Clean Harbors Inc (CLH) 2005 Q1 法說會逐字稿

Good morning. My name is Star, and I will be your conference facilitator. At this time, I would like to welcome everyone to the Clean Harbors first-quarter 2005 conference call. All lines have been placed on mute to prevent any background noise. After the speakers' remarks, there will be a question-and-answer period. (Operator Instructions). Thank you. Mr. Bill Geary, you may begin your conference.

Yes, good morning. This is Bill Geary, Executive Vice President and General Counsel for Clean Harbors. We want to thank you for joining us. On the call with me today are Alan McKim, our Chief Executive Officer; Mark Burgess, our Chief Financial Officer; and Steve Moynihan, Senior Vice President of Planning and Development.

Before we get started, I would like to remind everyone that matters we are discussing this morning and information contained in the press release issued by the Company today announcing our first-quarter 2005 financial results that are not historical facts are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Forward-looking statements, including predictions, estimates, expectations and other forward-looking statements generally identifiable by the use of the words believes, hopes, expects, anticipates, plans to, estimates, projects or similar expressions are subject to risks and uncertainties that could cause actual results to differ materially. Accordingly, participants in today's call are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of this date, April 28, 2005.

Information on the potential factors and detailed risks that could affect the Company's actual results of operations is included in the Company's filings with the SEC, including but not limited to our Form 10-K for the year ended December 31, 2004, and the Form 10-Q, which the Company plans to file on May 10, 2005. The Company undertakes no obligation to revise or publicly release the results of any revision to the forward-looking statements made in today's press release or conference call, other than through the filings that will be made with the SEC concerning this reporting period.

In addition, I would like to remind you that today's discussion will include references to earnings before interest, taxes, depreciation and amortization, or commonly known by the acronym EBITDA. EBITDA is a non-GAAP financial measure and is intended to serve as a complement to results provided in accordance with accounting principles generally accepted in the United States. Clean Harbors believes that such information provides an additional measurement and consistent historical comparison of the Company's performance. A reconciliation of the non-GAAP financial measures to the most directly comparable GAAP measures is available in Clean Harbors' news release dated today. A copy of this can be found at the Company's website, cleanharbors.com. A copy also has been furnished as an 8-K with the Securities and Exchange Commission.

And now, I'd like to turn the call over to our CFO, Mark Burgess, for our financial review. Mark?

Thank you, Bill. Revenues increased to 165 million in Q1 '05 from 142.8 million in Q1 '04. This $22 million increase was positively impacted by approximately $10 million in emergency response revenue, $5 million in other site service revenue wins and approximately a $7 million increase in revenues generated as a result of market share and growth successes in our technical service business. We're particularly pleased with this revenue growth, given the poor weather patterns experienced in Q1 '05.

Volumes in the incineration sector were up slightly year-over-year, with capacity utilization approximating 86% in the quarter. This utilization was impacted by the number of planned scheduled maintenance days slightly higher than those incurred in 2004. Landfill volumes were also up slightly, roughly 9%, despite the bad weather patterns and delays of certain facility projects that went into quarter two. Pricing trends were stable in the quarter, and while the pricing environment remains difficult, we're seeing some pricing improvement in various waste streams and technologies.

Gross profit increased to 44.4 million in Q1 '05 from 35.3 million in Q1 '04, an increase of $8.5 million. As a percentage of sales, gross profit increased from 24.7% to 27% and was positively impacted by lower outside transportation expense and rail expenses as a result of the Company's internalization efforts. Furthermore, disposal costs, outside disposal costs and labor costs as a percentage of revenue decreased significantly as a result of leverage from higher volumes. These positive variances to Q1 '04 were slightly offset by higher insurance and utility costs. And, finally, while fuel costs were up significantly in the quarter, we were able to pass the majority of these costs along to our customers.

Interest accretion was 2.6 million in the quarter, flat with the 2.6 million incurred in Q1 '04. Depreciation and amortization expense approximated 7.2 million in Q1 '05 versus 5.5 million in Q1 '04. Higher depreciation expense was incurred as a result of higher landfill volumes, expense associated with the MAC investment and other capital projects in 2004, as well as depreciation on assets that previously had been held for sale. Q1 '04 depreciation was also artificially reduced in the quarter by approximately $400,000 as a result of purchase accounting adjustments. On a go-forward basis, we expect depreciation and amortization to approximate $6.7 million per quarter.

