Clean Harbors (NYSE:CLH) held its first-quarter earnings conference call on Wednesday. Below is the complete transcript from the call.
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Summary
Clean Harbors reported stronger-than-expected Q1 2026 results, with both segments showing higher profitability despite challenging weather conditions.
The company achieved a historical low in safety incidents and improved its adjusted EBITDA margin by 60 basis points from Q1 2025.
Environmental services revenue increased due to growth in project services, particularly PFAS-related opportunities, and emergency response work.
The Safety-Kleen Sustainable Solutions segment saw a significant rise in profitability due to increased base oil prices and managed costs.
The company opened 18 field service branches in 2025 and plans to open 10 more in 2026, indicating a strategic focus on expanding its field services.
Management highlighted the potential of AI in improving productivity, compliance, safety, and customer service, with ongoing investments in technology.
Clean Harbors raised its 2026 adjusted EBITDA guidance to a range of $1.24 billion to $1.30 billion, reflecting confidence in both operating segments.
The company continues to pursue growth through strategic acquisitions and internal investments, alongside share repurchases as a way to return value to shareholders.
The PFAS management framework and recent regulatory endorsements are expected to drive significant growth in PFAS-related services.
The overall sentiment is positive, with management expressing confidence in continued growth and profitability, supported by favorable market conditions.
Full Transcript
OPERATOR
Greetings and welcome to the Clean Harbors first quarter 2026 financial results conference call. At this time all participants are in a listen only mode. A brief question and answer session will follow the formal 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 (General Counsel)
Thank you Christine and good morning everyone. With me on today’s call are our Co Chief Executive Officers Eric Erstenberg and Mike 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 and 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 and risks that could affect our results is included in our SEC filings. The Company undertakes no obligation to revise publicly release or publicly 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.
Eric Erstenberg (Co-Chief Executive Officer)
Eric Erstenberg to start. Eric 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, 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 3, 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’s 16th consecutive quarter of year over year improvement in adjusted EBITDA margin and 18th straight quarter of EBITDA growth. At the same time, Safety Clean Sustainable Solutions segment benefited from our continued focus around charge for oil services and from a late quarter surge base oil pricing that lifted its profitability. Turning to the segments beginning With ES on slide 4, 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 continue to see healthy demand for our disposal and recycling services. Technical services revenue rose 5% and safety clean 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. Continuing the trend of the past several quarters, we generated a sizable increase in landfill volumes we 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 US 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. 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. 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 the proper treatment and disposal pathway for a range of scenarios. This tiered approach provides the ideal way to address complex contaminants at reasonable cost. We are starting to see considerable regulatory movement around these forever chemicals. Both the Department of War in March and the US EPA in April have issued PFAS guidance that included incineration, hazardous 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 issued guidance that endorses high temperature 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. Integrated Framework provides a practical and scalable model for industry and government partners Today. We continue to believe that Clean Harvest remains the only company that can offer a cost effective end to end single source solution that is commercially scalable for any PFAS need. With that, let me turn things over to Mike to discuss skss, our efforts related to AI and our capital allocation strategy.
Mike Battles (Co-Chief Executive Officer)
Mike thanks Eric and good morning everyone. Turning to SKSS on slide 6, the year over year decrease in segment revenue was expected and reflects lower market pricing for basin 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 in SKSS grew 17% to $33 million with an impressive 320 basis point improvement in margins. We increased our CFO pricing sequentially from Q4 and more than double that rate in Q1 last year. We continue to provide high level services to customers and even with the higher CFO, we collected 53 million gallons of waste oil to keep our RE refinery running efficiently. At the same time, sales of base and blended gallons were consistent with the prior Q1. We incrementally grew both our direct lubricant gallons and Group 3 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 7 this morning, we wanted to briefly touch on the topic of artificial intelligence, an area of immense potential for us. Technology has been part of Clean Harbor’s DNA and a competitive differentiator for decades. AI is the next practical layer of that. We have implemented AI type functionality for years and 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 and we expect our AI efforts to keep delivering meaningful financial returns for us in the years ahead. Turning to capital allocation on Slide 8, 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 back truck fleet expansion, SDA Unit, 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. Eric will detail our Q1 purchases, but 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 US Economic backdrop to drive our base business, supported by growth opportunities stemming from reshoring pfas and project services with a large number of maintenance days and 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. 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 duties.
