Greetings, and welcome to the Clean Harbors Fourth 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. Mr. McDonald, 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, February 18, 2026. Information on potential factors and risks that could affect our results is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision to the statements made today other than through filings made concerning this reporting period. Today's discussion includes references to non-GAAP measures. Clean Harbors believes that such information provides an additional measurement and consistent historical comparison of its performance. Reconciliations of these measures to the most directly comparable GAAP measures are available in today's news release on our Investor Relations website and in the appendix of today's presentation. Let me turn the call over to Eric Gerstenberg to start. Eric?

Thanks, Michael. Good morning, everyone, and thank you for joining us. Starting off with safety. We concluded a record year of safety in 2025 by delivering a total recordable incident rate of 0.49 which is well below the prior year and industry-leading. Safety underpins everything we do at Clean Harbors, and I've outlined the many benefits on prior calls, such as reputation, teamwork, employee retention and cost savings. Most importantly, though, it is about sending our team home safe to their families at the end of each day. To everyone on the team listening today, we appreciate all that you did this year and every day to keep yourself and your colleagues safe. Turning to a summary of our results on Slide 3. We are pleased to report another outstanding year where in addition to a strong safety record. We also delivered record levels of revenue, adjusted EBITDA, adjusted free cash flow and saw our adjusted EBITDA margin increased by 40 basis points. We capped off 2025 with a strong Q4 as we exceeded the guidance we provided in late October. Our performance was driven by profitable growth in both of our operating segments, with our Environmental Services segment delivering its 15th straight quarter of year-over-year growth and adjusted EBITDA margin. This run of nearly 4 years of consistent margin expansion against a challenging industrial backdrop reflects the successful delivery of our essential services to customers in execution of our growth strategy along with disciplined pricing, cost management, workforce productivity and network efficiency. Turning back to our annual results. In 2025, we topped $6 billion in revenues for the first time in our history, while increasing our adjusted EBITDA by 5%. Our performance was led by our ES segment. which delivered adjusted EBITDA growth of 6%, while increasing its segment…

Thanks, Eric, and good morning, everyone. Turning to SKSS on Slide 6. The base oil pricing environment continued to weaken in Q4. And as expected, segment revenue was down slightly. In terms of profitability, segment adjusted EBITDA was $30 million, a 22% increase from the fourth quarter of 2024. For the full year, adjusted EBITDA for this segment was $137 million. Despite difficult macro conditions, the team continued to execute well on our oil collection services and related pricing, which drove the increase in year-over-year Q4 adjusted EBITDA and a 310 basis point improvement in margins. We increased our charge for oil pricing or CFO in Q4, raising rates roughly 50% above our Q3 average. Managing the pricing associated with these oil collection services and substantially lowering our overall waste oil collection costs remain the primary levers to offset continued decline in base oil pricing. Even when higher CFO, we collected 56 million gallons of waste oil to feed our re-refining network and keep our plants running efficiently. In addition, we once again delivered incremental growth in our direct lubricant gallons sold, which further supported our margin improvement. During the quarter, we also continued to grow our Group III production as those colons carry a premium to our conventional Group II volumes. For SKSS in 2026, we will continue to proactively manage our re-refining spread through providing consistent, reliable and high-quality collection services at appropriate CFO rates supported by market conditions. We will also prioritize expanding direct blended sales, increasing Group III production and pursuing partnership opportunities. Turning to capital allocation on Slide 7. we continue to seek opportunity to generate strong returns for shareholders through all elements of our capital allocation framework. We remain well positioned to do so, supported by strength of our balance sheet and our robust…

Thank you, Mike, and good morning, everyone. Turning to our Q4 and full year results here on Slide 9. Our quarterly performance came in ahead of expectations we outlined in October, driven primarily by continued strong growth across both technical services and field services. It was especially encouraging to see the underlying strength in our core disposal and recycling volumes as we closed out the year and in light of some of the challenges we had experienced in some of our key verticals in 2025. Total Q4 revenue increased 5% to $1.5 billion. As Eric highlighted, we surpassed $6 billion in annual revenue for the first time in the company's history in just 3 years after surpassing the $5 billion mark in 2022. Q4 adjusted EBITDA increased 8% to $279 million, and full year adjusted EBITDA reached approximately $1.17 billion. Our Q4 revenue and adjusted EBITDA growth rates were the highest we've seen in fiscal 2025, capping off another year in which we demonstrated our ability to continue to grow the business while expanding margins, and this provides us with positive momentum heading into 2026. Our consolidated Q4 adjusted EBITDA margin was 18.6%, representing a 60 basis point improvement from the prior year period. This margin expansion reflected a combination of disciplined pricing initiatives, volume growth, effective cost control and continued efforts to maximize efficiencies across our network and transportation fleet. For the full year, we improved consolidated adjusted EBITDA margin by 40 basis points, led by strong performance in our Environmental Services segment. SG&A expense as a percentage of revenue in Q4 increased slightly from a year ago to 12.9%, primarily reflecting third-party transaction-related costs and stock-based compensation. For the full year, however, we improved our SG&A as a percentage of revenue to 12.5% as we continue to tightly…

