Greetings, and welcome to the Clean Harbors Third Quarter 2025 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.

Thank you, Christine, and good morning, everyone. With me on today's call are our Co-Chief Executive Officers, Eric Gerstenberg 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, October 29, 2025. Information on potential factors and risks that could affect our results 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 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 performance. Reconciliations of these measures to the most directly comparable GAAP measures are available in today's news release on our IR website and in the appendix of today's presentation. Let me turn the call over to Eric Gerstenberg to start. Eric?

Thanks, Michael. Good morning, everyone, and thank you for joining us. As always, let me start with our safety results. Through September 30, we were at a TRIR of 0.49, putting us on a track record for another record year. We are extremely proud of that performance. The only way you achieve this level of excellence is with constant operational focus from the whole team to protect themselves and each other. Safety performance delivers measurable benefits across multiple dimensions from enhanced operational efficiency and productivity to stronger employee retention and company reputation. For any team members listening, congratulations on these great safety results, and let's finish strong in Q4. Turning to a summary of results on Slide 3. Our Q3 performance reflected year-on-year growth from an increase in overall waste volumes into our network. Pricing gains and increased productivity even in an environment where softer conditions resulting from macroeconomic factors have impacted some customers. Our ES segment grew on strength in Technical Services and SK branch. Our Safety-Kleen Sustainable Solutions segment performed in line with expectations, mainly due to our charge for oil program and product mix. Driving margin growth continued to be a focus for us as we are -- we were pleased to see our consolidated adjusted EBITDA margin increased by 100 basis points from a year ago to 20.7%, demonstrating the effectiveness of our pricing, the leverage in our network of permitted facilities and cost-saving strategies. Within all of the underlying ES businesses, we drove pricing gains and improved productivity while lowering costs, driving better margin contributions. Corporate segment costs were up from a year ago, primarily due to higher insurance expenses and health care increases, offsetting partially by cost-cutting actions. Overall, Q3 results fell slightly short of our expectations due primarily to slowness in field services…

Thank you, Eric, and good morning, everyone. Turning to SKSS on Slide 6. This segment delivered results in the third quarter that were in line with our expectations. Despite pricing headwinds in the base oil market all year, we effectively managed our re-refining spread and drove value from other initiatives. During the quarter, we dramatically lowered our waste oil collection costs versus a year ago as we advanced our CFO program. It is clear that our used oil customers understand that we are collecting a waste from them and providing value and reliable services. The team continues to manage costs while still collecting the volumes we need to run our plants. In Q3, we gathered 64 million gallons of waste oil, which is consistent with the second quarter. On the top line, our revenue decreased as expected. In terms of profitability, our adjusted EBITDA was essentially unchanged. The result was a 100 basis point margin improvement, largely stemming from the CFO increase, cost reduction initiatives and efficiency gains. We also increased our direct lubricant sales, which are among our highest margin gallons to 9% of our total volumes, which also contributed to that margin improvement. During the quarter, we continued our partnership with BP Castrol to support their more circular offering for corporate fleets. Additionally, we are growing our Group III production as those gallons carry a premium to our traditional Group II volumes, and we remain on track to add several million gallons of Group III this year. Turning to Slide 7. Today, we announced plans to construct a state-of-the-art processing plant that we refer to internally as the SDA Unit. By using an industry-proven Solvent De-Asphalting process and combining it with our existing hydrotreating capabilities, we can unlock incremental value from an everyday product, VTAE generated today in…