Eric Dugas (Executive Vice President and Chief Financial Officer)
Thank you Mike and 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 of 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. 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 to 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. 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 two times 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 in our vacuum truck fleet expansion. 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 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 to 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. 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 to 1.30 billion with a midpoint of 1.27 billion or an increase of 40 million from our prior guidance. 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 to 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 to 8% for the year we exited Q1. With increasing demand across disposal, recycling, mediation work and our SK branch offerings, 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 within corporate at the midpoint of our guidance, we expect negative adjusted EBITDA to increase by approximately 3 to 6% compared to 2025. This modest growth is primarily driven by higher wages and benefits, cost 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 to 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, 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. And with that, Christine, please open the call for questions.
Christine (Operator)
Thank you. We will now be conducting a question and answer session. If you would like to ask a question, please press Star one on your telephone keypad. A confirmation tone will indicate your line is in the question queue. You may press Star two if you would like to remove your question from the queue. For participants using speaker equipment, it may be necessary to pick up your handset before pressing the star keys. One moment please, while we poll for questions. Thank you. Our first question comes from the line of Noah Kay with Oppenheimer, Please proceed with your question.
Noah Kay (Equity Analyst at Oppenheimer)
Good morning all. Thanks for taking the questions. Great start to the year. I’m just trying to think about the growth profile across business lines here in the second quarter. In the guide, clearly I think you mentioned improving trends, really accelerating trends across segments. In March, I think you said 10% year over year revenue growth with NES in March and base oil prices improving as well. I guess if we just unpack kind of the midpoint of the ebitda guide for 2Q, how do we think about that if possible from a segment perspective? Because it seems like your exit trends imply a pretty good amount of upside to that.
Eric Erstenberg (Co-Chief Executive Officer)
Yeah, no, 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 going to happen with base oil, but we’re cautiously optimistic that that segment’s going to continue to overperform. When we think about our environmental services segment, as we saw in Q1, our growth rates of our SKE 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 are trying to maximize the production of fuel and diesel jet fuel. So that business we expect to obviously have a stronger second quarter and third quarter but probably pretty flat year over year.
Mike Battles (Co-Chief Executive Officer)
I think to address kind of the Q2 question you had Noah, in terms of the segments 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, 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. And so 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 Kay (Equity Analyst at Oppenheimer)
That’s super helpful guys, thank you. I want to pick up on your comments around the field expansion of the branch expansion and the cross selling opportunity there. Can you talk a little bit more about that? How do you generate cross sell from the field expansion? How does it translate across the business? You can give us some examples. That would be helpful.
Eric Erstenberg (Co-Chief Executive Officer)
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 form vacuum services above and beyond those baseline disposal lines, disposal and transportation lines of business. When you think about our safety clean 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 services to respond to their fleet emergencies or minor spills that they have as they transport goods throughout the country. So our job is to make sure that as we roll 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. And when you think of the number of types of technical services customers, they consume about 20 to 25 lines of business safety clean customers, about 5 to 6 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. 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. And 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 and those efforts. The team’s done a great job there and they’re really paying off. And that’s to come back around and answer your question, Noah. Our field service business is really complementing those other business units.
Noah Kay (Equity Analyst at Oppenheimer)
That’s great insight. I’ll leave it there and looking forward to having you guys at the conference tomorrow. Appreciate it. Talk to you tomorrow.
Christine (Operator)
Our next question comes from the line of Brian Bergmire, Ruth City. Please proceed with your question.
Brian Bergmire (Equity Analyst at Ruth City)
Hi, good morning. Thanks for taking the questions. Just on the 26th guide, the updated 26 guide. Just curious if there’s any impact from kind of rising diesel costs. You know, maybe the impact to 1q or 2q is to 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.
Mike Battles (Co-Chief Executive Officer)
Yeah, Brian, this is Mike. I’ll take shot that the diesel we have a recovery fee that covers many different things, including the price of diesel that gets reset monthly. And so we tend to offset the cost of the diesel prices with that recovery fee. It really is, it is 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 is been a well understood and well accepted by our customers and it moves every month. So I think that the rising price of diesel as it relates to environmental services, you know, the rising price of diesel has kind of an immaterial effect on our profitability, on our margins. It’s, it is almost a pass through on the, on the SKSS side. Obviously it is a very much more material. Material.
