Greetings, and welcome to the Clean Harbors, Inc. Third Quarter 2019 Conference Call. At this time, all participants are in a listen-only mode. A question-and-answer session will follow the formal presentation. [Operator Instructions] As a reminder, this conference is being recorded. It’s now my pleasure to introduce your host, Michael McDonald, General Counsel for Clean Harbors, Inc. Please go ahead, sir.

Thank you, Kevin, and good morning, everyone. With me on today’s call are Chairman, President, and Chief Executive Officer Alan S. McKim; EVP and Chief Financial Officer, Mike Battles; and SVP of Investor Relations, Jim Buckley. Slides for today’s call are posted on our 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, October 30, 2019. Information on potential factors and risks that could affect our actual results of operations is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision to the statements made in today’s call other than through filings made concerning this reporting period. In addition, today’s discussion will include references to non-GAAP measures. Clean Harbors believes that such information provides an additional measurement and consistent historical comparison of its performance. Reconciliations of non-GAAP 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. And now, I’d like to turn the call over to our CEO, Alan McKim. Alan?

Thanks, Michael. Good morning, everyone. Thank you for joining us today. Starting on Slide 3. Q3 was another strong quarter for us, as we drove high-value waste streams into our network and achieved growth across many of our service businesses. It was our eighth consecutive quarter of profitable growth. We delivered nice revenue growth of 6% in the quarter and grew adjusted EBITDA by 11% on the strength of our business mix, pricing and higher efficiencies. Environmental Services was the primary driver behind our strong performance and Safety-Kleen contributed to our profitable growth. Turning to our segment results beginning with Environmental Services on Slide 4. Revenues were up 8% in Q3, due to growth in our volumes, particularly Incineration, the mix of waste that we received and the strong growth across multiple service businesses, such as Field Services. Adjusted EBITDA increased 19%, which translated to a margin improvement of 180 basis points and put the segment above 20% for the second consecutive quarter. That level of margin and profitability reflects the mix and volumes we saw in the quarter, supported by ongoing efficiencies at our facilities. As I mentioned last quarter, we also continue to realize the benefits of the regional structure that we instituted in 2018. Incineration utilization came in at 92%, up considerably from a year ago. The plants ran well in the quarter and that helped limit our turnaround days, which we had expected to be low due to turnarounds that were shifted to the second quarter. Our average revenue per pound for incineration increased approximately 12% from a year ago, primarily as a result of the ongoing shift to high-value waste streams, such as high halogenated compounds. Landfill tonnage was up 6%, as base business was steady and supported by several projects. We generated about $8…

Thank you, Alan, and good morning, everyone. Turning to Slide 9 in our income statement. As Alan highlighted, we delivered good results across all our key metrics in Q3. We increased revenue by $48.5 million, while growing adjusted EBITDA by $15.3 million, an incremental margin pull-through of more than 30%. This quarter saw – we saw good growth supported by higher pricing and operational efficiencies. From a gross margin perspective, we saw 20 basis point improvement in Q3 from a year ago, due to better asset utilization, business mix and pricing. SG&A expenses were up $1.1 million in absolute dollars, but improved 70 basis points in percentage terms. This improvement was driven by a series of cost saving initiatives, as well as efficiencies achieved through our Safety-Kleen Customer Care Center, which we invested in over the past two years. Using the midpoint of our guidance range, for the full-year 2019, we now expect SG&A to be down in absolute dollars, with an improvement on a percentage basis of 80 and 90 basis points versus 2018. Depreciation and amortization increased slightly to $73.8 million, which reflects assets we’ve added from tuck-in acquisitions and capital spending. For 2019, we now expect depreciation and amortization in the range of $295 million to $300 million, which is essentially flat with prior year. Income from operations increased 22% to $80.4 million, reflecting the combination of our revenue growth and improved margins. On a GAAP basis, EPS was $0.65 versus $0.55 a year ago. Our adjusted EPS was $0.72. Our effective GAAP tax rate was 32.8% in the quarter. On an adjusted basis, our tax rate for Q3 was 32.5%. For the full-year 2019, we anticipate that our tax rate on an adjusted basis will be in a 30% to 31% range. Turning to the balance…

Thank you. We’ll now be conducting a question-and-answer session. [Operator Instructions] Our first question today is coming from Noah Kaye from Oppenheimer. Your line is now live.