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

Eric G., curious if you could maybe talk about and update us on how the conversations are going on the captive side. I know you talked about that in some prior calls. But do you think there'll be any closure developments in '26 and '27. And just any broad thoughts on incineration pricing trends into '26.

Sure, Tyler. Thanks. Yes, the captive market continues to be active. We are pursuing opportunities with a couple of key customers across the board. And we think with some changes that they have on their cost structure as well as utilization, that there is a potential clear path here for additional captive closures. As you know, we continue to monitor and work very closely with all the captives across the U.S. and Canada. Today, there continues to be about 40 different sites that have captive incinerators that are also our customers generating waste streams into our network. So we have some very solid relationships. And again, do anticipate that there will be some captives that come off-line in the future. When? Still it's too early to tell, but discussions are active. That being said, we also have a lot of opportunity to continue to drive financial performance around incineration pricing across the board in our network, we expect to continue to outpace inflation and drive price improvement into the mid- to upper single digits across our network. Incineration being a leading indicator there. And we still will continue to push those levers that we've done in the past. So a very active network overall, Tyler.

Okay. Great. Great update. I was a bit curious on the commentary around Industrial Services. So obviously, we got a better ISM print. So maybe we're going to see some improvements in the industrial complex at some point. But what does give you the confidence there? Is that based on some hard planned turnaround work, and kind of, again, Eric Dugas, what is in the expectation there for '26?

In terms of '26, Tyler, the guide, as I said in my comments, fairly modest expectations. I think we have seen some more positive -- maybe some more positive leading economic indicators around ISM and PMI and things of that nature, but the guide really kind of has current market conditions built into it at this point.

Yes. And I would add on to that, Tyler, that when we look at our industrial business, Q4, we began to see some nice momentum in some of our specialty lines of business within Industrial Services. Our base business has been consistent as we enter into 2026. We're working with over 400 customers of assessing their turnaround needs for the year. We're seeing some positive indicators, I would say, as we touch base with every single 1 of them with face-to-face calls. And we're getting ahead of their opportunities, and there appears to be some indications and momentum here. But we're still -- when we look at the overall guidance for 2026, as Eric said, we're pretty conservative on our outlook there.

We do see, Tyler, that it has kind of turned -- we think it might have turned the corner. If you think about the growth -- the revenue growth of the business, and you look at kind of Q1, Q2, Q3 into Q4 in NIS, if you do the math, it's definitely leveling off. And we do see some positive momentum, as Eric G said, into 2026. Not the guidance.

Okay. Great. And then my last one here real quick, Mike. Can you guys talk a little bit more about the VAC truck and the field investments? And this is really a broader question about all the internal growth investments that you guys have done and you do see. But is this move really more because the acquisitions have gotten so expensive. And you've got a great market position, you've got buying power, et cetera. that the reality is that building may simply offer better economics than buying through M&A at this point?

Yes, Tyler, I'll start. This is Eric. So when we look at our VAC services, our 3 prominent business units that use VAC services. We have our Safety-Kleen environmental VAC our field service VAC and our industrial VAC. And those opportunities, those collections of VAC waters drive organic waters, contaminated waters and solids and sludges into our great facility network. And that business across the board has been growing substantially in the 8% to 10% to 14% range. So we've been adding more trucks. We're trying to have been keeping up with that pace. We have rented some trucks, which to fuel that organic growth. But really, what we want to do is continue that growth path of greater than 10%, build out more trucks internally, acquire more trucks, eliminate the subcontracting and just keep pace with those growth rates across all the business units. So it's really been a win-win. And as I said, it's fueling a lot of great water and sludges and solids into our network.