SG&A expense increased to 24.4 million in Q1 '05 from 23.2 million in Q1 '04. Higher salary, commissions, bonus accruals, MIS-related expense and professional fees associated with Sarbanes-Oxley compliance were offset by lower telephone expenses. Costs associated with Sarbanes-Oxley compliance approximated $800,000 in the quarter. On a go-forward basis, we expect SG&A expense to be in the $26 million range.

Operating income approximated 10.2 million in Q1 '05 versus 4.1 million in Q1 '04, or an increase of $6.1 million. And EBITDA approximated $20.1 million versus 11.9 million in '04, an increase of 8.2 million or 69% as a result of the volume and expense reduction initiatives previously outlined. On a percentage of sales basis, we continued to see improvement as EBITDA increased from 8.5% in Q1 '04 to 12.2% in Q1 '05.

The Company also recorded in other income a 618,000 benefit in Q1 '04 versus a $5.5 million gain in Q1 '04. The Q1 '05 gain resulted from the settlement of a business interruption case with our insurance carrier concerning the fire at one of our facilities several years ago. The 5.5 million gain from Q1 '04 was associated with the mark-to-market on the Company's preferred stock that was refinanced in June 2004.

Interest expense increased to $5.9 million in Q1 '05 versus 5.4 million in Q1 '04. This increase took place as a result of a reduction of $600,000 of interest capitalized in Q1 '04 associated with our MAC investment at our Deer Park, Texas, incinerator. Tax expense in the quarter was $32,000 versus 1.2 million in Q1 '04 as a result of a Canadian tax restructuring that the Company engaged in last June.

Net income approximated $4.8 million, or $0.27 per diluted share versus net income of 2.8 million and an $0.08 loss per diluted share in Q1 '04. The Q1 '04 figures included a non-cash gain of 5.3 million associated with the embedded derivative on the Company's preferred stock that I had previously mentioned.

From a balance sheet perspective, we continue to manage our balance sheet very, very strictly in Q1 '05. Our cash and marketable security balances approximated $46 million at the end of March versus $48 million at year-end as we did a good job in managing cash-flow, despite making an $8.4 million interest payment on our bonds in January. Cash management will continue to remain a priority of the Company going forward. Accounts receivables remained relatively flat at $126 million versus year-end levels. We continue to make improvement in our paid receivables during the quarter despite the strong revenue growth.

Properties held for sale approximated 8.3 million versus 8.9 million at year-end as we were successful in the sale of one property in the quarter.

Net PP&E was at 179 million at the end of the quarter versus 180 million at the end of December. Accounts payable balances were relatively flat with year-end levels. We saw improvement in our deferred revenue as we realized a $2.5 million decrease in Q1 as we further improved our inventory management practices. In particular, we are realizing improvement at our Deer Park and Aragonite incinerators, where we have invested in technology and processing equipment to reduce future handling costs in processed waste more quickly than we have in the past.

Environmental liabilities were roughly $179 million -- 178 million versus 181 at the end of the quarter, as a result of the spending and change in estimate on a legal case that referred to an environmental matter outstanding that is no longer probable.

Long-term debt remained flat in the quarter, and from a cash-flow perspective, capital spending and environmental spending approximated $5.8 million during the quarter. At March 31, we had no outstanding loans against our $30 million revolving credit facility. For 2005, we expect the cash interest expense should approximate $22 million. At this point, we're considering alternatives to reduce the costs associated with our standby letter of credit facility and hope to realize that in the near future and reduce that expense on a go-forward basis.

Cash taxes we believe will be in the $3 million range for 2005. Capital and environmental spending should approximate $35 million. And furthermore, as Alan will discuss in more detail, we believe revenues will climb 5 to 6% year-over-year in Q2 and EBITDA will approximate 21.5 million to 23.5 million.

With that, I would like to turn the call over to Alan.