Thank you, Mike, and good morning, everyone. Turning to our Q3 results and the income statement on Slide 10. While our quarterly performance came in below our expectations due to the factors Eric outlined, primarily a shortfall in Industrial and Field Services plus elevated health care costs, I want to highlight the underlying strength in our business. Total revenue increased to $1.55 billion in the quarter, with Environmental Services growth stemming from our wide range of service offerings and diversified customer base. Adjusted EBITDA increased 6% to $320 million, demonstrating our ability to drive profitable growth through a steadfast commitment to margin expansion. Our consolidated Q3 adjusted EBITDA margin expanded to 20.7%, led by a 120 basis point improvement in Environmental Services. This margin expansion reflects our strategic focus on pricing initiatives, cost reduction efforts and productivity gains as we see evidence of margin improvement across each of our business units within the ES segment. Within Environmental Services, demand in our disposal network and collection businesses remained solid, driving revenue growth despite macro headwinds in some verticals like chemical. SKSS delivered more than $40 million in EBITDA, its strongest quarter in the year demonstrating operational resilience in a soft base oil market. SG&A expense as a percentage of revenue increased from a year ago to 12.2%, reflecting higher health care costs, professional fees and compensation. We are maintaining our full year SG&A guidance as a percentage of revenue in the low to mid-12% range. Depreciation and amortization was approximately $115 million, reflecting our continued capital deployment, including Kimball operations and increased landfill amortization related to greater disposal volumes. We've raised our full year depreciation and amortization guidance to $445 million to $455 million, primarily due to the strong landfill performance. Income from operations in Q3 was $193 million, flat versus…

[Operator Instructions] Our first question comes from the line of Tyler Brown with Raymond James.

So it feels like there's a lot of puts and takes out there. The industrial malaise, I guess, continues to march on a bit. But Eric Dugas, just it looks like you brought the midpoint down, call it, $15 million. But if you had to bucket the culprits, would you say it was really the field and industrial shortfall? And then how big was the health care issue? You brought it up a few times. Was that onetime? Or is that a go-forward step-up in cost?

Sure, Tyler. So in terms of the total takedown, the $15 million, a lot of that is reflected in our Q3 results. Industrial Services being the most predominant piece of that, we estimate maybe $7 million. Field Services, really just the lack of those medium and large projects that we've seen a good chunk of in earlier quarters, probably about $4 million. And then the healthcare in the Environmental Services segment is about $4 million and probably about $6 million overall to the entire company. So I think you're absolutely right in terms of a lot of puts and takes. We still see really strong momentum and good volumes in more of our waste disposal-related businesses of tech services and SKE and think those will perform quite strong kind of here into Q4 and into 2026. I guess the last point on healthcare, Tyler, it is a trend I think a lot of companies are combating. We have built in the increases into our Q4 guidance, and we're in the process of doing some things to make sure that we can offset some of the increases we're seeing there. But probably not entirely unusual, but certainly higher cost than we would have liked here in Q3.

Tyler, this is Mike. The one thing I'd add to what Eric said, we did have a fair amount of high-cost claims. That's much higher than, let's say, averages for the past 2 or 3 years. Hard for me to say if that's the new normal. It doesn't feel that way. But as Eric said, we're trying to make sure we're changing some of our plans to make sure we cover off on that in 2026.

Okay. Okay. That's helpful. And then I appreciate that you guys aren't giving '26 guidance. But conceptually speaking, I mean, should we think about EBITDA on a more consolidated basis kind of flattening out year-over-year just into maybe the first part of '26. It sounds like maybe, Eric Gerstenberg, you're not looking for an industrial pickup really until the spring turnaround season? Or are there enough internal levers to kind of drive the EBITDA growth even in the first half without a whole lot of economic help?

Yes, Tyler, I'll start. And certainly not expecting a real rebound of an industrial turnarounds until the spring. However, we're going to continue to grow our EBITDA across our waste collection businesses and our service businesses as well. So we're looking at next year, preliminary. We're still of a budget process to go through. But 5% EBITDA growth, I mean, we're really still targeting that. We think we can do that based on the demonstration of cost-cutting initiatives and volume and pricing growth in those waste businesses.

Okay. That's extremely helpful. And then I do just want to come back to capital allocation, Mike and Eric, just obviously, you guys announced a very sizable organic growth project. I'm sure someone will go over all of that. There was another decent buyback in the quarter. But just realistically, what should we be expecting on the M&A front? I mean, how does that pipeline look? Are you looking at bigger deals? Are you looking at smaller deals? Do you think you can get something across the line this year? Or is that something maybe more into '26?