Thanks, and good morning. Just a couple from me to start. You mentioned at the outset, Alan, that the PFAS opportunity and kind of gridlock in Washington being a gating factor there. But it does look like there has been a couple of developments recently. We saw you’re participating in a program with Washington State on incinerating firefighting foams. So I guess, the first question is just from a technical perspective or all of your incinerators, are the majority permitted to destroy PFAS substances? Have you proven to the regulators that incineration is fully effective at the disposal method? Would you – would it require any CapEx into the plans to deal with PFAS, just your thoughts there?

We do see – it’s still non-haz, right? So we’re still waiting to get some determinations from the Feds and ultimately, how are the states going to administer the programs. But we also know that we have a strong pipeline of opportunities. A lot of them are predominantly to deal with groundwater and in situ kind of treatment systems. And we are essentially booked out with our treatment units and we’re looking at next year to invest a lot more in our treatment plants. So that we could get more and more of those rental units out, not only to support our customers directly, but also to support a number of our partners that would like some of the technology that we have, particularly again on the groundwater. I think it’s too soon to tell from an incineration standpoint, just which ones we would be earmarking as the regulations come forward here. But obviously, the rotary kilns would be the most likely sites that we have and we have several of our plants are the rotary kilns technology, which would be most appropriate.

Okay. But from a permit perspective, there’s no gating issue there?

Yes. This is Jim. There are no permit yet, because as Alan said, that – it’s still non-haz…

Yes.

So until [indiscernible], no one has a…

Yes.

And we – I think we also saw that there may be waste streams coming into your Sarnia landfill just as some landfills in the State of Michigan, for example, are refusing to take PFAS wastes. So just any thoughts there on, maybe understanding how the design standards and the operating requirements of your landfill maybe offer a bit more control over PFAS? I was just understanding how that happened?

Well, our Sarnia landfill did go through a pretty exhaustive permit expansion that took about six years and was issued to us a couple of years ago. And so that gave us a lot more capacity and meeting a new design standards certainly was part of that. And we also put in the thermal treatment unit there. We have an incineration – incinerator operating at that site as well, but it’s only liquids-only. So that wouldn’t be one that would be used for any solid contaminated material. But that particular landfill has got some real unique capabilities to it with that permit expansion we have.

Okay. And then just following up in your comments on IMO 2020, maybe kind of take us through a little bit of your thought process right now? What impacts do you expect us to have on your IMO demand? How likely is it that you’ll be able to put through a price increase as we exit the year? Just your thoughts on how the overall environment is shaping up relative to your expectations and opportunities for pricing?

Yes. So I think what we’ve seen here is, the used motor oil that wasn’t being re-refined through companies like us, so it was going into the utility market predominantly. And much of that market has driven – dried up. A lot of the utility market now is being served with this much lower cost high-sulfur fuel oil, where they have the scrubbers and they have the ability to take this material, but because of the significant discount that you’re seeing now with high-sulfur heavy #6 oil. That is really what’s been disrupting, I believe, they used motor oil market. And so the market is somewhat long right now. And we just recently did put out a price increase because of that. And we know that many collectors who are not in the re-refining side of the business are going to have some real difficulties getting rid of their oil, because of the whole shift that’s going on with the high-sulfur market. So we feel very good about our position and being able to service our customers, be able to handle more used motor oil. We’re expanding our California facility right now and adding more VGO capability there. The VGO market is really strong right now. So we’re not going to be making a more base oil just yet, but we are making and converting more used motor oil at that plant. So I think we’re feeling very good about the used motor oil side. What we haven’t seen yet is any of the impact of swinging some of the material over into the diesel side or the marine diesel side, which subsequently may have a positive impact on the base oil market. We haven’t seen that yet.

Yes.

Hey, Noah, one point I want to add to Alan’s comments is that, although, we didn’t do a price increase, and I think that we’re, as Alan said, we’re seeing kind of signs of life. There’s not much of an impact in Q4. I think that it does take time to kind of go through the system. And so I’m not anticipating that being a big lift for Q4, per se.

Yes.

Mike, you anticipated my question. So really, this is a benefit to 2020, is that right?

That’s right. That’s right.

Yes.

Okay, thanks. I’ll turn it over.

Yep. Okay.