Brian Bergmire (Equity Analyst at Ruth City)
Got it, got it. Yeah, that makes sense. And then I appreciate the kind of overview and your thoughts on AI. Just maybe from a high level. Where do you see the greatest opportunity right now? Would you say it’s maybe on top line, bottom line? Is it efficiency or safety? Just some general thoughts on where the opportunities lie. Thank you. I’ll turn it over.
Mike Battles (Co-Chief Executive Officer)
Sure. I’ll start the. You know, I think about artificial intelligence. Interesting. As we prepared for this call, we wanted to talk a little bit more about, about AI. We went back and looked and we were actually talking about AI and robotic process automation back in 2017. So we were. We’ve been actually having these types of technologies in our systems, in our processes, as we say, we think we’re a leading, leading in technology in clean harbors and AI to the next iteration of that. Again, we’ve been talking about it for many, many years. So 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. They’re all that and many other things we do as an organization. But that type of safety compliance and profitability drivers, whether it be invoice, audit, automation, faster profiles, the list goes on and on. We’re making a more concerted effort here in 2026. A little more money, not a lot more money, but there’s many, many different projects out there that help us from a safety and compliance standpoint as well as 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.
Christine (Operator)
Our next question comes from the line of Jerry Revich with Wells Fargo. Please proceed with your question.
Jerry Revich (Equity Analyst at Wells Fargo)
Yes. Hi. Good morning, everyone. Hey, Jared.
Eric Erstenberg (Co-Chief Executive Officer)
I’m wondering 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 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? Yeah, Jerry, to start the year, we went out with our sales team and they did touch points with over 12,000 customers that have both small and large type turnarounds planned for the year. And 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. And 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. So while the count seems good, they have been shorter in duration. 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. But 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. So we’ll Continue, I think 90 to 120 days from now. We’ll have a better outlook of what we’re seeing.
Jerry Revich (Equity Analyst at Wells Fargo)
Okay, thank you. And then Mike, can we just circle back to your comments in the prepared remarks on the M and 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 and any color that you could share, willing to share on. What are the key signposts from a timing standpoint that we should keep in mind?
Mike Battles (Co-Chief Executive Officer)
Yeah, Jerry, So when you think about M and A, it’s been another busy year here at Clean harbor, just like it was last year. We just weren’t as successful. But you know, we got the DCI acquisition over the goal line and that closed here in Q1. And there’s many other opportunities out there, Fiat, all in our swim lane, primarily in environmental service that have permanent facilities that feed our network or have a large collection network. these are many out there. I think some are very close to closing, but there’s plenty in the hopper. Mostly smaller deals, tuck ins type of transactions. But I think those have been plentiful this year.
Jerry Revich (Equity Analyst at Wells Fargo)
Thank you.
Christine (Operator)
Our next question comes from the line of James Rashuti with Needham, Please Proceed with your question.
James Rashuti (Equity 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 characterize as kind of like pit stops in nature, we. Does that suggest something more meaningful in the back half? We see some change in the overall pricing environment for a while.
Eric Erstenberg (Co-Chief Executive Officer)
We don’t see a change from the pricing environment, no. But 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 there, they’re running hard right now, but 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.
Mike Battles (Co-Chief Executive Officer)
Yeah, certainly hopeful that that pattern comes to fruition, Jim. But just to be clear, kind of in the guidance as we have it laid out right now, we don’t have large turnaround activity coming back in the second half. Again, hopeful that that happens. But the way we have it laid out right now is pretty flattish year on year.
James Rashuti (Equity Analyst at Needham)
Got it. And 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? I think you alluded to.
Eric Erstenberg (Co-Chief Executive Officer)
we’re seeing very strong trends with multiple verticals. Chemical, a little bit too early to tell, but 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. So 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 confirmed 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. So a number of verticals we’re seeing expansion in.
Mike Battles (Co-Chief Executive Officer)
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, whether we unless there’s an M and A or something like that. So the fact we’re raising guidance on both segments here, just after just giving guidance six, seven weeks ago, should tell you about our view as we think about the rest of the year.