Yes, Tyler, the answer to that question is yes. So we are looking at larger deals. We're looking at smaller deals. I think that we obviously, we talk about the SDA and happy to go into that and maybe other projects we're thinking about. But in the interim, we want to remain prudent. We want to remain disciplined, like we have for the company's history, frankly. But certainly in the past couple of years, we certainly try to be very thoughtful about it and make sure we're getting a good return on our shareholders' investment. And I think there's plenty of things out there, both large sizes, publicly available and smaller things that are out there. And so we remain very active. In the interim, we did buy back some shares. I don't think that's a change in trends. That's more like we saw opportunities there to take advantage of some market dislocation, and we took advantage of that, and we bought back over $115 million worth this year. And so I think that's a good return on our shareholders' investment. So we'll continue down that path. I don't think that's a change in strategy. But we see ourselves as a growth company. We see ourselves as M&A company, and we'll continue to do things like that.

Okay. Perfect.

And one follow-up, too, Tyler, when you think about the 5% that Eric mentioned, obviously, budget processes is in that area code. It's probably -- most of that's going to be in ES with a little bit in SK and a little bad guy in corporate, I think as I think about the piece parts of that.

Our next question comes from the line of Noah Kaye with Oppenheimer.

Let's kind of continue along the capital allocation theme. Made some really nice progress this year on free cash flow conversion and free cash flow generation, as you talked about, Eric, with Kimball rolling off and the underlying growth. Mike, when you talked about potentially up to $500 million of organic investments and obviously, this SDA investment might be part of that. Can you give us some guardrails around where you want to convert free cash flow to EBITDA within the business broadly over the next couple of years? Is there a baseline we should think about? And I know it's a little bit path dependent on what kind of M&A you do. But just kind of try to give us a baseline level that we should be underwriting here?

Sure, Noah. So this is Eric Dugas. And I think you're absolutely right. The free cash flow generation has been fabulous this year, a lot of initiatives on that front. As we look out into the future, I think we're going to continue to target kind of that 40% free cash flow generation, 40% of EBITDA. I think there'll be pluses and minuses to that along the way for the minuses would be these accretive capital investments that we mentioned that will be adjusted out of that, and we'll call that out and explain those clearly. But those are really growth projects that we see, and that will be a detriment to the 40%. But normal baseline guardrails, I'd say 40% conversion and each year trying to grow up from that.

I think the team under Eric's leadership has done a great job with cash collection. The organization has done a great job with cash collections, managing our spend, and you really see it in the margin improvement, and that's really been helpful trying to get to that 40% and hopefully beat that over the next few years.

Okay. And just so we're clear, you do intend to formally adjust this SDA investment out of free cash flow because that was not the case with Kimball, right? So is that kind of the practice going forward that these extraordinary organic investments would be excluded?

Yes, you got it Noah.

Okay. And then I guess to double-click on this specific investment, I think just help us understand some of the key assumptions you made in underwriting this. I mean you talked about the 6- to 7-year payback. Obviously, we've seen the value of base oils fluctuate a lot over the company's history. What is it sort of dependent on to hit those target returns from a commodity value, if at all?

Yes. Noah, this is Eric. I'll start. It's really a great investment for us. It's a bolt-on technology out at our East Chicago refinery, and it's upgrading a product that we already produce called VTAE, Vacuum Tower Asphalt Extender, and it's moving it up the value chain by implementing this technology and taking over 30 million gallons of what we already generate and sell and creating it at a better market value. There is some -- certainly some fluctuations in the price of that 600N product. It's not as -- it doesn't fluctuate as much as base oil. It's used in heavy-duty applications. So it's a more stable price look at when we sell that product. So we're excited about that. Overall, though, it's just a straight baseline upgrade of that 30 million gallons into a new arena, bringing that up the value chain, proven technology with a hydrotreater back down the back end. And so we're excited about that incremental $30 million to $40 million of EBITDA once we start up in 2028.

