Participants

Michael McDonald; General Counsel; Clean Harbors Inc

Eric Gerstenberg; Co-President, Co-Chief Executive Officer; Clean Harbors Inc

Michael Battles; Co-President, Co-Chief Executive Officer; Clean Harbors Inc

Eric Dugas; Chief Financial Officer, Executive Vice President, Chief Accounting Officer; Clean Harbors Inc

Tyler Brown; Analyst; Raymond James

Noah Kaye; Analyst; Oppenheimer & Co., Inc.

Larry Solow; Analyst; CJS Securities

David Manthey; Analyst; Robert W. Baird & Co. Incorporated

Brian Butler; Analyst; Stifel Nicolaus and Company, Incorporated

Jerry Revich; Analyst; Goldman Sachs & Company, Inc.

Presentation

Operator

Greetings, and welcome to the Clean Harbors fourth-quarter and full-year 2024 financial results conference call. (Operator Instructions) As a reminder, this conference is being recorded.
It is now my pleasure to introduce your host, Michael McDonald, General Counsel for Clean Harbors. Thank you, sir. You may begin.

Michael McDonald

Thank you, Christine, and good morning everyone. With me on today's call our our co-chief executive officers Eric Gerstenberg and Mike Battles, our EVP and Chief Financial Officer Eric Dugas, and 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 1,995. Participants are cautioned not to place undue reliance on these statements, which reflect management's opinions only as of today, February 19, 2025. Information on potential factors and risks that could take our results is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision of the statements made today other than through filings made concerning this reporting period. Today's discussion includes references to non-gap 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 website and in the appendix of today's presentation.
Let me turn the call over to Eric Erzenberg to start.

Eric Gerstenberg

Thanks, Michael. Good morning, everyone, and thank you for joining us. We continue to execute on our strategic priorities in Q4, delivering strong consolidated results and beating street expectations. The quarter was highlighted by sustained momentum in our environmental services segment and concluded 2024 as another strong year with consolidated EBITA growth of 10%.
Before we get into the results, let me spotlight our team's outstanding safety performance.
We remain laser focused on safety and continuous improvement in the quarter, which contributed to a total recordable incident rate that enabled us to surpass our 2024 goal.
While we're proud of this achievement, we recognize that safety is an ongoing journey.
Turning to our financial performance on slide 3, our results were in line with our expectations as our ES segment capped a record year with solid 4th quarter.
Steady demand for our ES services allowed us to conclude 2024 with strong waste collection volumes, particularly containerized waste, and a healthy flow of project work, resulting in full year revenue growth of 11% and adjusted even margins exceeding 25%.
SKSS, as expected, faced a challenging commodity pricing environment with market conditions for base soil and lubricants further deteriorating toward year end.
As announced in November, our team took very aggressive actions in our used oil collection pricing to offset the lubricant pricing deterioration.
Reflecting the strength of the year overall, we delivered record revenue, adjusted, and adjusted free cash flow in 2024.
Operationally, we also achieved a number of milestones, including the completion and commercial launch of our Kimble, Nebraska incinerator.
The acquisition and integration of HEICO and noble oil, growth in our workforce and improve retention as we lower turnover by 250 basis points.
The launch of our total Pfos solution, initial expansion of our Baltimore hub, our partnership with Castro for its more circular offering, and more than 20,000 emergency response events.
Turning to our segment's reviews, beginning with ES on slide 4, adjusted Eva die increased 11% with a 9% increase in revenue, translating to a 50 basis point margin improvement. PEICO accounted for half of the segment's 103 million revenue increase, with the remainder from organic growth driven by a combination of volume and price.
Q4 marked the 11th consecutive quarter of year over year improvement in the ES segment adjusted E dot margin, which has increased by more than 500 basis points when compared with Q4 of 2021.
Looking at segment components, field services revenue grew 47%, driven primarily by HEPACO and organic growth. In technical services, higher network volumes and pricing drove an 8% revenue increase. Average pricing in the incinerators rose 4% while achieving 94% incineration utilization in the quarter. Demand was robust and our plants ran very efficiently. We are beginning to realize the benefits from investments and process improvements we've made in our network in the recent years.
Safety Clean Environmental Services completed another year of steady revenue growth within the segment, generating 6% in Q4. We performed 246,000 parts wash services in the quarter, up from a year ago. Other core branch offerings also perform well, particularly containerized waste services.
Our industrial services team did a great job driving price improvements and managing their cost structure during the slower fall turnaround season.
Turning to slide 5, after completing final inspections and incurring some startup-related costs, our new incinerator in Kimmel, Nebraska launched commercial operations in December.
We are proud to have successfully completed this multi-year project ahead of our original timeline. Our engineering team did an outstanding job hitting every milestone of this complex project. Kimball's design mirrors the Arkansas incinerator we opened in 2017.
The initial shakedown phase for Kimble is underway. We expect the incinerator to ramp up gradually as we optimize its operations over the next 12 to 18 months.
The opening of the incinerator comes as an op comes at an opportune time for our customers. Kindle's ability to handle more complex waste streams aligns well with the demand environment, which is highlighted by reshoring, infrastructure spending, efforts to regulate PFOs, and the current administration's pro growth agenda. Kimball increases our overall North American capacity by 12%, presenting solutions for captive incineration customers. We have a proven playbook that we continue to share with our captive customers to evaluate their strategic options, including closure.
Before turning the call over to Mike, I want to touch on POS, which is a topic we often get asked about. We shared on our Q3 call that we were planning to conduct our next round of testing to meet the EPA's more stringent emission standards for POS incineration.
That testing took place in November at our Utah facility with both the EPA and DOD on site during testing. These tests involve considerable data collection to scientifically prove that PFOS elimination in our incinerators occurs up to 6 9s of destruction with no emissions concerns. We expect the results of the testing to be available in Q2, and we are confident that the data will continue to support our previous testing results. Clearly demonstrating that POS can be safely eliminated using our high temperature record permitted incinerators.
We appreciate the government's active participation in our latest study. The consensus is building around the need to address these forever chemicals and eliminate their threat to human health. Many industry analysts believe that PFAs remediation and destruction carries the potential of creating a multi-billion dollar marketplace, and we are seeing an ever increasing pipeline to support that belief. We expect PAS to remain a priority for the current administration and state regulators. We look forward to keeping you updated on the results of our study once they are finalized. With that, let me turn things over to Mike. Mike.