Thank you. Our next question is coming from Tyler Brown from Raymond James. Your line is now live.

Hey, good morning, guys.

Good morning.

Hey, Tyler.

Hey, Alan. I just want to unpack the comments around seeing some industry specific weakness on the macro front? I’m just curious what specific industries are end markets that you were talking about there?

Yes. I just think sort of broadly thinking about what you hear about transportation and manufacturing being a little bit soft. I think…

Industrial production being down.

…yes, industrial production was down. But quite frankly, not specific to a particular company, or our customer base per se, but that’s just sort of the noise that we hear out there that there are some slowdowns, maybe some had to do with the GM strike. We don’t know how that might kind of work its way back. We certainly saw a little bit of that in the blended oil market. So there was some impact by that. But it was just a reference that, there has been comments, particularly about those three particular areas that are important markets for us.

Sure, okay. But then you kind of were quick to note that you do have a healthy backlog in the disposal network. And whenever you’re talking about that, is that more on the incineration side, or the the backlog and the landfill project work?

Yes, I think, this was a good quarter for our landfills. We do have a big backlog. I think our deferred has grown quite a bit. So that, that’s sort of another sign that we’ve got a lot of material there. Mike, do you have a comment, too?

Yes, Tyler, it’s over $11 million. Deferred revenue has gone up $11 million since year-end. And so I feel like, Alan’s comments are, we’re not immune to macroeconomic factors. But we see nothing today. As we look at the near-term, both our pipeline in Q4 and early 2020, we don’t see anything yet. But again, we know that we’re not immune to it, that’s kind of Alan’s points, whether it be in manufacturing, whether it be in transportation, whether it be in utilities, I mean, that’s just some of these factors are impacting them, and I’m sure they’ll impact us, we just don’t see it today.

But I think as we finish the year strong, as we go into our seasonally slower quarter, we’ve got a heavy backlog of material. We also have, I think, a very strong pipeline in –coming out of our sales organization for both projects, as well as ongoing waste stream. So I think, we haven’t yet seen any real impact yet, I guess, what we’re saying.

Okay. So it feels that the backlog is good. You got waste in the pipe, so to speak. The incineration pricing continues to have momentum. I think and correct me if I’m wrong, but you have fairly easy comps in the first-half from some exogenous events. So I guess, my question is, why wouldn’t yes, maybe grow mid to high single digits next year, just outside of the macro really falling apart?

Yes, Tyler, we’re going through our budget process, kind of as we speak right now. And obviously, we’re excited about the progress we’ve made in 2018 and in 2019. And I’m hopeful that as when we get to that process and we can go and review that with that Board and get their sign off, we’ll be able to come back and kind of give you kind of some indication and some thoughts around 2020. That being said, as Alan said that, a lot of good indicators, and we come in with a strong backlog and a seasonally weak quarter. So I’m optimistic. But I think that, it’s important that we kind of respect this process, and we’ve been good at doing that. And I think we’ll continue to do that.

Okay. I had to try. I appreciate that. Just real quickly – sorry, a conceptual question, Alan, about Safety-Kleen. So in my right, is it about the two-thirds of the EBITDA is really housed in the branch business with maybe the other third kind of making money on the oil side. Is that conceptually right? And I know that that branch business is very sticky, but it’s probably slow growing, whereas that other third of the EBITDA that oil business, that’s where you’re going to see the influence from IMO and maybe closed-loop. Is that the right way to think about it?

Yes.

Okay, okay.

Yes.

I wanted to make sure I had that. And then my last one here. So, Mike, I think this is the second or third EBITDA raise this year. So is your incentive comp accrual tracking over 100% here in 2019?

Tyler, so it is a second, I think. I don’t think we’ve raised guidance in Q on – I think we did it in Q2, we did it again this morning. But I think that, the challenge is that, our accruals are obviously booked towards what the bonuses are every quarter – to those up every quarter. We’re very diligent. That being said, we have some very aggressive safety goals. And we’re running, although, we’re doing better than last year. We’re not kind of getting to those safety goals right now. And as such, that accrual was probably a little lower than where it was last year. But the base…

Okay.

…as you can imagine, the base business is doing well. We’re really good to – really close to budget. A lot of – I think a lot of good bonuses being accrued, just to be fair. But safety is although a great improvement from prior year and we said – internally we said tough – we have our expectations for ourselves and we’re finding a little short of that at the moment.