And Noah, one thing I'd add to that is that, as Eric said, we're using kind of our -- the byproduct of the re-refining process, VTAE, as Eric mentioned, and using that in this process to make a higher-value product. But there's also that -- we're not -- this won't fill -- that 30 million gallons won't fill the new product. We'll have an opportunity to grow from there. We're not assuming we get any other VTAE from any other third parties, which that would be upside to the model. The reason why I bring that up is just as an example is that I think that as we built this model up, it came up with the $30 million -- $30 million to $40 million that we spoke of in the live call, I think there's plenty of upside to that model. I think that we -- I thought Eric and I went through the analysis with the team, we're very reasonable in our assumptions as far as how we build it, how we think about the price of VTAE, how we think about the price of 600N, how we think about the cost of building the plant, how we think about the time line of building. I mean we thought through that. We've had many, many meetings on this with the team and with the Board to ensure that we're doing this in a thoughtful way. So we continue to do, what we've done with every large project on time, on budget, hit the numbers we say we're going to hit, simple as that.

If I could sneak one more in. I think you're clear now on sort of the delta versus expectations in Industrial and Field Services. I guess just from a forecasting perspective, I know usually, IS tends to gather steam into September and then October is kind of the big month. So with that particular line of business, was it just the case that these deferrals really started to manifest late in the quarter and kind of continued through October here, and that's what we're seeing? And is there some way to think about normal seasonality in the future perhaps being different at all than what we've seen in the past?

Yes. No, I'll begin. This is Eric. When you look at kind of what occurred in the quarter, our turnarounds have been -- the number of count of turnarounds has been pretty stable. There's been some pushes. But overall, when we get into working for the turnarounds at our customer sites, the scope of the turnaround ends up being a little bit less than what we originally quoted or scoped with that customer. They really wanted to get the units cleaned and back online as quickly as possible. As we proceed into the fourth quarter, we took that into our guidance for the fourth quarter. We're still having turnarounds here, as you mentioned, as we flow into October here, and that's solid. But we're -- we really didn't -- we pared back a little bit of what we expected based on the third quarter results. And we truly expect as things continue to stabilize that as we get into 2026, we're not losing turnarounds to any competition. We're performing all the turnarounds. And we're going to -- we expect it to have a little bit better growth path as the economy recovers a little bit, particularly in the chemical and refinery sector.

Yes, I think just to add one thing to what Eric said and one thing that we can see in our P&Ls and here around the business is the business is -- we're setting ourselves up really well for when things loosen up and come back. And when I look at even the Industrial Services P&L, Noah, I can see much better labor management. So I can see labor as a percentage of revenue in a better spot. I can see overtime coming down as a percentage of revenue. I can see us using less subcontractors and internalizing more work. So despite the financial results here in Q3 and what we believe into Q4, which is really impacted by the cost pressures, particularly in chemical and refinery, as we said, that those customers are seeing, we set ourselves up really well for when things change in the future because I do think those investments, particularly on the labor front and other areas, we should reap benefits of that hopefully next year, but definitely in coming years.

Our next question comes from the line of Jim Schumm with TD Cowen.

So maybe just help me understand, I'm sure other people don't know the 600N base oil market very well. Can you just help us with like what is the market pricing right now? What is like peak to trough pricing for this market? What's the total demand? Just how should we think about this? Like what's the total demand this year? What was it 5 years ago? Is demand expected to grow? Why? What's the end market? Just help us understand this is a fairly big investment for you guys. So I just want to understand this market a little better?