Michael Battles

Thank you, Eric and good morning everyone.
Turning to our SKSS segment results on slide 6, revenue and imminent decrease year over year in Q4, reflecting soft demand and lower pricing during what is already a seasonally weak course. These results reflect the ongoing challenges in the base oil and the lubricants market. In response to that market softness, we took action on several fronts. In mid November, we shifted to a chargeable oil position.
We also idled our California re refinery in Q4 to address our inventory buildup and support our CFO initiative.
We believe these actions, along with comprehensive cost cutting initiatives will support this business in 2025.
In the quarter, we gathered 63 million gallons of waste oil higher than the prior year reflecting the addition of noble oil.
During the November shift in our due to a Devember shift in our collection approach, Q4 collection costs were at the CFO average versus the PFO average in Q3.
We expect to continue to increase our price to collect used motor oil in 2025.
Our goal is always to balance the feedstock levels our ref re refineries need with collecting oil at the best possible price.
In addition to aggressively moving to CFO and reducing oil collection costs in light of base oil pricing, our strategies to minimize volatility in this business include selling more blended gallons, producing Group 3, and capitalizing on our partnerships that leverage our low carbon footprint products like we have with BP Capital.
Our blended volumes in the quarter came in as expected at 20% of total volumes sold.
Our Group 3 program has moved forward, and we expect to increase Group 3 production this year.
Our Castro partnership generated its first major fleet customer for their more circular offering to year end.
Their sales and marketing rollout continues, and we're excited to see the potential of this partnership get realized with more large fleets.
Turn to capital allocation on slide 7, we ended the year with a healthy cash balance and low leverage that will enable us to execute the overall Clean Harbor's growth strategy.
We continue to look for opportunities, whether those are internal or external to generate the best returns on our shareholders' capital.
Internally, we continue to see op opportunity to invest within multiple parts of the company.
Eric detailed our success with launching Kimble, which is a $200 million plus project that will pay an attractive return for decades.
We have smaller lucrative opportunities as well. In 2024, we allocated approximately $20 million of capital to the expansion of our Baltimore location.
In 2025, we intend to replicate that success through another similar growth project by expanding our presence in Phoenix in response to rapid market growth in the southwest region, particularly in the semiconductor market.
We are purchasing and upgrading a site that allows a comprehensive hazardous waste collection and service capabilities and an estimated cost of $15 million.
We remain very active in the M&A front evaluating potential acquisition candidates that will support our growth plans while enable us enabling us to capture synergies and drive additional volumes into our network. The pipeline is as active as ever.
We intend to execute our share buyback plan to at least maintain a flat share account and be opportunistic with large purchases when conditions are ideal just as we have for the past decade.
In conclusion, we enter the first quarter of 2025 in great shape. We expect another year of consistent profitable growth led by our segment.
We are bullish about our prospects this year as demand for our services remains strong, with multiple tailwinds supporting us from reshoring to infrastructure investments to BFAS to potential captive closures.
We continue to have a healthy waste backlog and a robust pipeline of remediation and waste projects. The commercial ramp up of our Temple incinerator is underway.
The outlook for field services is positive given the early returns on HEPACO and the growing need of our skilled workforce and capabilities. We anticipate a recovery in industrial services this year after a challenging 2024 and fully expect our SKA Environmental Services to continue to achieve record waste collection to support our network.
In 2025, Clean Harbor celebrates its forty-fifth anniversary. Our commitment to our core values has never been stronger.
We believe that we have the ideal growth strategies in place to deliver an outstanding financial performance in 2025, including record adjusted dividend and cash flows.
In addition, we anticipate the continued marginal improvement based on our pricing, cost mitigation plans, and productivity initiatives.
With that, let me turn it over to our CFO, Eric Duties.