I would add to the answer to your question around, hey, is this just a pivot? It's just a pivot. Is this kind of a better answer? The answer is that our balance sheet allows us to do all these things. Our cash flow generation has allowed us to do M&A and do capital additions. We signed the P&S for DCI. There's others out there that we're looking at. So I feel like we can do it all given our cash flow generation. It really just based on ROI and what's going on in the market.

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

Just picking up on the M&A point, beyond the DCI acquisition, can you just update us on the M&A pipeline in terms of types of opportunities you're looking at and range of outcomes for acquisitions in 2026.

Yes, Adam, this is Mike, and I'll start. We do see -- we do have a lot of lines in the -- and frankly, we did all through 2025 as well. We weren't as successful, but we do see a lot of opportunities there, mostly in the Environmental Services business, mostly similar to what we think in DCI that has some permanent facilities that have some -- we see those types of opportunities coming to market, and we've been very active. Now we haven't been as successful in 2025, but we see a lot of good opportunity and primarily in Environmental Services, I'd say.

And then I think the 1Q guide implies year-over-year declines in Safety-Kleen EBITDA and then maybe a recovery in the balance of the year, finishing flattish. So can you just talk about the drivers of that improvement in the balance of the year? Is that coming from incremental charge for oil actions? Are there any assumptions for base oil prices improving in the guide?

Adam, it's Eric. I'll take that one. And you're absolutely correct, kind of the way we see Q1 right now in SKSS is a little bit down year-on-year. It is almost all driven through kind of the base oil pricing challenges that we see here at the beginning of the year. Obviously, as we did in 2025, we'll continue to counteract that with providing great oil collection services at the right price there that the market demands. And so as we move throughout the year, things do get a little bit better, some of that oil collection pricing modification kicks in. But Q1 is kind of the year-on-year low watermark, if you will.

And Adam, we do have base oil pricing going down slightly in the guide over the course of the year. We do have that not at the same level happened in 2025, but we do assume a slight decline in base oil pricing.

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

There was a lot to like, I think, around the capital allocation. I want to get to that in a minute. But just on the core, Field Services, you called out the $30 million of emergency response work. It sounds like that basically drove the revenue growth year-over-year in the quarter. Can you maybe quantify the level of ER work you did total or anything outsized you would call out for 2025 and what you've assumed for ER work for 2026 in the guide?

Yes. No, I'll start there. Obviously, we had a nice fourth quarter with $30 million in large-scale emergency responses. If you look at the field services business over the course of the year and every year prior to it, we have ups and downs in large emergency response events. But throughout the course of the year, we drive some large events. We did over 22,000 emergency response events last year that you can really consider that a good baseline business that continues in that core base FS for utility customers, manufacturing, rail, all those types of things. And then we also see good incremental events that will continue to happen. When in the quarter they will or not, it's to be determined, but that's been a core part of our field services business for the past 20 years. Those things happen. So we have that factored into growth of field service year-over-year of being in that mid-single digits as a baseline.

I would say, Noah, that when you look at the 22,000 events that Eric mentioned, I mean, that's up like 5% from last year. So we still see a fair amount of events happening in the country in North America, and we've been there and we've been winning our fair share. And when these large events happen, the company is built for that. It was built on emergency response. That's part of the business model. And because it's such a big business now with the acquisition of HEPACO, it's been a great winner for us.

Yes. Noah, just one last point on that. I think when you think about our network, what we build with field services branches, last year, we added an additional 18 field service branches to our network. And as you know, through our strategy is to make sure that we have an operating branch of every business unit in all the key geographies throughout North America. And that presence, when we think about field service, that presence allows us to be the first call when emergencies happen and leverage through the rest of the network, people and equipment to be able to grow with those emergency response events. So it's a core part of what we do. We do it really well. Our sales team, our field services operations team, they are out there pounding the streets to make sure that for every customer who needs a facility response plan with an emergency response provider that we are the #1 call when things go wrong. And we've done a good job of that, and we'll continue to exercise that presence as we grow here throughout 2026.

Very helpful. I think just on the 1Q guide, just how much of a headwind will weather be? I mean last year, I know it was a $10 million to $12 million EBITDA headwind. We obviously between burn and some other events have had a rough start to the year. Some other players in the space have talked about it. So just where do you kind of think that ends up for 1Q?