Yes, Jim. So we have an hour on the call, we're not going to take an hour trying to explain that 600N base oil market. But I will tell you, I will tell you that it is used primarily in industrial applications, which tend to be a little more resilient and gear oils, heavy-duty diesel engines, hydraulic oils is not as sensitive to electrification as passenger car engine oils would have. We've had a lot of customers express interest in this high-value buying this high 600N oil, and we've kind of worked out. We've kind of given them samples of what we provided, and they seem like there's a very good receptivity in the marketplace for this base oil. When you think about that the market, we'd be a very, very small player in a very large market. It tends to trend a little bit with Group II base oil, which has been down over the past couple of 3 years, but it's at a much higher premium. And it's been a consistent dollar premium to what we're thinking in the Group II base oil. And most of the country has to import 600N today, including from Korea and from other places. And so it's hard to kind of put a finger on, what's it going to be 3 years from now. We're assuming that the trend we see of some decrease -- we're assuming decreases over the modeling period. We're not expecting this plan to get turned on until 2028. So we do have some time there. But I do think that we've cut this way -- we've cut this 7 different ways. So let's assume that base oil -- the Group II 600N pricing is down. I think there's other levers out there, including taking additional VTAE from other customers to help offset that. I think the model that we put forth, I think, is a very balanced model. Hard to predict what happens to base oil, hard to predict what happens to 600N oil, but we think we have enough levers in the actual model that even if that comes up a little softer than we expect, there's other levers we can pull to help offset that to kind of get to where we need to get to. Again, we've consistently put together a large-scale construction projects that are on time and on budget that hit or exceed the EBITDA numbers that we have quoted. I believe this is no different.

Mike I just wanted to clarify, it sounded like you -- were you saying the consumption, you're expecting the consumption to decrease over the next couple of years of this oil? I did I...

No, no, no. It is more about -- we have assumed pricing goes down a little bit in the modeling period not the demand per se. And the point I think that maybe I misspoke is that when we produce this 600N oil, we still be a very small player in a very big 600N market, I guess what I'm trying to say.

Okay. Okay. All right. Maybe switching over to the SKSS guidance. I kind of -- my recollection was just that it was sort of the $140 million was the number. You guys just referenced a midpoint. What is -- just so everybody is clear, like what is the range for SKSS this year? So -- and then what's the confidence level in hitting that $140 million midpoint?

Jim, Eric here. I'd say that as we sit here today, we're very confident in that $140 million mark. To range bound that, I hesitate to do so. You might have to force me into a range, maybe it's a few million on either side. But the way the business is performing right now, particularly around our initiatives of CFO and our ability to continue to drive CFO pricing due to market conditions. The catalyst of that is obviously the high level of service we continue to provide and the fact that we haven't lost customers. I mean that really is the area that the team has done excellent on this year, and that gives us the confidence that we'll be able to meet that $140 million of EBITDA. So hopefully, that answers your question. Range bound, we haven't really looked at it that way, but high confidence in that number right now.

We feel the $140 million is the new low watermark, we grow from there.

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

My first question is on incinerator pricing. I didn't see a number in the slide deck. Could you talk about what that was? And then somewhat related, I know you gave the data specifically in the 10-Q later today, but could you talk about specific growth rates for Industrial Services, Field Services, SKE and tech services?

Sure. Dave, it's Eric. I'll take that, and I'm sure the guys will add on. In terms of incineration pricing, there's pockets, but over the entire population, we're looking at mid-single digits again, I think pretty consistent with prior quarters. In terms of the different sub-business lines or business units underneath ES, you'll find our tech services business, really great revenue growth there, some nice volumes, good pricing, but some of our -- as we alluded to in the prepared comments, kind of waste remediation projects, those types of things really saw a really strong quarter. So you're looking at double-digit growth there. Safety-Kleen branch continues to do really well. Again, some nice initiatives around our back services and pricing, mostly leading to about an 8% growth. And then we mentioned Field Services, not overly concerned here. You'll see, I believe, about a 9% drop in revenue there, maybe a little bit higher, maybe 11% now that I'm thinking it through. But really, it's those projects that didn't come through kind of medium, large-scale projects. We're not overly concerned about that right now. These things can be a little episodic. But when you look at that business over the longer term over the last few years, you're going to see some nice organic growth there. So not concerned with that. And then Industrial Services, as Eric mentioned earlier, about, I think, a 3% or 4% decline kind of year-on-year there, largely related to the turnaround services.

That's great. And I know we've talked a lot about capital allocation here this morning. But does the investment you're making in this SDA Unit say anything about your M&A outlook? And I was also wondering that since you put out these Vision 2027 goals, we're a little bit past half time here. I think HydroChem was already in that 2022 starting point, and you've added Thompson and HEPACO basically. But could you maybe talk about how things have played out since that update and kind of how you're thinking about the market in general?