Eric Dugas

Thank you, Mike, and good morning, everyone.
Turning to the income statement on slide 9, our Q4 results exceeded the guidance provided on our last earnings call.
Led by profitable growth and yes.
With continued margin expansion in that segment.
Demand across our core lines of business remained robust as we concluded the year.
Overall, we drew total company revenues in the quarter by more than 90 million or 7% and by over 480 million or 9% for the year.
The segment led the way with 15% adjusted IA growth for the year, with the associated margin exceeding 25%.
Fourth quarter adjusted IA of $257 million was driven by great results in the ES segment, offset by a decline in SKFS and higher corporate costs.
This total reflects a $4 million dollar adjustment related to startup costs for Kimball Incinerator that were incurred leading up to the launch of its commercial operations in December.
Our adjusted even down margin of 18% in Q4 was down year over year, but up 30 basis points for the full year to 19%.
This annual improvement speaks to the strength of our ES business, where margins improved 90 basis points for the year by leveraging our overall facilities network in part from a record level of drum waste collected and the significant growth of field services.
SGNA expense as a percentage of revenue was 12.7% in Q4.
Similar to the full year percentage of 12.6%. These levels were in line with our expectations as the primary factors behind the dollar increase from prior periods were related to M&A activity, increased labor and benefit-related costs and insurance.
For full year 2025, we anticipate our SGNA expenses as a percentage of revenue to remain in the mid 12% range.
Depreciation and amortization in Q4, is expected at 105 million and $401 million for the year.
Up from 2023 due to acquisitions.
For 2025, we expect depreciation and amortization in the range of 440 to 450 million.
Income from operations in Q4 was $137 million and $670 million for the full year.
Representing a 9% increase from the full year of 2023.
Q4 net income was down versus the same period a year ago while increasing for the full year as we delivered EPS of $7.42 in fiscal 2024.
Turning to slide 10 and the balance sheet.
Cash and short-term marketable securities at year end were $790 million.
Up 195 million from the end of Q3 and approximately 240 million over the course of 2024.
We saw a meaningful decrease in our receivable balance of 127 million in Q4 as we focused on collections related to HEPACO billings that were slowed by a previous system changeover.
On our Q3 earnings call, we have lowered our free cash flow estimate for the year in recognition of these challenges.
However, cash collections in this area exceeded our expectations down the stretch, resulting in a strong Q4 free cash flow.
I want to thank the team for their great effort in finishing the year strong.
Our balance sheet continues to be a source of strength for us.
Our net net debt to EEA ratio at year end was just under 2 times with no material debt amounts coming due until 2027.
We continue to be opportunistic in addressing our interest rates.
As we did in October when we repriced our term loan to generate approximately $2 million in annual interest savings.
Our overall interest rate at year end was 5.38%. Starting to cash flows on flight 11.
Net cash from operating activities in Q4 was $304 million.
25 million from prior year.
CapEx net of disposals was 60 million.
Down considerably from prior year and in line with our expectations as we are wrapping up our Kimble spend.
As Eric mentioned, the Kimball incinerator was commercially launched in December, with total spend on the project of approximately $210 million including the $75 million that was spent in 2024.
For the quarter, adjusted for cash flow was 248 million.
Finishing the year at 358 million.
These results exceeded expectations based on the working capital improvements I spoke to a moment ago.
For 2025, we expect our net CapEx excluding the Phoenix Growth Project, to be in the range of 345 to $375 million.
During Q4, we bought back more than 101,000 shares of stock for a total of $25 million bringing our year-to-date total to $55 million.
Moving to guidance on slide 12.
Based on our Q4 and 2024 results, along with current market conditions for both of our operating segments, we expect 2025 adjusted IA in the range of 1.15 billion to 1.21 billion with a midpoint of 1.18 billion.
Looking at our annual guidance from a quarterly perspective.
We expect adjusted EA for Q1 to grow 4 to 6% year over year in our ES segment.
And be flat on a consolidated basis.
For full year 2025, adjusted even guidance will translate to our reporting segment as follows.
In Environmental services, we expect adjusted IBADA in 2025 at the midpoint of our guidance to increase 5 to 8% from 2024.
Overall demand for our core services remains strong.
And will drive continued growth in 2025.
With Kimble ramping up and offering additional capacity along with macro tailwinds, we expect to introduce more volumes into our facilities network along with continued expansion in the SK branch and field services businesses and the return to growth in industrial services.
For SKSS, we expect full year 2025, that's just an IEDA at the midpoint of our guidance to be 140 million.
The environment remains challenging as we begin the new year, and we remain cautious in our oil pricing assumptions.
Within corporate at the midpoint of our guide, we now expect negative adjusted EBA to be up 3 to 7% compared to 2024.
The year over year increase primarily relates to rising expenses in areas such as wages and benefits, insurance, and growth in the business, partly offset by our cost savings initiatives.
For adjusted to cash flow.
Current expectation for 2025 is for a range of 430 to $490 million or a midpoint of 460 million.
As Mike mentioned, we are planning to invest $150 million in a growth project in Phoenix this year.
We're going to exclude spend from this long-term growth project from adjusted free cash flow going forward.
We believe this will create a more accurate picture of our free cash flow generation as a company.
In summary, our growing ES segment delivered an exceptional performance in 2024, capped by a strong fourth quarter.
The favorable market dynamics propelling this business, position it for greater earnings potential, particularly as we anticipate a high growth US economy in the coming years.
The ramp up of our Kimball incinerator is underway with our remaining network operating at a high capacity.
Moreover, the potential for increased volumes related to PAS destruction are on the horizon as we move into 2025, presenting exciting growth opportunities.
The integration of TEPCO has progressed nicely, and we're confident in another solid year for field services.
Our SK branch operations continue to deliver profitable growth quarter after quarter, showcasing our operational excellence, and we're optimistic that industrial services will grow in 2025.
Overall, we remain encouraged by the trajectory of our company and the market conditions to support and potentially accelerate that profitable growth this year.
With that, Christine, please open up the call for questions.