Okay, all right. I appreciate it. Thanks, guys.

No problem, Tyler.

Thank you. Our next question is coming from Michael Hoffman from Stifel. Your line is now live.

Thanks. Good morning, Alan, Mike, Jim.

Hi, Michael.

Can – let me – I want to knock something on the head on PFAS. You’re not going to do drinking water. If whatever you’re going to do is going to be on remediation groundwater, your steer clear drinking water. Drinking water is probably the bigger near-term play, but there’s a long-term trend potentially in remediation on PFAS?

Yes, exactly. We may support the larger E&C companies out there that need that some of the technology and units that we have, but absolutely, you’re right.

Okay. And so, Alan, you’ve been at this a long time, and I – give me credit for often seeing where the puck goes. Is this an asbestos or a PCB opportunity?

I think it’s probably more of a PCB, but it’s going to take the regulatory driver to make it that way.

Okay.

And so I think, obviously, that is the difficulty right now is to try to understand whether we can – whether something will get done in Washington or not.

So your view is, you need a Fed move, not just the states, because the states are being in front of the Feds at this point?

Yes. I mean…

Yes, yes?

I think that’s typically where the funding comes from and how the states can get more money and make sure that, all the states are aligned. I think that’s the best place here.

That’s where the money comes from now normally, Michael, is from the Fed.

Yep. Okay. And then you’ve touched on the unbilled AR. So there is this positive trend that’s been happening each quarter and there’s nothing to suggest that that trends changing either when you try and correlate it to a macro?

Right. I think when we look at the real details behind our agings and where all the components of DSO, our buckets of receivable are in pretty good shape. We just need to do a better job of getting our bills out the door a little bit faster, which has the most impact on DSO right now.

Okay. And then this is a tough question. But the last cycle, Clean Harbors had some challenges being able to look forward and predict the business, as it compressed. What have you done in the business model to improve the ability to predict it? Because in – there’s a slowdown is inevitable, businesses have cycles. So what have you done to improve that predictability this time?

I think our exposure in oil and gas is relatively small today, EBITDA is in the $15 million, $20 million range versus $150 million range. So, we have divested a number of businesses and sold off a lot of assets in that space. As we saw that impact, particularly in Western Canada with the huge discount in crude oil and the reductions and the amount of plants that were being proposed and built. And so I think our exposure there is relatively low. I also think that we’ve put in place some, I think, very good tools to manage the spread in the business, particularly in the Safety-Kleen business. I mean, when you think about the EBITDA that we got when we bought it in 2012, where we are going to end up this year. We essentially doubled the EBITDA of that business for – outside of maybe some corporate allocation that you could argue about. But we still believe that there is good margin improvements that could be made in the Safety-Kleen business with other initiatives. We’re sort of at that seventh inning, as compared to where I’ve spoken before. But I do think that managing the spread is probably the thing that will help us as we hit maybe a – some type of downturn and the crude oil values, let’s say, it went down to $20 again, I think, we’re in a good position.

Okay. And then lastly on that, just to be clear, Mike, you came into the year of thinking, you would – flat would be good from the SKO contribution to EBITDA, maybe it’s slightly down. But SKE was continuing to improve average branch revenues, good solid organic growth there, which is driving operating leverage. And so that’s why it’s up, that that’s still the right way to think about it. And then IMO helps next year, or if crude oil goes up higher than base oil, prices go up anyway. But that’s how to think about it.

Yes. No, I think that’s exactly how you – that’s how you look at it. I think that the you – I think that we had a tough start. As – if you remember with some of the flooding and frozen barges and so forth, we had a tough start to the year and that kind of put a lot of pressure on the SK oil business. I think that, I totally agree with you that, the growth is – the growth this year is coming from the branch network and better price – better pricing and leveraging that business.

Right, because it’s looking like it’s mid single digits or better where SKO might be flat or down and there’s your low single-digit blend.

Yes. Yes, sir.

Okay. All right. And then, okay, cool. All right. And then I just want to make sure I heard you correctly. You’re biasing the free cash flow midpoint or higher. So you didn’t change the guidance there. But you’re acknowledging the EBITDA trend would lead you to midpoint or higher?

