harbors

We see the market acting by that when they need to deal with their situations.

Larry Solow
Larry Solow
Analyst at CJS Securities

Okay, great. No, I appreciate that color. Thanks.

Eric Gerstenberg
Co-CEO at Clean Harbors

Absolutely. Thank you.

Operator

Our next question comes from the line of David Manthey with Baird. Please proceed with your question.

David Manthey
David Manthey
Analyst at Baird

Thank you. Good morning, guys.

Eric Gerstenberg
Co-CEO at Clean Harbors

Good morning.

David Manthey
David Manthey
Analyst at Baird

First off, on the new guidance. It looks like $30 million of the $40 million midpoint EBITDA increase is because of SKSS. As you said, I mean, you don't normally raise guidance in the first quarter. Should we expect the benefit from spreads in SKSS to flow ratably second quarter through fourth quarter, or are you thinking about this like, "Hey, we have visibility on the second quarter based on where spreads are now, and we'll assess the potential third quarter and beyond spreads when we report in second quarter in July or whatever?

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

Sure, David. It's Eric. I'll take that one. I would say we have the better base oil pricing kind of spread ratably between Q2 and Q3. Certainly more insight into Q2 right now, given the uncertainty around how long oil stays high. I would think about it kind of ratably through Q2, Q3. I think Q4 remains better just with a lot of the things that the business is doing as well. In the current guidance, you know, we kind of assume, you know, pricing maybe coming back down a little more towards normal as we get closer to year-end.

David Manthey
David Manthey
Analyst at Baird

Okay. That's helpful. Thank you. Then, as it relates to Kimball, I know initially you were doing a lot of starting and stopping and doing some test burns and things. As we sit here today, is Kimball sort of running on a normal schedule? Is it taking what you would consider normal waste streams at this point?

Eric Gerstenberg
Co-CEO at Clean Harbors

Yeah, David. No, Kimball ramp up has gone extremely well. We more than exceeded our tonnage targets in 2025. We're out of the gate succeeding our expectations in 2026. The plant is running well. Team's done a great job, and we're on track with everything that we've laid out in the past from financially. You know, when you think about 2025, our overall EBITDA contribution was about $10 million. This year, add another $10 million-$15 million to that. We're hitting our goals, our targets, and the plant is running very well.

David Manthey
David Manthey
Analyst at Baird

Okay, thank you.

Eric Gerstenberg
Co-CEO at Clean Harbors

Thank you.

Operator

Our next question comes from the line of Adam Bubes with Goldman Sachs. Please proceed with your question.

Adam Bubes
Adam Bubes
Analyst at Goldman Sachs

Hi, good morning. How are you thinking about potential to maybe hold on to some of the charge for oil actions in a base oil upcycle? Is there a way you'd advise us thinking about SKSS EBITDA growth on a % higher base oil prices or maybe incremental margins or a way to frame that?

Eric Gerstenberg
Co-CEO at Clean Harbors

Yeah, Adam. We, the team throughout 2025, you know, we were responding to some very challenging conditions with what was happening with base oil and did a great job of moving to a charge-for-oil basis. As we exit Q1, we were in that $0.60 range, and we look to continue to manage. We had lost some gallons, but we really wanna continue to manage in a charge-for-oil scenario. You know, it's a waste that needs continued processing and refinement. We wanna make sure that we continue to operate that way and operate efficiently, even though the base oil market has been changing.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

You know, Adam Bubes, we worked really hard to change the industry, you know, from a pay-for-oil to a charge-for-oil. You know, it's a long, painful 18 months, we're not that interested in giving it back. Obviously, we're going to need to be selective on that, because we want to make sure we keep gallons flowing into the re-refineries. You know, I think we'll be loaded to do that.

Adam Bubes
Adam Bubes
Analyst at Goldman Sachs

Can you just help us think about where your realized base oil price was in the quarter, and how does that compare to the exit rate?

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

I mean, base oil prices, I don't have exact numbers to share with you, but base oil prices certainly went up as you got toward the end of the quarter. The conflict started in late February. We gave guidance in mid to late February. The conflict started in late February. Prices started ramping up, and that was part of the beat here in Q1 and frankly, the guide raised Q2.