Question and Answer Session

Operator

(Operator Instructions) Tyler Brown, Raymond James.

Tyler Brown

Hey, good morning.
Heyfo.
Hey.
Sorry, I'm a little under the weather here, but, there have been a number of articles about the California wildfires, maybe a sizable hazway cleanup effort. I'm just curious if you guys are seeing any incremental opportunities. Is there anything kind of baked into the guidance there?

Eric Gerstenberg

Yeah, Tyler, this is Eric answering. We we're participating actively in helping with the cleanup and the remediation. I'd say though that while the wildfires were underway, they did have some typical disruption to our branch collections. We were pleased, however, that none of our operating branches had any effect and and thankfully our people did not have any effect of their homes by and large. And so after that conclusion of getting the fire under control, our teams have done an awesome job in helping with the environmental hazardous waste cleanup of that fire progresses today. How long that's going to go on is really unknown at this point, but we continue to support the efforts there.

Eric Dugas

I think it's just in terms of the guidance to address your guidance question, Tyler, for Q1, maybe some modest benefits from the work that Eric talked about, but largely kind of a net neutral event I think because of the slowdown in that region, due to the fires as well. So that's how we kind of see Q1. But as Eric said, time will tell in the scope of that work.

Tyler Brown

Okay, and then if I, come back on bird flu, I know I've asked about this before, but the calling numbers are really high, particularly in December and into January. I think you participated back in 2015, but are you guys mustering any resources in that effort as well, or could that be an opportunity to at least to help?

Michael McDonald

It could be Tyler at this point we've actively participated in helping to provide assistance. There hasn't been anything that that's sizable at this point that we would speak of.

Michael Battles

Nothing material.

Tyler Brown

Okay. And then Eric G, you mentioned this captive solution now that you've added 12% more capacity to the fleet.
So I'm just curious now that Kimble is online, are you getting any inbounds about possibly filling those burn slots with captive closures? Is there anything material to talk about there?

Eric Gerstenberg

Yeah, certainly, Tyler, we've talked about a number of times in the past, as all those captive incinerators continue to be our customers, and we have some outstanding relationships there and as things have evolved, we continue to work work actively with some of those captives on helping to evaluate. Their next steps as as things progress with Kimble coming online, but also as they really evaluate their cost structure and what could change in the regulations to affect their air emissions controls. All those types of things are in play in a in a challenging environment and so they, yeah, we we work with them and continued to to get closer with a few of them that opportunity exists there.

Tyler Brown

Okay, my last one just real quick, that's helpful on M&A so.
There have been a number of deals and let's call it the specialty waste space, I think by both financial and strategic buyers. It seems that multiples have maybe moved up. I'm just curious if you think you guys would get some M&A across the line this year. Are things a little rich? It sounds like the pipeline's good, but just any more color on that would be helpful.
Thank you.

Michael Battles

Yes, this is Mike. We remain very active in the market. We, as you noted, there's a lot of deals out there and we've been very active in participation and looking at those deals, and we remain active. The pipeline is, as I said in my prepared remarks as busy as ever, and we're trying to find the right deal that makes sense financially and strategically, and we're going to continue to be active in that marketplace. Prices have gone up. We think there's real value there and and we'll be an active participant in 2025, no doubt.

Tyler Brown

All right, thank you guys.

Michael McDonald

I feel better thanks.

Operator

Noah Kaye, Oppenheimer.

Noah Kaye

Well, good morning folks, thanks for taking the questions.
We just, like to start by getting a sense of some of the moving parts for the one cu guide, specifically, I think, what drives a bit softer, ES segment growth versus the full year average, I mean, some of the moving pieces I would think about would be, you get a couple of months of rollover have to go contribution. I don't think price was too strong. Tech last year utilization wasn't too high so is there anything kind of one time or you know kind of a a a net headwind the ES to call out that we should be thinking about that maybe improves throughout the year.