James Rashuti (Equity Analyst at Needham)
Yeah, it does, and I appreciate that additional color. And congrats on that. Nice start. Thank you.
Christine (Operator)
Our next question comes from the line of Larry Tholo with CJS Securities. Please proceed with your question.
Larry Tholo (Equity Analyst at CJS Securities)
Hey, good morning, everybody. I was going to follow up on that question just because I know you mentioned the economy too. The backdrop seems to be improving and you gave a little more color on that. Just a question I had was, has there been any hesitation from any customers through the kind of just the Iran conflict going on? Has that interrupted you guys at all? It doesn’t feel like much. Obviously we talked about the oil effects, but outside of that, has any 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.
Mike Battles (Co-Chief Executive Officer)
Hey, Larry, this is Mike. Thanks for the question. I guess I would say that we haven’t seen a lot of disruption because of the conflict. As a matter of fact, one would think logic would tell you that you’re getting kind of more U.S. production that that should be, 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 happen during COVID frankly, that may be happening again. 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. Whether or not the demand environment’s changing, I don’t know. But that’s still kind of muted. But certainly as US manufacturing should grow in the short term because of this conflict, if you were betting, then.
Larry Tholo (Equity Analyst at CJS Securities)
Right, okay. And then just a question more mid to longer term on PFAs. And I appreciate all the color and the framework that Eric provided there. So the, the Dow, the epa, obviously they’ve given kind of guidance. It still feels like it’s interim though. Right. They’re not really establishing actual requirements. They’re just kind of laying out the options. Right. For removal. So are we still waiting for like a more finalized guidelines or requirements for customers that might actually accelerate growth, you know, over the next couple years?
Eric Erstenberg (Co-Chief Executive Officer)
Well, Larry, I’ll start. So certainly we’ve talked about in the past, the revenue that we did in 2025 was about 120 million plus and 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, seeing an accelerated pipeline and 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 a airport is going to be remediated because they’re going to put a new Runway down. We’re using that guidance and they’re accepting it. And they accept it because of who we are and what we know and how we utilize our network in order to perform those responses. So I think that the point is that we’re seeing that framework being enacted, customers acting more and more responsibly, regulatory agencies acting more and more responsibly. There definitely seems like there is more momentum going into this year than a year ago at this time too. So even though there hasn’t been any formal specific guidance like what we put out, we’re acting by that. We see the market acting by that when they need to deal with their situations.
Larry Tholo (Equity Analyst at CJS Securities)
Okay, great. I appreciate that call. Thanks.
Eric Erstenberg (Co-Chief Executive Officer)
Absolutely. Thank you.
Christine (Operator)
Our next question comes from the line of David Manthey with Baird. Please proceed with your question.
David Manthey (Equity Analyst at Baird)
Thank you. Good morning, guys. First off on the new guidance. So it looks like 30 million of the 40 million midpoint EBITDA increase is because of STSS. And as you said, you don’t normally raise guidance in the first quarter. So 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 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 (Executive Vice President and Chief Financial Officer)
Sure, David. Eric, I’ll take that one. I would say we have the better base oil pricing kind of spread rapidly between Q2 and Q3. Certainly more insight into Q2 right now given the uncertainty around how long oil stays high. So I would think about it kind of ratably through Q2, Q3. I think Q4 remains better just with a lot of things that the business is doing as well. But in the current guidance, we kind of assume pricing may be coming back down a little more towards normal as we get closer to year end.
David Manthey (Equity Analyst at Baird)
Okay, that’s helpful. Thank you. And 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 Dugas (Executive Vice President and Chief Financial Officer)
David. Kimball Ramp up has gone extremely well. We more than exceeded our tonnage targets in 2025, we’re out of the gates exceeding our 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 to 15 to that. We’re hitting our goals, our targets, and the plant is running very well.
David Manthey (Equity Analyst at Baird)
Okay, thank you.
Eric Dugas (Executive Vice President and Chief Financial Officer)
Thank you.
Christine (Operator)
Our next question comes from the line of Adam Buebus with Goldman Sachs. Please proceed with your question.