Yes, Dave, this is Mike, and I'm sure Eric and Eric have some thoughts on this as well. But the SDA Unit has no reflection on our M&A appetite. That was -- that's been an investment that we've talked about internally for a few years, frankly. And so this is more like, hey, we got the Board approval. We're starting to spend money on it. We should talk about it. It's a material asset that we need to make sure that our investors understand and we track against that. So that's really the driver of the discussion of the SDA. The other items that are out there, the $500 million, those are other things we're thinking about. As we think about where we go next with this, things like adding more hubs or making some investments in other incineration capacity. These are not new topics that we've talked about many times before. So it's more like just trying to say, look, that's another good use of capital that has great awesome returns, as you saw from the math that we're doing on this. So that's just a good use of capital. We're going to have $1 billion in cash by the end of the year. We're going to generate another high $400s million of cash flows in 2026. I mean those are -- we're going to have plenty of cash to do a variety of different things, including good M&A. As Eric mentioned in his Eric Dugas in his remarks, the leverage market is very -- our leverage is very low. Our appetite for debt -- from our debt investors is very strong. It was way oversubscribed. We got the rates. Eric and the team did a great job of pushing that debt out for a number of years, and it shows the appetite that the marketplace has for our high-quality debt because it's a high-quality asset. So it doesn't change one little bit. When thinking about Vision 2027, that was always a vision, just what it was. It was a vision of where we want to take the company, but we want to be disciplined about capital, and we've been thoughtful about M&A, and we'll continue to be thoughtful. And there are opportunities out there that are big and small, and we'll continue to capitalize on that. So I'm of the view that nothing has really changed with that announcement with the SDA announcement. I just want to make sure that you understand that this is more of kind of a timing issue that we've been talking about for a number of years that we want to share with the investing public because it's going to be a material number.

Our next question comes from the line of Larry Solow with CJS Securities.

I guess first question, just on the guidance again, not to beat a dead horse, but the miss in the quarter, you guys clearly outlined that, a little bit of industrial, a little bit of Field Services. But it sounds like you kind of -- you've bucketed that miss out in the quarter and it skew cards out for the year. But do we -- so do we bounce back? Were you assuming a little bit of a better Q3 than you are going forward already? I'm just kind of curious if turnarounds seem to be a little bit less even than expected. So do we -- what gives you the confidence that we kind of get back to where you thought we were going to be in Q4, not to kind of get the details, but if you get where I'm going with that question.

Certainly, Larry. And as we digested kind of our Q3 results and then projected our thoughts on kind of Q4 and the guide there, I think one thing that gives us -- makes it -- allows us to feel really good about Q4 is, I mentioned a moment ago, and I think in response to Dave's question, kind of the growth that we're seeing in Technical Services that 12% revenue growth, more projects coming our way, continued good waste volumes. So we're continuing to see because of our diverse customer base, although there's softness in certain verticals that we mentioned around chemical and refinery, we continue to increase volumes by collecting from other customers and bringing into the network. So that part of the business, we see a lot of strength. I think the other thing that pleasantly that we saw in Q3 here that I mentioned a moment ago is our margin expansion, right? I mean I think, as I mentioned in my remarks, the steadfast commitment to continuing to drive margins and generate free cash flows. That gives us comfort, quite frankly, as we move into Q4 in some of those more waste disposal type businesses. Certainly, the services business, as Eric alluded to, Industrial Services, we're not forecasting any large pickups there. And Field Services, again, like Industrial Services, a lot of good margin accretion there that we're seeing, but that can be episodic. So both medium and large jobs will come back. It's just a question of when and where, quite frankly.

I guess I would say one more thing, Larry, to that end. I'd say that all our [ LOBs, ] all the businesses that make up SK -- that make up Environmental Services had good margin accretion year-over-year. And when you think about from where we were a year ago, where we were concerned about SKSS, when we stabilized that business. We're concerned about free cash flow conversion. While we're going to have great free cash conversion this year, we continue to grow. When you think about EBITDA margins and our mark to 30% margins, I mean, that's on ES, that continues on unabated. It's 14 straight quarters of year-over-year margin growth. So I mean, I feel like we're kind of hitting all our strides. Look, it's a miss. I get that. I get the point. But really, it really is, I think, very, very temporary, as I said in my prepared remarks.