Eric Dugas

It's it's Eric. I'll take this one, just in looking at kind of our guide for Q1, as I said, my remarks, kind of the segments still kind of guiding to about a 5.5% growth rate here in Q1. You're right, some big pieces just in there, another quarter of HEICO with some synergies, so that'll be nice, but we are seeing again, the team has done a great job getting some pricing in here as as the calendar turns, particularly in the FK branch business. Our volumes remain strong, so we're still seeing those things and guiding that way into Q1. There was a little bit of slowdown obviously from weather and the California fires that Eric alluded to a moment ago.
But still seeing, core growth in those core lines of business. I'd say on the IS side of things, maybe a little bit of headwind in Q1 here from some a large project that we had in IS last year in Q1. So that's driving, like I said, 5.5% growth rate in E. SKSS obviously pricing headwinds are offsetting that. To arrive at kind of a flat guide for Q1, as I project out for the rest of 2025, I think the biggest item there leading to kind of the midpoint of our ES guide at 7% is the introduction of of Kimble. That will begin to ramp up through the year. We are being a little modest there full year growth, probably.
10 million-ish maybe in that range for the year, but that's the big one. And then I'd say the other item that we could see an upside to the guide would be just the level of responses. 2024 was a great year in terms of ERs, particularly in FS. And if we can continue to see that the high level VRs there, that would be upside.

Noah Kaye

Very helpful detail, just on the subject of Kimball, I guess the ramp up of a new facility, introduces some unique elements to, utilization and price mix. So maybe help us understand kind of how you're thinking about the fleet average and whether or not you're going to sort of break out Kimble separately from kind of typical metrics you report around unilization and price mix.

Eric Gerstenberg

Yeah, Kimball, yeah, I know Eric G here just wrapping through some of that on Kimball, we expect to incinerate over 28,000 incremental tons throughout the course of this year. And as we started off the gate here in January, we began with some really rough weather which impeded our ability to get the tonnage throughput that we expected in January. That being said, the team has done an awesome job of helping to get over some startup issues, and we're really having a great stretch of how we're performing and burning currently and expect to meet our goal of punish throughput here in the first quarter. So that's great. Overall, for the course of the year, as we've mentioned in the past, we expect an incremental. 8 to $12 million of EIA contributions through that incinerator 28,000 tons and so excited with how we're progressing right now through the quarter. Over the next few years, we'll continue to ramp up and contributing 25 to $35 to $45 million of BAA over the next 3 to 4 years.

Michael Battles

And no, I just as a as a point as you look at it from a quarterly standpoint in Timble, not, this is not perfect, but let's say it's not much of a contribution in Q1 and it goes, if you say the midpoints 10, it's a 2 million in Q2, 3 and Q3, and 5 in Q4 as we ramp up the year as depending on obviously depending on whether and plant production is a lot of variables in that number, but that's kind of direction as we thought about the guy for the year and the break up by quarter for Kimble. And also I want to just reiterate, I've said it many times that Kimble is part of a network and there's another incinerator right on site, so it's very sometimes it's hard to break that out specifically as to the profitability of each individual plant, but that's kind of how we've done it from a guide standpoint.

Noah Kaye

Very good, thank you. Just one last one and I'll stick on incineration. I guess what what are you all hearing on the update to the Mac standards maybe frame for us a little bit potential timing, where you think the regulations might go and to what extent could this be a tailwind and an opportunity.

Eric Gerstenberg

Yeah, no, Eric here again, certainly it continues to evolve. We know that the EPA is actively engaged in doing a review of performance of current incinerators, both captive and commercial, and that review will continue on for a while. Obviously there's there's some change of administration that affects some of the timing of that, but we know that that's long overdue. And we do expect that that will have an impact on, particularly maybe on the captive area of evaluating some of those incineration in units.
We, with new standards are going to are going to come capital investment, and we know confidently that our units perform exceptionally well. We also know that some of the captive units are old and tired and will need some sort of upgrade. So for that. We think that pertains to opportunity for us in future years. I think it really is going to play itself out over the next 3 to 5 years. Implementation, whatever upgrades, captives, or commercials we'll need to do, there'll be an implementation schedule that'll take over the next 3 to 5 years.

Michael Battles

No, the only thing I'd add to that is that you know theseA standards are air quality standards and the current administration has repeated many times, clean air, clean water, and so this is I think nothing changes, nothing slows here, I think with the change administration because clearly what we're talking about here is air quality standards.

Noah Kaye

Great stuff. Thanks very much, guys.

Michael McDonald

Thank you.

Operator

Larry Solow, CJS Securities.

Larry Solow

Great, good morning, everybody.
Just, first question on the, good morning. On the environmental services because I know you don't guide to margin, you spoke about, margin expansion averaging looks like a little over 100 bits for the last 4 years. Sounds like a bunch of moving parts in 2025, a little bit of a, I guess, a tailwind. Still from Epico, pricing may be a little bit of benefit, and then there's obviously the the ramp of Kimball may be a little bit of a negative impact. So yeah, how should we think sort of what are you incorporating? Is that a little of a slowdown in margin expansion this year? You did mention overall margin expansion, so just trying to dissect, by segment.