Adam Buebus (Equity 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 up cycle? And is there a way you’d advise us thinking about skss EBITDA growth on a percent higher base oil prices or maybe incremental margins? Way to frame that.
Eric Dugas (Executive Vice President and Chief Financial Officer)
Adam, the team throughout 2025 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 60 cent range and we look to continue to manage. We had lost some gallons, but we really want to continue to manage in charge for oil scenario. It’s a waste that needs continued processing and refinement and we want to make sure that we continue to operate that way and operate efficiently even though the base oil market has been changing. You know, Adam, we worked really hard to change the industry from a pay for oil to a charge for oil. And you know, it’s long, painful 18 months and 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 our gallons flowing into the re refineries. But I think we’ll be loathe to do that.
Adam Buebus (Equity Analyst at Goldman Sachs)
And then 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 (Executive Vice President and Chief Financial Officer)
I mean, base oil prices, I don’t have exact numbers to share with you, but base oil prices certainly went up as as we 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 raise in Q2.
Adam Buebus (Equity Analyst at Goldman Sachs)
All right, thanks so much.
Eric Dugas (Executive Vice President and Chief Financial Officer)
Thanks, Adam.
Christine (Operator)
Our next question comes from the line of James Shum with TD Cowan. Please proceed with your question.
James Shum (Equity Analyst at TD Cowan)
Hey, good morning guys. So maybe just a couple of clarification questions for me. So the SKSS guide up 30, we’re spreading that over 2/4 Q2, Q3. So that’s like 5 million additional or incremental per month over those 6 months. Or 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 (Executive Vice President and Chief Financial Officer)
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. But as I alluded to a moment ago and in my prepared remarks, a lot going on in the business, lot changing even earlier today. Some news, we have some assumptions we’re working on right now and we’re going to come back in three months time and kind of update those. But I would think about it as the increase that’s in the bank in Q1 spread pretty evenly between 2 and 3 for the rest of the 30 million and then kind of flattish to up a little bit in Q4.
James Shum (Equity Analyst at TD Cowan)
Okay. And then on PFAS, sounds like you just kind of mentioned some, 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 Erstenberg (Co-Chief Executive Officer)
Yeah, it’s more in the 25 to 35% range. What we’re seeing initially here entering the year. So strong pipeline, number of samples that we’re seeing to analyze for PFAS contamination that customers have been 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 Shum (Equity Analyst at TD Cowan)
Okay, great. Thanks guys.
Eric Erstenberg (Co-Chief Executive Officer)
Thank you.
Christine (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 Toby Sommer with Truist. Please proceed with your question.
Toby Sommer (Equity Analyst at Truist)
Thanks. I’d love to get your perspective on the EPA guidelines. Any differences that you’ve noticed between those Fresh and the DoD and what you expect to hear from customers or in fact they’re already hearing. Thank you.
Eric Erstenberg (Co-Chief Executive Officer)
Yeah, we were really excited obviously to get to see over the goal line the approving of incineration by the Department of War. Our teams have been working with already 700 different military installations to make sure that we’re here for their needs. So 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. So we’re excited by just seeing some of that limited momentum about disposal technologies being pushed out there by particularly the Department of War.
Mike Battles (Co-Chief Executive Officer)
Toby it just revalidates what we already know, that we have a great end to end solutions. Eric said in his prepared remarks. We can solve any of our customers deep as problems and we’ve proven that both internally with our own framework as well as externally with the Department of War or the epa.
Toby Sommer (Equity Analyst at Truist)
Thank you very much.
Christine (Operator)
Thank you.
Eric Erstenberg (Co-Chief Executive Officer)
We have no further questions at this time. Mr. Gerstenberg, I’d like to turn the floor back over to you for closing comments.
Christine (Operator)
Thanks Christine and appreciate everyone joining us today. We are participating in several investor events in the coming weeks, starting with the Oppenheimer Heimer conference tomorrow. We are looking forward to seeing many of you at these events and as always have a great safe rest of your week.
Disclaimer: This transcript is provided for informational purposes only. While we strive for accuracy, there may be errors or omissions in this automated transcription. For official company statements and financial information, please refer to the company’s SEC filings and official press releases. Corporate participants’ and analysts’ statements reflect their views as of the date of this call and are subject to change without notice.
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