Absolutely. I appreciate it. And I'm kind of looking how this miss -- how you put this on a go-forward basis as opposed to just the miss. I just want to make sure that going forward, obviously, it's only 1 quarter, but you threw out -- we appreciate a little bit of color for next year in that 5% number, which I'm sure can move around. That's just kind of a baseline, we get all that. But I just want to make sure that you're not -- it doesn't sound like you're building a rapid improvement in Industrial and Field Service. So I just kind of trying to say then if you weren't building that in, in this quarter, then why we have the miss. But I get the extra color really does help. Just shifting gears real fast, just on PFAS. It sounds like things are continue to go well internally. To get a real acceleration, obviously, 20%, 25% growth is great, but I think your queue is growing a lot faster than that. To translate that into actual sales, right, we'll need some governmental -- some kind of legislation or something, I guess, right, or maybe even the National Defense Authorization Act or something. And I guess we're just in a holding period on that. Obviously, government shutdown doesn't help, but any further -- any color on that?

Yes, Larry, this is Eric. So obviously, getting our -- the results of our test that we did on our thermal units out and exposed and published by the EPA was a great milestone for us. The activity in the market has been extremely strong and became even stronger when that published results came out. The level of activity of what we've seen, how our pipeline has been growing. We've continuously talked about how our pipeline has been growing 15% to 20% quarter-over-quarter. It continues to do that. It feels like we even got more of a bump. So we're not really thinking that any major change in regulation has to happen to continue to drive that growth and even accelerate it. We're pretty bullish on how our prospects are panning out and the opportunities in front of us. So we feel pretty good about it. We think it's just going to accelerate. And as far as the Department of Defense lifting their moratorium, that's just -- that will be just another accelerator for us, and we're optimistic about that as well.

Our next question comes from the line of James Ricchiutii with Needham & Company.

So outside of chemical, the refinery markets, are you seeing any choppiness, any other signs of weakness in some of the broad end markets that you guys service?

James, Eric, this is -- I'll begin. No, we haven't. We really -- as evidenced by our results in Q3, our volumes have been growing across our waste businesses. It's really strong through Q3. We're beginning Q4 very strong. So where there's been this pullback a little around IS spending around turnarounds and chemical spending around turnarounds. On the waste side of the business, it's been strong, volumes, price into the network and project growth with PFAS, but other projects happening across the board. So we feel pretty good about what we've seen from manufacturing, from retail, from the whole list of other verticals that we service. And that's really very resilient in our waste collection business because of all the diverse verticals that we service. Everybody is generating hazardous waste and what they're making out there these days. And we're certainly a beneficiary of driving those volumes into our network, which we continue to see and projects ever lift.

Okay. Maybe just turning to Kimball, and I know you touched on it a little bit, but how should we be thinking about how the scale-up of Kimball is going, maybe discussions you're having with customers? And you've talked in the past about better network efficiencies that come as a result of this and then potentially some lift to margins. And just talk to us about maybe how Kimball plays out in 2026?

Yes. So in the third quarter this year, we -- the new Kimball incinerator Train 2 unit processed over 10,000 tons. When we came into the year, our plan was to burn an incremental 28,000 tons in our network, and we're doing that with the Kimball expansion. It's been great. The ramp-up has been solid, typical start-up type things. We expect that tonnage to continue to grow as we've laid out. Nothing that -- everything that we see continues to see a path to hit our ramp-up objectives of that new unit going into 2026. The network efficiencies are alive and well. The routing of our -- how we manage our customers' waste into our units, the transportation efficiencies, those are showing up. So we're really bullish about how Kimball has helped the network in so many ways. As far as speaking with our customers, the trend continues on how our network provides them a really security in being able to have multiple units service their needs and well positioned geographically with transportation efficiencies built on. And when we even think about what's going on with captives, we talk a lot about that, where the interest of what we have now continues to be strong. Those captives are our customers, as we've mentioned. Our relationships with them are strong as they continue to evaluate their cost positions, we have active discussions. So we're just adding Kimball to our network continues to prove to them in those large generators of hazardous waste that we have the network and the capabilities to supply their needs.