Eric Dugas

Sure, Larry, Eric Dugas here. I'll take that one, and certainly I mean I think marginal expansion in our environmental services segment has just been a highlight the last few years. I mean 90 basis points delivered in 2024, more than 100 basis points in 2023, so it's been a great story, kind of, implicit in our guide for 2025, we do continue to have margin expansion, but at a slightly lower level, given the midpoint of our guide. I think the foot and takes that you mentioned a moment ago, Larry, you're on to the right things. I do think we have a couple of headwinds built into the guide relative to our growing field services business, and really just not being able to perhaps forecast some of the same level of large responses that we saw this year and perhaps a little degradation and margin there. And then also, obviously, we're very excited about Kimble, but as that plant ramps up.
It won't be as contributory to margins just because the ramp up. So those are a couple of headwinds. If you kind of adjust for those, you're in that, high of 60 to 90 basis points of improvement in the rest of the business. So again, a great story. We're going to continue to do all the things around pricing, getting leverage from the network, cost cutting, all those things to continue to drive margins and yes.

Larry Solow

Gotcha. And just on Kimball, you mentioned startup costs, you're taking it a little bit slower this time around. I remember to go back in El Dorado, I guess I think it was 2017, there were a little bit more hiccups than expected, but it feels like lessons learned. I think this is a similar blueprint, but any color there would be great.

Eric Gerstenberg

Yeah, sure, Larry, as I mentioned in my script, the the unit that we just completed and starting up in Kimble. Is really a replica of what we built in El Dorado with design improvements, so that is contributing to a smoother startup here of this unit than what we experienced in the El Dorado unit. And the team is really doing a solid job of getting the unit online. It's performing well, as I as I mentioned earlier, as we go through February here, so really excited about hitting our goals that we've laid out for that unit.
Right.

Larry Solow

And this last one I just follow up on those question just on the PFA. So, obviously, sounds like a significant and growing multiyear opportunity, and I know you've spoken about, bookings growing, sequentially double digit, I think quarter of a quarter for the last several years.
Do you build in significant actual growth in revenue this year? Are we still kind of in a somewhat of a holding pattern until we get more guidance from the EPA and whatnot?

Eric Gerstenberg

Yeah, Larry, I would say this that we did not build out build in a significant revenue growth associated with EPAs year over year. We do continue to see an active pipeline, a growing pipeline.
Our pipeline has been increasing.
About 20% quarter over quarter. So and we have really had an active market there. In fact, we just had a nice opportunity of of really the first state in the country securing a collection. So we're seeing activity across the board and the the prospects that we have are solid, but we did not really include anything very material in our guide.

Michael Battles

Normal growth rates vary in the in the model, from what we've seen in the past few years, and we've made investments, as Eric said, in that business with the total be fast solution as well as sales investment.
Thanks mate. Thanks.

Larry Solow

Guys. I appreciate it.

Operator

David Manthey, Baird.

David Manthey

Hey, hi guys. Good morning. First question is on, SKSS with the addition of Noble and the mothballing of, Newark, California in 2024, what is the current nameplate base oil re refining input and output capacity of your system today?

Michael Battles

260 I think the number is about about what it was what it was last year because we kind of subtracting to that one.

David Manthey

And in the fourth quarter of 23, what would be the comparable number there?

Eric Gerstenberg

There's been between the acquisition of Noble and the offset of Newark, it's really about very comparable data.

David Manthey

Okay.
All right. And Based on the guidance that you've provided here, by segment, first off, is 80 million, does that seem in the ballpark for corporate items in the first quarter?

Eric Dugas

Yeah, you're not Probably lower than that, David.

Michael McDonald

Yeah, okay.

David Manthey

All right, but regardless, when we look at the segments here, there's a pretty significant jump in IBETA to get from the first quarter to get to some sort of run rate that gets you to the full year EBITDA guidance in SKSS specifically.
And I, I'm wondering if you could talk through the factors that are impacting the first quarter that either, go away or get better in some way from 1 to 2Q that gets you up to that sort of run rate so you can hit that 140 for the year.

Eric Dugas

Sure, Dave, it's Eric I'll I'll answer the question here. When you look at at Q1, obviously in our guides implied, down from from Q1 last year, pricing is certainly down, that's how we see it in Q1. But the other thing, too is we still have some of that, higher cost inventory rolling through the numbers here in Q1. Mike emphasized in his comments the great job that the team has done changing to a higher charge for oil here. We'll begin seeing, a lot of those benefits kind of late in the quarter and then on to Ques 2 and 3 when hopefully, pricing improves a little bit still lower than last year, but certainly the run rate in in SKSS and Q2 and Q3 improved because of that, the better inventory costs.

Michael Battles

Yeah, we're going to see better CFO pricing, kind of summer driving season and kind of some of that there a higher price scale kind of out out of the network as we roll out through Q1.

David Manthey

Okay, thanks. And then finally, XEEO, if we're looking just at organic growth and field and emergency response, what was the growth there? And then, to round that out, other than the softness you saw in 2024, why is it you expect growth in industrial services in 2025?