Yes. I think that, Michael, the challenge around cash flows, it’s very difficult to predict down the stretch. Working capital is volatile as far as when we get paid and so forth and what we owe and when we owe it. And so I think that we were hesitant to kind of raise, although, we did raise EBITDA guidance, we feel very good about that. I was hesitant to raise cash flow guidance just because there are a lot of ambiguity beyond my control that I want to make sure that I consistently exceed expectations.

Got it. Thank you very much. See you on Sunday.

Okay, thanks, Michael.

Thank you. Our next question is coming from David Manthey from Baird. Your line is now live.

Yes, thank you. Good morning, everyone.

Good morning, David.

Good morning, David.

First off, you – I think you said you ended the third quarter in a charge-for-oil position. Did you say that you further raise those charges at the end of the quarter? Just so I heard that right?

Yes. Go ahead, Michael?

Yes. Yes, David, we ended the quarter up a little bit. And we have put a price increase in place subsequent to quarter-end this – actually this month, yes, subsequent to the end of the quarter.

Okay, so upward bias there. HCC, when they reported, they sort of had an expectation of choppiness in UMO markets in the fourth quarter. I guess, I can trust that, Alan. You sounded very confident that things were going to get better from here. And I’m just wondering what gives you that level of confidence relative to some of the ebbs and flows of the supply and demand in these markets, as we move towards IMO 2020?

Just – really just a feedback that we’re hearing from our team in the oil side of our business, where purchases of third party oil or swaps that are going on or traders that are trading in UMO, basically, shut it off from any further sales. I mean, we – we’ve seen some of the bigger trading firms, say, look at the utility market is closed. We don’t have an outlet. We have product really sitting stranded in some cases and we’re not going to be taking on anymore. So now that’s particularly on the two coasts, obviously, the east and – East Coast/West Coast are where you really see that and maybe heritage being in Indianapolis maybe doesn’t get as much color around that as we see it. But we’re pulling oil from all over North America and we get a good idea of sort of where inventory levels are and what outlets are wrapped. So I feel pretty confident about it.

Okay, that sounds good. And further on pricing beyond the charge-for-oil and you also gave us incinerator price. And were you able to achieve price in any of the other lines of business, the industrial environmental services, parts washing?

I would say on the industrial side, particularly after the Veolia acquisition, we have really done some deep dive in probably the top 30 or 40 contracts. And in some cases, we have lost some of that businesses. We were more aggressive in our pricing strategies. They’re trying to get more of a reasonable margin for some of the business that we acquired. So I think, overall, industrial will be down because of some of those initiatives. But we also think that in other cases, where we have sort of a nice bundled service approach to some of these customers, we’re getting their waste streams, we’re doing their industrial work, we’re doing their emergency response work. We see some opportunities for price improvement in those scenarios. So – but I would say just pricing in general and industrial has been a real focus of ours.

Okay, sounds good. Thank you very much, guys.

Okay.

Thanks, David.

Thank you. Our next question is coming from Jim Ricchiuti from Needham & Company. Your line is now live.

Thanks. Good morning. Question on SG&A. You seem to be doing a nice job on that score. And I know you’re early in the process and thinking about 2020. But I’m just wondering, is there anything you can say as it relates to SG&A expenses as a percent of revenues going forward? Is there much more that you can get do you think from that area?

Yes. Jim. So, we’re not going to talk about 2020 in – as part of this process. But in – but we didn’t see anything unusual this year. We did do some – like the team is always trying to think about not just the quarter in front of us, but next year and the year after some of the moves we made in 2018 and 2017 of consolidating operations are starting to pay off this year. And there’s no reason to think that we’re not going to start thinking of some more creative ideas in 2020. So can it get better? I’m hopeful. But I think that the team is always thinking about kind of how to take out costs, how to consolidate locations, how to do things more efficiently, how to put better systems in place, all those things are to drive kind of SG&A as a percentage of revenue. All those things kind of allow you to get that better leverage, and the team does an excellent job of doing that, led by Alan and the whole organization focused on that exact point.

Got it. And just turning to the ES side of the business. You noted a couple of areas of pockets of weakness, but it sounds like what you’re seeing is actually fairly healthy demand. I’m wondering, are there any parts of the market, where you’re seeing unusual strength of better momentum that you would have expected?