Noah, it's Eric Dugas here. I think when we looked at -- when we think about weather year-on-year, I mean, we're -- I think we've heard from some other folks that have come out and we're seeing the same thing. weather impacts us in these winter months, January, early February here, seemingly kind of every year. And so when we think about our guide here in Q1, I would say the weather impact is flattish. We talked about SKSS assumptions in Q1. That's really the lighter side of our guide here in Q1. You look at the ES business, we're still growing 5% to 7% year-on-year. A lot of the great things that we did throughout 2025 and in Q4 that we just talked about kind of continue into Q1.

Yes. We haven't seen -- with all the nasty weather we've had -- we've had some delays, but no plant upsets. No plant upsets, which I think is an important point.

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

My first question, a clarification here. I missed what you said about corporate expense for 2026. What was that growth rate?

2% to 4%.

2% to 4%, Dave.

2% to 4%. Okay. So looking at 2025 as a whole, if Clean Harbors was able to grow EBITDA by roughly 5% in 2025, and that's in the face of field and industrial being down and a $10 million headwind from SKSS EBITDA. And then in 2026, you're saying that each of those things are going flat or positive and then you've got Kimball ramping and all these other growth initiatives. I'm not being critical here. I'm just asking like when you look at all of those things, I'm wondering which one or what segment are you seeing that's going to be a drag to 2026 EBITDA growth? Because it feels like everything in '26 is either the same or better than it was in '25, and you're guiding for the same level of EBITDA growth. If you could help me understand the bridge there.

Yes, Dave, this is Mike. I'll start. I think that our goal is to make sure that we provide a balanced view as we go into the year. I mean there's a lot of -- I think to your point, there's a lot of positive momentum. You certainly see some of the solid waste guys talking about that momentum, and we see it as well. January, as Eric said, was a rough month from a weather-wise standpoint. We got to -- we want to see it. We want to see it. And my hope is we come back in a couple of months and talk about a great Q1 and a great Q2 and Q3 as well. But you want to be thoughtful as you set expectations for the year. I think that a 5% growth, as Eric laid out in his script, is a reasonable growth is a good starting point. And certainly, in the face of what we see just -- when you look at industrial production, we had a great January, but once is not a pattern. And so let's have a few quarters, a few months of this type of growth before we start claiming victory here. So that's kind of our view, and we want to be thoughtful about this, and we're hopeful that we come back here in a couple of months and say how great the quarter was and how great Q2 and Q3 are going to be.

Yes, yes. Got it. And on the first quarter, first quarter EBITDA as a percentage of full year has been about, I don't know, 20.6% for the last 3 years on average. And this year, you're sort of saying 19.5% based on the guidance midpoint. Did you quantify the weather? Is that the reason that we're down? It's only representing that smaller percentage of the overall?

David, it's Eric. I think a couple of things. I would -- as I said before, I would think weather impacts kind of flattish year-on-year, a little bit of year-on-year decline in SKSS. And then just to go back to the beginning of your corporate question of 2% to 4% for the full year. Corporate is a little bit heavier in Q1 the way we've got it laid out. There's some natural inflation, but also a little bit of incentive comp timing, a little bit more incentive comp in our guide for Q1 this year versus last year, we had some back up just because of the performance in Q1 last year. So that's probably the piece you're missing. But the whole year, it calendarizes out pretty similarly.

Yes, it's more of a Q1 corporate item, I think, Dave, when you look at it. And SKSS, as you saw, to be a little soft in Q1, and that's really driven by some PFO pricing we still had at year-end still on the balance sheet that kind of ran into Q1. So Q1 was a bit of a rough quarter, so.

Our next question comes from the line of Bryan Burgmeier Citi.

Maybe just on Safety-Kleen, the charge-for-oil opportunity has been pretty compelling and successful. Just curious if you could characterize how much sort of room to run there is there? Do you maybe still feel Clean Harbors isn't getting proper value? Or is it maybe mostly about just kind of compounding at these levels now?

I think, Dave -- excuse me, Bryan, I think that the -- our ability to continue to charge for dirty motor oil has been a differentiator. And I believe that we haven't really lost a lot of gallons in this process. So I feel like this has been a hugely successful endeavor and really have been able to offset kind of the base oil pricing that we see. I feel like we've kind of taken a good step forward and really made some real changes, and I feel like that's going to continue to pay off. We're not -- as you saw from Eric Dugas' comments around the year for 2026, we're not assuming that, that gets a lot better, but we're hopeful that if oil prices stabilize and recover, that could be a huge winner for us.