Eric Gerstenberg

Erica answering and when you think about industrial services, we talk about in Q3 of last year that the refinery world in particular ratcheted down their spend. The refinery turnaround number still held in place, but what they, the extent and size of their turnarounds was really constrained and that affected us. What we're seeing so far this year is that Our number of turnarounds that we already have booked for 2025 is up substantially. Hard to quantify a total spend on that, but the count. Is a significant change. So what we're seeing is that some of the things that most likely that were pushed from 2024 have to get done in 2025. So the team is, has a pretty bullish outlook on what we have in the book so far and how that business will. Be better and perform well. There is certainly some specialty things that go along with those turnarounds that we expect to have happen as well. So good early look at how 2024 is going to enhance and help a better position for industrial services in 2025.

Michael Battles

And Dave, you asked about field service exEICO.
I think organically for the year it's up, high single dig 78% on a consolidated basis, organically environmental services closer to 5%. So that was definitely a driver that 7 or 8%, a lot of it was in the larger projects we talked about, and we had a great year in project work, fair amount of work that year and we're we're forecasting that continuing to 2025.

David Manthey

I appreciate it. Thanks, guys.
I did.

Operator

Brian Butler, Stifel.

Brian Butler

Hey, good morning. Thanks for taking the questions.
All right just on the FKSS, when you think about the oil that you're collecting, how much are you over collecting versus what the capacity is now? I think you just told, I mean, you just told us where that is, but how much are you over collecting.
And what's the safety margin.
On what you'd like to collect? Let's put it that way.

Michael Battles

Brian, this is my, I'll start in one of the Ericsson sure can TRY if they want. We, we're not over collecting. We went aggressively as we talked about in the call, we went aggressively on CFO pricing and we're losing some gallons to do that, and that led to the closure of the California re refinery. So I think that's the. That's what's happening. We've kind of drawn a line. The issues we've been really very adamant about driving CFO pricing and to some extent we've lost something else, and that's okay.
And so we are certainly beyond the over collecting world. We're a little under collecting and we may have to, we have to continue to be aggressive in that area around around plants.

Eric Gerstenberg

Yeah, Brian, just to build on that, one of the key things when we as we push so hard.
In the past we were taking some gallons from some of our partners, I'll call it into our refineries that were also collectors in the used motor oil market. Those are the first ones to go as we raise our prices there. We're not taking those gallons nearly to the extent that we passed from those competitors or collectors that are out in the market as well, so. The cost the direct customers are the ones that we're really managing collectively as a team to drive that right CFO rate.

Michael Battles

And we're holding the line on those pricing we have not, we have no intent to change that.

Brian Butler

Okay, great.
And then.
On the the.
Captive.
Incinerator.
Opportunity, can you maybe just refresh everybody in on the size of that potential market.
And, what's the reality of some of those converting in.

Eric Gerstenberg

The next, couple of years. Obviously you're working with all of them, but, again, let's just TRY to size that and understand how big because that's not built into any of your, is that it's not built into your 25, but is it part of your vision 2027 as well?
It's Brian, just I'll give you a recap, it's really not part of our vision 2027. It's all opportunity to size it. Today, there is 41 active captive incinerators out there.
All those captive incinerators continue to be our customers. We handle waste streams and support their shutdowns when they occur.
About 20 of those have a probability that something may change with them, whether it's due to the changes in air regulations or them evaluating their utilization and their cost structure.
Are all of the above and the change in products that they might be making that affect the way streams that go in, all those types of things are in play. And it's It seems clear that there is an active opportunity with opportunities with a few of them over the next 3 to 5 years. None of that is built into our thought process. We just like we did with 3M, we went through strategic reviews with them as partners to help evaluate what is the best path, but we do see opportunities with them and and to help them lower their cost structure and And we anticipate that continuing to be a trend, especially in light of that we have such redundancy in in our incineration units to be able to handle anything that they need us to handle in our footprint. So good strong opportunities there we think.
Great. Thanks.

Eric Dugas

For taking.

Michael McDonald

The questions.

Eric Dugas

Sure. Thanks, Brian.

Operator

Jerry Revich, Goldman Sachs.

Jerry Revich

Hi, this is Adam on for Jerry today. Good morning. Over the last 5 years, you folks have had a really strong focus on pricing for appropriate returns in industrial and field services. Can you just update us on how customer retention metrics are tracking in those businesses? Have you seen any change over the last 12 months?

Eric Gerstenberg

Adam, yeah, here to begin. I'm sure my partners will add in.
We, as you mentioned, we've continued to price aggressively in the market with our field services and industrial to make sure that the returns that we're getting in those businesses is commensurate with the hazards associated with those services, and we've we've seen strong solid results with the teams implementing that.
We've obviously stayed ahead of inflation as well. When we look at the overall market basket of customers, I could name on one hand that of those customers that we've decided proactively to walk away with that weren't willing to accept what we were doing and and help work with us and so small attrition of customers overall.

Michael Battles

No real no real change in customer returns that's that's the punch.