Nothing that I can – Mike, I’m not sure if you have anything that comes to mind. I mean, we – the chemical industry is really strong.

Yes. That’s right, say, Jim, is that chemical investment is being made, especially in the Midwest and in the Gulf continues to kind of pay dividends for us. I mean, we were just – we have that – we have the network, we have the teams in place there. And that has been a winner for us for a year or two. I think that will continue to be a winner for us prospectively. I just think that type of investment that’s being made billions and billions of dollars being invested in the region and a low-price natural gas and they build the labor. I think, it’s really been helpful for us and that sees no sign of slowing down, in my opinion.

And then final question for me. I’m just wondering if you could elaborate at all on just where you are in terms of reinvigorating the sales on the closed-loop side. It sounds like you’ve made some changes. And I’m wondering, what we might anticipate near-term from some of the internal changes you’ve been making?

So I’ll start now and feel free to jump in there. We are up over 40% in the direct loop kind of year-over-year. Now that’s not our own internal – because our numbers have – we have higher expectations for that. We’ve made a lot of investments in people and processes. We’re hopeful that there’s further progress. But I think that, I think on – just taking a step back and looking at it from here and 30,000 customers, good stick rate, good growth every month with more volume being and the team really excited about it. I’m hopeful that continues to grow. Is that going to be the needle mover in 2020? I hope so. I’m not sure it will or not. But I do – I’m excited about – the team is very excited and I’m very excited about the growth that they’ve made. Again, not as fast as we wanted to do, a lot of a lot of things we had to work through. But I think the team is really excited about the prospects going forward.

Yes. Certainly, customers are adapting to our products in there. They like the value proposition that we’re offering them. So we’re seeing, as Mike said, good repetitive sales with over 30,000 customers. And so as long as our team continues to drive those kind of subscriptions, we’re just building more and more of our customer base. We’re going to continue to see a nice steady growth in that business.

Last point on this one, Jim, is I think that the sustainability angle that hasn’t been a focus of ours. It hasn’t been a focus of our customers over the past couple of years is starting really to take hold and take root. I mean that we are – this is all recycled oil. It’s a higher-quality than from crude. And we’re really excited about the prospects over the long haul. It’s – again, it takes longer to change attitudes. And so I think that those attitudes are starting to change.

Got it. Thanks very much.

Thank you. Our next question is coming from Larry Solow from CJS Securities. Your line is now live.

Great, thanks. Good morning, guys.

Good morning, Larry.

Just a couple of quick follow-ups. Just on the – back to the – on the pricing on the incinerator side. Clearly, you guys have done an excellent job. And you focus much more on the high-value waste streams and you’ve gotten El Dorado performance really improved a lot. And you had – I think you had an easier comp, too, as you go back couple of years ago and you’ve built on that this year. Going forward, maybe not double-digit increases, but is there still room for sort of mid single-digit or even higher increases and maybe that can offset some of – some flattening of volume in some pockets that you spoke of?

Well, I think we just went through a – sort of a three to five-year strategic plan. And when we look at debottlenecking and opportunities to continue to expand our incineration capabilities and adding more processing, whether it be drum shredding to be able to process more drums faster, or ash handling capabilities and other kind of technologies. We see real opportunity to continue to get more tonnage through the plants. Clearly, we have a high demand situation right now. And we think that’s going to continue to grow because of the whole renaissance of the chemical industry here in the U.S. Low price in natural gas is really, we believe what’s brought back a lot of major chemical companies here. So I think that’s how we think about the incineration business, Larry, right now.

Okay. And then on the mix, specifically, you mentioned, you continue to shift towards more high – highly – higher-hologenetic compounds. Is there – El Dorado is that – is there still room for improvement there, or is it now sort of handling the, what you call, the nasties of the nastiest waste?

Well, that plant – that brand-new plant there, as you know, was designed to handle those more difficult type streams. And so we’ve continued to ramp that plant up. We’re still not where we want to be with the throughput of that facility. But we are – the team has really made some great progress since its initial startup there. And we do have some additional investments being made in El Dorado, which we hope will allow us to take even more of those materials through the plant, because it’s not just getting the material into the incinerator, but it’s actually getting the material prepared and able to be efficiently incinerated within the plant. So a lot of the preparation side of our incineration business, we can add a lot more value, too.