Adam Bubes
Adam Bubes
Analyst at Goldman Sachs

All right. Thanks so much.

Eric Gerstenberg
Co-CEO at Clean Harbors

Thanks, Adam.

Operator

Our next question comes from the line of James Schumm with TD Cowen. Please proceed with your question.

James Schumm
James Schumm
Analyst at TD Cowen

Hey, good morning, guys. Maybe just a couple of clarification questions for me. The SKSS guide up $30 million, we're spreading that over two quarters, Q2, Q3. That's like $5 million additional or incremental per month over those six months? Did you realize some benefit in Q1, and you're assuming a little bit of benefit in Q4? Just maybe some help there.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

I would describe it as this. We certainly realized some of the benefit in Q1. We talked about that kind of on the call. In Q2 and Q3, I would say kind of an equal amount of incremental benefit and then kind of back down to normal in Q4. Q4 has a small kind of year-on-year increase in our current assumptions. As I alluded to a moment ago, you know, and in my prepared remarks, a lot going on in the business, a lot changing even, you know, early as today, some news. You know, we have some assumptions we're working on right now, and we're gonna come back in three months' time and kind of update those.

Eric Dugas
Eric Dugas
EVP and CFO at Clean Harbors

I would think about it as the increase that's in the bank in Q1 spread pretty evenly between Q2 and Q3 for the rest of the $30 million, and then kind of flattish to up a little bit in Q4.

James Schumm
James Schumm
Analyst at TD Cowen

Okay. On PFAS, sounds like you just kind of mentioned maybe some accelerating momentum there. Is 20% the right growth rate to continue to think about this? Or does the accelerated pipeline, maybe we should be thinking about like a 25% growth rate or is that too premature?

Eric Gerstenberg
Co-CEO at Clean Harbors

Yeah, it's more in the 25%-35% range, what we're seeing initially here entering the year. We're strong pipeline. Number of samples that we're seeing to analyze for PFAS contamination that customers have submitted have been up. The pipeline in both soil remediation, AFFF changeouts, as well as industrial and municipal water treatment, all of those areas we're seeing improvement trends as we begin here in 2026.

James Schumm
James Schumm
Analyst at TD Cowen

Okay, great. Thanks, guys.

Eric Gerstenberg
Co-CEO at Clean Harbors

Thank you.

Operator

As a reminder, if you would like to ask a question, press star one on your telephone keypad. Our next question comes from the line of Tobey Sommer with Truist. Please proceed with your question.

Tobey Sommer
Tobey Sommer
Analyst at Truist

Thanks. I'd love to get your perspective on the EPA guidelines, any differences that you've noticed, between those, federal and, the DoD and what you expect, or to hear from customers or in fact are already hearing. Thank you.

Eric Gerstenberg
Co-CEO at Clean Harbors

Yeah, no, we were really excited obviously to get to see over the goal line the approving of incineration by the Department of Defense. Our teams have been working with already 700 different military installations to make sure that we're here for them, their needs. All positive trends there. Just, as you know, we spoke in the past that we had Lee Zeldin down and visited our incinerator down in Houston a while ago, and he recently commented about meeting with environmental and us on helping to solve the PFAS challenges out there. We're excited by just seeing some of that limited momentum about disposal technologies being pushed out there by particularly the Department of Defense.

Michael Battles
Michael Battles
Co-CEO at Clean Harbors

Tobey, it just revalidates what we already know, that we have a great end-to-end solution. As Eric said in his prepared remarks, we can solve any of our customers' PFAS problems, and we've proven that both internally with our own framework as well as externally with the Department of Defense or the, or the EPA.

Tobey Sommer
Tobey Sommer
Analyst at Truist

Thank you very much.

Eric Gerstenberg
Co-CEO at Clean Harbors

Thank you.

Operator

We have no further questions at this time. Mr. Gerstenberg, I'd like to turn the floor back over to you for closing comments.

Eric Gerstenberg
Co-CEO at Clean Harbors

Thanks, Christine. Appreciate everyone joining us today. We are participating in several investor events in the coming weeks, starting with the Oppenheimer conference tomorrow. We are looking forward to seeing many of you at these events. As always, have a great, safe rest of your week.

Operator

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time. Thank you for your participation, and have a wonderful day.

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