Jerry Revich

Understood and then in SKSS understand that the CFL will take some time to flow through the financials, but are you fully caught up on your base oil market pricing are are there any other front and actions that can be taken or are we fully caught up at this point?

Michael Battles

Yeah, Adam, this is Mike. I'll answer the question. It's base pricing has come down and through the year end and even here early in January, we we we're we're a price taker in that marketplace and. And it's really hard for us to predict kind of what's going to happen to baseball price now as we think about our guides, we don't assume that pricing is back. We assume it stays kind of relatively flat, little uptick in summer driving season, a little down thick in the back half of the year, but really we're assuming kind of where we are today, it's the best we can do.

Eric Dugas

And and if you're kind of referring to our pricing.
Relative to.
Use motor.
Oil collection and if we're caught up there, that is something that will be dynamic and flexible on based upon the base oil pricing that Mike just alluded to. So if we continue to see deterioration in in base oil, we'll counteract that through our use more oil collection pricing. So, good point, that's the other variable there.

Jerry Revich

Great thanks so much.

Operator

(Operator Instructions) Tobey Sommer, Truist.

Tyler Brown

Good morning. This is Tyler Barra on fertility. Can you just explain the impact of the Trump administration's tariff policy on your business? I pose, potential incremental risk of refining margins or environmental services demand.

Eric Gerstenberg

Tyler, Eric Gerstenberg responding on that one. The We do not think that there is going to be any material effect on regulations that really are the foundation of the business. They go back such a long time and there isn't any anticipation that we would see or even think about rollbacks and regulations that would affect our business.
In fact.what, as The Trump administration has changed. New EPA leader, he's been talking about how he wants to help solve their issues and grow by onshoring and helping with permits on manufacturing and and really supporting the business and and hopefully taking care of getting more regulations in place around Pfos. So the, we don't see any step backward on any of the regulatory environment parameters that affect our business.
Got.

Tyler Brown

It. And maybe give a little more broadly, can you talk about demand trends by customer vertical, whether it's refineries or global chemical.

Eric Gerstenberg

Company.
Sure, Tyler, we still see very strong demand across the board. The refinery business, what's going on there as as we've mentioned in the past, has affected the later half of 2024 with turnarounds, as we mentioned earlier in the call here, we are seeing a stronger count of number of pipe number of turnarounds that we expected with that refinery business. But that continues to be in flux a little. The rest of the markets that we're servicing, particularly around chemical, retail, manufacturing, we still see strong growth. Our our collection volumes of containerized waste as we begin 2025. Our single digit high single digits ahead of last year. So that's that's positive. Teams doing a great job of making sure that we're staying tight with our customers, servicing them well, making sure we're staying in contact with them, and we see that in the early stages here are drum collections and as Eric alluded to earlier that there are some the normal effects in Q1 weather that affects certain areas, but overall, the verticals that we're servicing, and it's obviously a broad range of verticals, we're seeing some solid trends still.
Thank you.

Operator

Jim Ricchiuti, Needham.

Hi, good morning. This is, Chris Granho for Jim.
You, you'd mentioned that, you, you'd signed the first fleet customer for the oil at the end of the year. Is there a collection arrangement, in conjunction with that? And, could you talk a little bit about the funnel, for similar types of fleet opportunities as you enter the new year? Thanks.

Michael Battles

Yeah, Chris, this is Mike. I, I'll answer that. The, so yeah, that's exactly what happens. So we have as far as the more circular offering, we collect. Use motor oil at, pastor customer sites and sell them base oil at a at a little bit of a premium versus the market rate because it's a because it's because it's a low carbon footprint offering it so that that is how the more circular offering works, the Castro team has put up a fair amount of sales and marketing effort behind it and they've been investing a lot. Different and different avenues to TRY to grow that and we do think that there's plenty of opportunities to see a lot of lines in a lot of lines in the water. The pipeline is very strong and the progress that they're making to sell the more circular offering me, as I said in my prepared remarks, I did sign up one very large customer. I think they have another one very close to being complete. There's more in the pipeline. So stay tuned. I think we work very actively with them as far as you know as we go to market together and sell sell our services and sell our great base oil and so I think that it's been a good partnership so far and as Chris.the the the lead time on large fleet chains is long and so that's part of the challenge here, but I think the progress has been been terrific.

Got it.
Thank you. And you mentioned the expansion of Phoenix related to to the semiconductor vertical. I'm just curious, are you evaluating other potential geographic nodes where there are semiconductor fabs underway?

Eric Gerstenberg

Yes, we certainly are, Chris. The expansion that with our customer base out in the Phoenix area has been really strong so far. We fully anticipate that's going to continue. And then in a couple of select geographies we have strong opportunities as well, growing relationships with customers there, so it's been an area that we see growth.
Great.
Thank you very much.
Thank you.

Operator

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

Michael McDonald

Thank you, Christine. I want to thank the Clean Harbor's team for their great work in 2024. At 25,000 strong, their focus on safety, sustainability, and exceeding customer expectations led to another year of great results and positions us well for continued growth. We hope to see you all at our investor conferences in the coming weeks. Have a good rest of your week and most of all, please stay safe.

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.