Got it. Got it. And then just one follow-up is maybe just on the Group III oil production. Just again, from like a high level, if you can maybe frame that sort of size the opportunity for Clean Harbors. Is there any material contribution to '26? Yes, that would be really helpful.

Yes, Bryan, Eric here. So when we look at our run rate of our Group III production, we're in the neighborhood of 4 million to 6 million gallons increasing year-over-year. And that differentiation between the Group II is at about $1 a gallon more. So it's meaningful. But what also is important here is that when we blend that oil, we also have an opportunity to really offset some of the Group II plus that we've been selling. So there's -- it will continue to ramp up year-over-year. The traction of the products and the blended products that we're making with our Group II has been excellent. And we're really excited about that continuing to have a meaningful contribution to EBITDA improvement within our SKSS business in the coming years.

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

This is Jake Kooyman on for Jerry. The Technical Services segment saw a good acceleration in the fourth quarter. Can you walk us through the key drivers of that acceleration, whether it was project activity, pricing, mix, volume? And how much of that momentum carries into the first quarter?

Yes, I'll begin. Really was -- as we said in the script, it was really a combination of multiple different things when you look at it. Our TS business had really great volumes across the board. We saw about 8% increase in overall containerized waste volumes. In our Safety-Kleen Environmental business, strong waste collection along with VAC services, we highlighted that. When we look at the field services business, lots of ERs, large and small, good strong base business. And then finally, our project business was very strong as well, drove some nice volumes into our landfills into our incinerators and the momentum in the project business around PFAS. So it was multiple different things that contributed to the success of ES. And that was a great fourth quarter. It was a great year with our environmental services. We fully anticipate that momentum to continue here into Q1 and 2026 in all those areas that I just spoke about.

And Jake, the great thing about what Eric said is that this doesn't include any captives closures. It doesn't include no large ERs. We're not assuming that there's going to be a large bounce back in the chemical or the refining area. And we're not assuming a base oil recovery. I mean, so we have a lot of good opportunity there. So we feel like this growth that we're talking about this morning has -- is a reasonable assumption. But those things do turn around, then I think that we'll be in incredibly good shape in 2026 and beyond.

Fantastic. Very helpful. And then just as a follow-up, I know you provided -- I was just hoping you could speak on the moving pieces of the Environmental Services, 5% growth guide for 2026 and any cadence on the quarters outside of the 1Q that you already provided.

Jake, I would say just to point out a couple of the big drivers in that 2026 growth. And -- and yes, we talked in our script, it's year 2 of the Kimball incinerator. So I talked about an incremental kind of $10 million to $15 million of EBITDA there across the network by continuing to ramp up that facility. PFAS opportunities and a growing pipeline there, a 20% increase into 2026 is in our guide. And so those are probably 2 meaningful discrete pieces. continued field services growth and some of the new branches and new agreements we're getting into with existing customers that Eric highlighted a moment ago. And then you really have all those great things that we continue to do in Technical Services and Safety-Kleen branch around growing volumes and pricing strategies and being diligent around those. And that's all wrapped with continuing to provide just great service to all our customers. So I would say those are the big drivers. And yes, in terms of calendarizing out the quarters, I would say that it very much kind of calendarizes out kind of 5% growth roughly in each quarter year-on-year. So hopefully, that answers and clarifies your question.

With the acquisition in the back half of the year, that was the only thing I'd add to that.

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

First, congrats on the cash flow on the quarter and really for the year. I can remember, I don't know, 10 years ago when cash flow was a sore thumb, but now it's a real highlight. So I commend you for that.

Thanks, Larry. Good to hear.

Yes, absolutely. Been around too long. So I guess a question, Eric, just on the -- I really appreciate the PFAS, a lot of good stuff. I like the picture on the slide, too. The -- it feels like operationally, regulatory, the momentum is really stronger than it's ever been. It sounds like you can do about $150 million this year, plus or minus. But are we getting closer to an inflection point where -- I don't know where that inflection point takes us, but where we could really see an acceleration in revenue growth over the next few years?