Okay. And just switching gears on Safety-Kleen on the closed-loop. Obviously, it’s grown rapidly, as you said, but some pretty small numbers. And you talk about a little bit of internal reallocation of investment and whatnot. Potentially, do you still think maybe there’s some external opportunities you might be able to make to sort of kick start it a little bit more?

I think so. I mean, it’s about a 2.3 billion gallon market, and we’re just a tiny, tiny fraction of that, as you know.

Right.

And so to get to where we want to get our base oil, blended oil split, which is sort of a shifting it from 70-30 to sort of 30-70 blended now. We – the market is there. We just – we’ve been adding people. We’ve been bringing on more experienced folks to manage that business. We have a new leader in Craig Linington, who’s running our SK oil business, who came over from Shell and Jiffy Lube, who has got a lot of great experience. And so, we have high expectations that we’re building the right team now to accelerate the kind of growth that we see in what is a a 2 billion gallon market.

Right. And then just lastly, on the fine-tuned organizational structure, which you’ve mentioned in a last couple of calls. It sounds like you’re certainly starting to reap some of that benefit. Do you see that sort of – are we in the early innings of that? Sometimes these things take a while to really to bear fruit, so perhaps you’ll benefit that for the next several years going forward?

I think as we look at the regional structure that we put in place 18 months ago or so, the team has really done a nice job of tying in our field, our tech, our industrial and now even getting Safety-Kleen closer together with that new regional structure is something that we’re really working on to kind of build more of a single platform. So that, even though we’ll continue to have Clean Harbors and Safety-Kleen as our brands, we know that from a service delivery, we can work closer together to service each other’s customers, particularly as we have grown in areas like our retail business, where this – the tremendous opportunity to leverage each other’s service capability. So I would say, we’re in our early innings there as it relates to the Clean Harbors Safety-Kleen network out there.

Okay. And just one last question, if I may. You mentioned sort of – you recently – I think you said internally, you guys sort of discussed a three to five-year outlook. I know, looking back maybe 10 years ago, something you had put out sort of a longer-term outlook and that was when your company was somewhat different and so more oil focused. You haven’t put out sort of that longer-term number. Any thoughts going out over the next six, 12 months, where you might discuss a little bit more of long-term nature and what you think the business can do?

Yes, why not, Larry. I think we certainly should think about doing that and sharing sort of our long-term vision with you and the Street. So let us put – let’s think about that and get back with the team.

Awesome. Thank you. I appreciate it, guys.

Yes. Thanks, Larry.

Thanks, Larry.

Thank you. [Operator Instructions] Our next question is coming from Jeff Silber from BMO Capital Markets. Your line is now live.

Thank you so much. Just a couple of quick follow-up questions. When you were discussing the Environmental Services segment, you talked about some major ER events that contributed, I think, about $8 million in the quarter. Is – are those all done? Are we going to see some kind of roll off into the fourth quarter as well from that?

Probably the one – major one is still ongoing. And so we continue to work on a pretty large event down in the Southeast, a water event, so I would say that particular one. And I think the wildlife reserve is still going as well. So I think a couple of those were still ongoing here in this – in the fourth quarter.

Yes, Jeff, pretty small. But yes, there’ll be some rollover effect.

Yep.

So smaller than the $8 million you saw in the third quarter?

We believe so. Yes.

Yes, because one of…

Yes. It’s always difficult. And there could be others that could come on, and it’s hard to – very hard to keep those natural events.

No, that’s fair enough. And maybe in your prepared remarks, you talked about adjusted EBITDA guidance by segment. Forgive me, I kind of cut out here. Was that for the fourth quarter or was that for the year as a whole?

Jeff, what we do is, we always give guidance for the full-year by segment and we adjust that accordingly as the business has changed. So that that would be – you can get to the nine months and back into it.

Got it. Okay. Thanks so much.

Thank you. We have reached the end of our question-and-answer session. I’d like to turn the floor back over to management for any further or closing comments.

Okay, thanks, Kevin. Thanks for joining us today. We’re participating at the Stifel event and presenting at the Baird Industrial Conference next week. So we look forward to speaking with many of you at these and other investor events. Have a safe day. Thank you.

Thank you. That does conclude today’s teleconference. You may disconnect your line at this time, and have a wonderful day. We thank you for your participation today.