Got it. Last question, just on M&A. And again, you touched on this, but is valuations or is that the main challenge with respect to the potential for larger opportunities that might be out there? Just wondering how we might think about the pipeline for larger deals?

When you think about larger deals, Jim, this is Mike. Certainly, valuations have gone up from where they were. The whole industry, including our stock, has experienced kind of some valuation appreciation, which is well deserved and probably can go further. But I think that we have the best opportunity for the larger deals to provide the most amount of synergies that are out there and that would provide, when you look at it kind of post-synergy basis on multiple levels that are very reasonable and very value accretive to our shareholders. So -- the answer to your question is that we're trying to stand our swim lane. We look at deals all the time. Price is certainly part of the discussion, no doubt about it. We're trying to be thoughtful and make sure we get a good return. But I think on some of the deals we look at, synergy component is a big part of it, but I think we can provide a fair amount of synergies from the larger deals we're looking at.

Our next question comes from the line of Tobey Sommer with Truist.

I'm going to ask another capital allocation question, but maybe from a broader perspective over the next 2 years plus. If you look back at your Investor Day, 2.5 years ago, you have about $3.4 billion you thought at the time you'd incrementally you'd be able to deploy on acquisitions. Now we've got $500 million internal investments that you cited and who knows maybe there's even more. How does the -- if you could compare and contrast sort of today's capital allocation profile between acquisitions, share repurchase and internal investments versus what you thought 2.5 years ago? What are the differences in that mix of spend?

Tobey, this is Mike. I'll start and Eric and Eric can certainly chime in. I think that there's been really no change in our deployment of capital when you think about internal investments or buybacks. I think those 2 -- when you think about the 4 legs of the stool, the fourth being debt repayments, I think that we have maintained a consistent posture on both capital internal growth projects like the Kimball incinerator, now like the SDA Unit or buybacks, a steady growth of buybacks this year, maybe a little higher than normal, but we buy back a float plus depending on the market that's out there. We still have $350-plus million of availability under our current authorization. When I think about M&A, I mean, M&A is lumpy. It takes two to tango, and we got to make sure that we're getting a good return on our investments. We never said it was going to be a straight line to get to that level of growth. We always said that it's going to be -- this is kind of -- we wanted to message to the Street that this was our -- Eric and I's intent to go do M&A, but it's got to make financial sense. And as such, there have been deals that we got to a point where we stopped or deals that didn't fit very well that we talked to the Board about a couple of 3 times that didn't fit well that we decided not to go forward on. So these are all the process of being very cash disciplined, getting -- trying to make sure we get a good return. And that I think that our long-term shareholders are happy about, frankly.

And if I could ask another question about health care expense. Do you anticipate health care expense growth increasing or accelerating again next year? Some of the surveys out of the big health care consulting firms suggest that next year is going to be even tougher.

Yes, Tobey, it's Eric here. I think difficult to project, kind of read the same news you do. I think at a gross level, certainly, I don't think one could say that health care costs in general won't increase. However, I think some of the reasons for our increase this year that Mike mentioned around the preponderance of high-cost claims. The frequency of those this year just seems to be higher than normal, and I don't necessarily see that impact continuing. It could, but I think the law of kind of long-term averages would get that back down to a normal level. So I think in short, yes, they'll continue to increase. I don't think they'll increase at the same level that we saw this year at the gross level. However, as I mentioned earlier, we are doing some things internally to try to mitigate the increase. And I think it will mitigate the increase in health care costs going forward.

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

Thanks, Christine, and thanks, everyone, for joining us today. Our next investor event will be at the Baird Industrial Conference in Chicago in a few weeks, followed by a Stephens event that Jim will be presenting at in Nashville. Also, have a great day today. Keep it safe and enjoy the upcoming holiday season. Thank you.

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.