Yes. It's a great point, Larry. I think we do believe that, that we're getting closer. Having the opportunity to go down and talk to the Senate Committee on public works was a great opportunity for us to not only share what our total PFAS solutions are, but more so to talk to them about that there is capacity and infrastructure to handle PFAS remediation and cleanup and that there is existing technologies and capacity to handle the growth and deal with this significant issue. I think the other key point, too, is that during those discussions, we laid out very clearly based on our experience of managing the cleanups that we've already been doing and the treatment that we've already been doing. We laid out what we thought the regulatory parameters should be. And we've got some great feedback on that. Those regulatory parameters, we've been communicating those to the EPA. But more so, we've been communicating those to our customers. And the way we got to the revenue that we are today is by saying to our customers, hey, to limit your risk, to manage it properly, these are some thresholds and parameters that we can help you employ with our total PFAS solutions and make sure you don't have any long-term liability. So I think all that put in together, I really do think -- and I think we all believe that the momentum of getting some really defined thresholds with the EPA is in sight. We're hopeful about that. We continue to drive that, but we also see our customers acting very disciplined today even without that in place.

Right. And I guess a question for Eric Dugas, doesn't the 3-year contract that you signed, doesn't that almost get you to that 20% growth by itself this year? Kind of busting chops a little bit on that one, but isn't that kind of fair? Or is that all not incremental, that $110 million over 3 years?

Yes. Keep in mind that we do some work there today, Larry. And so that $110 million is the total. It's increasing $15 million to $30 million, I think, in any given year over that 3-year period from what we do today. So there's still room to run that.

That's fair. I guess my second question for Eric, just on the margin improvement, again, also really nice. And we don't need to call it discretes, but you may not be able to predict it continuing every single quarter, but up to 26% EBITDA margin. As you look out 3 to 5 years, could this continue to expand? I mean could we be talking about a 30% EBITDA margin business when we reach 2030?

Yes, Larry, we think 30% is certainly kind of in the future for us. And internally, that's the target, the reset target that maybe we have now, but it's 30% and beyond. Now what year we hit that? I mean, I think we're going to continue to strive to expand margins at a minimum of 30 to 50 basis points a year. That's what we said, and we've been able to kind of overachieve on that. So exactly what year we're going to be above 30%, I can't tell you, but that's the internal goal. I guess just one thing that I'd like to share relative to that is with our margins in Environmental Services here, just about 26% for the year, we're exceeding those margins that we had assumed in our Vision 2027 a couple of years ago in fiscal 2027. So call it, 2 years ahead. But certainly, we see a lot of runway in margins, continue to grow margins through volume, pricing initiatives, internalization of costs, greater use of technologies, all those things, holding on to our people and reducing kind of turnover, that's been a great thing for us the last couple of years. So we're going to keep doing those things, and we'll see margins expand.

Yes. Larry, just to build on that, our aspirational goal is really to get to those 30% margins by 2030, 2032. And when you look at the past 4 or 5 years, everything that we've been driving, there's a clear path to get there. We have a number of opportunities that Eric just articulated. We're going to continue to get more efficient. We're going to continue to route our trucks well. We're going to continue to lower turnover. All those things and driving pricing ahead of inflation will drive our margins and continue to expand as we build the platform of the business and leverage what we have with our unparalleled disposal network.

Yes, Larry, the last thing I'd say to that answer is that we have in every single manager's compensation EBITDA margin as part of their targets. And I think that's really helped drive behavior. I think -- and we can talk about what year we hit 30%. I don't think that's a goal. That's just a stopping point. I'm of the view that we can continue to expand margins even beyond that 30%. I mean we can pick a date when you want to hit that. But I think I'm of the view that, that's not a goal. That's just a good way to measure ourselves.

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

Mike, can we just talk about SKSS a little bit. What -- you gave some breadcrumbs, but like where are you for leading-edge pricing? Are we like $0.50 a gallon? Or are you above that? And then just where are you in terms of utilization of your refineries? Any thoughts to closing another refinery? Or do you feel good about where you are now? And then just any color on the -- or update on the Castrol partnership?

Sure, James. I'll take care of all those. The first of which is that we are north of $0.50 as we get into 2026 here. I think we've done a good job of driving price improvements in our UMO pricing. And I feel like the team has done an excellent job of really changing the marketplace kind of where we were a year ago to kind of where we are now. It's just -- it's really unbelievably good and the team has done a nice job of really holding the line. And the good news is that we haven't really seen -- we have lost some gallons, but we haven't lost nearly as many gallons as we thought. And as such, we haven't had the need to -- as we sit here today, to close any more re-refineries, and I think we've been able to feed our network. And I said in my prepared remarks, we've been able to feed our refinery with the used motor oil we've been able to collect at really good pricing. When I think about the future in our Castrol partnership, it's been successful. We've had some good wins there. It hasn't been as successful as we thought it would be, probably need some more work there. But it's a long selling cycle. We understand that. The team at Castrol has done a good job of driving that. We've been good partners with them. We have had a couple of good wins, but that hasn't been as big of a needle mover as we probably thought when we went into this.

Okay. Great. And then just in terms of the pricing, it's kind of hard to get base oil pricing or could you help us understand where your average sales price was or is now? Is there anything any help you can give there?

Yes, James, it's hard -- we have a lot of different customers and a lot of different price points, but it has been down. I mean, just cutting through it all, there have been a fair amount of base oil pricing declines kind of all through 2025. And I think it's been in the mid-teens range as far as the overall base oil pricing. But remember, we are managing a spread. And so that really forced us as an organization to drive that UMO pricing up to manage that spread to deliver the number that we told you back last February, we told you we're going to deliver the number for SKSS, and we're right there. So it's something we're really proud of, frankly.

And James, just to build on that -- just to build on Mike's comments a little bit further. One of our key goals that we've mentioned multiple times is to really drive our direct blended sales growth. And that's the most stable pricing that we can do and work with our customers to not only pick up their UMO but deliver to them really high-quality direct blended oil into their network. And we're successfully beginning to grow that. It's not as fast as we would all like, but that's our true -- really true north across our business is growing that direct blended, getting stabilization on that back-end price while we continue to improve our UMO pricing. And the market today has really -- has accepted that UMO is -- it's really a hazardous waste, and it needs to be collected and managed. And we do a nice job across our network of customer service and collecting the gallons when they're tanks are full, and we'll continue to drive those opportunities.

Great. And just lastly for me. Veolia bought Clean Earth, as you're fully aware, do you expect to lose a certain amount of volumes or EBITDA with that transaction? Is there any impact to 2026 that you guys are contemplating?

Not at all, James. We -- yes, they were obviously the successful acquirer of that, but we do not anticipate losing any volumes to what they have going on there. In fact, we overall think there's opportunities to continue to grow our services with our customers and not concerned about that in the lease.

[Operator Instructions] Our next question comes from the line of Tobey Sommer with Truist.

It's been so long since we've had sort of a good industrial economy. Maybe could you remind us what your growth in revenue and EBITDA would look like in a good industrial economy year and maybe contrast that with the guide?

Yes, Tobey, I'm happy to answer that. It's kind of tough to prove it. We haven't had it in such a long time. It's tough to remember. But if you remember, some years, we were growing ES revenue double digits. There was years when industrial production grew and we were growing that ES business at really good rates. And that kind of began the 15 straight quarters that Eric mentioned earlier of EBITDA growth. So tough to see what good looks like. I'm telling you right now, it's going to be good, but it does have to happen. And so if it does happen, I think it will in 2026, we start seeing that certainly in our pipeline. I'm hopeful that we have kind of 4 good quarters of beat and raise and we come back to you and say how great it was because of great industrial production.

Right. And what parts of the business of the portfolio do you think would see it first so that if we're as we work our way through the reported quarters this year, if we start to see improvements in what areas would that lead to greater confidence in the industrial recovery?

I mean you see it in Environmental Services. I mean it's hard to say which -- I think you see it in all 4 parts of our -- of the lines of business that would make up Environmental Services, whether it be TS, FS, IS or SK Branch, you see all 4 of those with an increased industrial production. I feel like they would all be the beneficiary of that, maybe more so -- TS and IS more so, but I see all 4 of those lines of business which make up the Environmental Services segment improving because of course, base oil pricing improves, as we talked about earlier, I think we see some real good EBITDA growth in the SKSS business.

Last one for me. If you dream the dream for PFAS, what's the best catalyst that you could think of in terms of the regulator, perhaps the DoD, what kind of event could transpire that would really catalyze growth there?

Yes, Tobey, I'd really say and we point to regulatory framework around thresholds of PFAS contamination and clearly articulating it for industrial waters, soils, solids and driving remediation of those with those thresholds. And we're getting there. The market is disciplined. However, we really would like those in place. They would be the greatest catalyst to really put it on steroids, so to speak.

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

Thanks, Christine, and appreciate everyone joining us today. Our next investor event will be at the Raymond James Conference in Orlando in a few weeks. We hope to see some of you there and at other events. Have a great rest of your week, and please keep it safe out there.

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.