Thanks, Mark, and good morning, everyone. As you've already heard from Mark's financial discussion, Clean Harbors got off to a great start in 2005. Our trailing 12-month EBITDA is slightly more than 82 million. And this quarter represents our fifth quarter of continuing year-over-year quarterly improvements. The demand environment and our execution remained strong in Q1. Utilization was steady at our incinerators compared with Q1 of '04. And landfill volumes were up. We continue to drive savings through our ongoing cost reduction initiatives and we exceeded our financial guidance, posting another quarter of double-digit growth and GAAP profitability.

Given the inclement weather conditions we faced in Q1 and the fact that the pricing environment continues to be very competitive, we're pleased overall with our Q1 results. And our field service, and our field people in general, did a great job under very difficult weather conditions this past quarter, and we really thank them for their efforts.

Looking at the different segments of our business, site service really stood out in Q1. In March -- in fact, in March, it was a record month for site services. As Mark mentioned, we had several emergency response projects as well as some nice base business wins during the quarter. So that combined contributed more than 10 million in revenue.

Clean Harbors has become one of North America's most recognized and most relied-upon providers of emergency response cleanup services, particularly for those large-scale-type projects. It really provides us not only with tangible topline benefits, but also invaluable brand-name recognition as a trusted expert in this field with the business. So we expect to build on these capabilities in '05 as we continue to open up new offices throughout the U.S. and Canada.

Turning to the tech services component of our business, transportation and disposal performed very well in Q1. Our vertical approach to the marketplace appears to be working well, as we've secured business across a number of key target verticals. Overall, waste volumes in Q1 were fairly strong, particularly in our bulk business. Our drums are slightly down in light of the seasonality we typically see in Q1. This mix of business in the quarter was not ideal, since drum volume generally provides us with higher margins. However, utilization at our treatment facilities was steady really throughout most of Q1.

The volumes we achieved at our disposal facilities in Q1 is even more impressive when you consider the lower-than-expected contribution we see from the large facility-type projects. Large facility projects, which typically feed very large amounts of waste to our incinerators and landfills, have been an important element in driving revenues for Clean Harbors during the past several quarters. And we believe that our vertical market strategy -- sale strategy will help us build a stronger pipeline of these larger projects going forward.

In Q1, we also hired two additional senior industry managers. We now have five of our six target verticals staffed with leadership -- new leadership to help us drive these industry verticals. And we hope to bring on our last manager in these areas in the second quarter. These managers are just a few of the selected hires we've been making to support the topline growth we've been generating. Our available headcount growth rose slightly during the first three months of the year and we ended the quarter with 3770 employees Company-wide.

From an expense perspective, Q1 was a success for us. Our ongoing cost-cutting initiatives are continuing to yield results. Our top priority has been to reduce the Company's reliance on outside transportation, which cost us in the neighborhood of $60 million in 2004. Despite the 16% increase in revenues from Q1 of last year, our outside transportation costs in the first quarter were down nearly $2 million. The past two quarters we've added 41 new tractors and continued to hire additional drivers, purchase more rolloff equipment and vacuum equipment to support our site services strategy.

We have an additional 13 new tractors arriving in May. In addition, on prior conference calls, we've spoken about our desire to increase utilization of our rail facilities. We saw that really beginning to happen in Q1 as we are making incremental progress on shifting more transportation, particularly that long-haul transportation, from outsourced trucking to our rail assets.

One item of note for Clean Harbors from an expense perspective is the rising cost of fuel. In Q1, we were able to pass the vast majority of those costs on to customers through surcharges. We've been very disciplined about not having to absorb these costs. We're going to continue to take this approach in the quarters ahead.

We've also been lowering our SG&A as a percentage of revenue. This is a direct result of reducing non-available headcount and implementing technology enhancements. Our organization today is more productive than ever before, thanks in large part to the technology initiatives we've undertaken. For instance, the new wireless systems that I mentioned on our Q4 conference call have been met with much success in the field. In the second quarter, we will be implementing handheld devices to a number of locations with the goal of rolling these technologies throughout the year across the Company. We're currently in the process of deploying our proprietary software, WIN, across all of our Canadian operations. We've already relied on WIN to monitor and manage workflow at all of our facilities in the U.S. and integrating the workflow from our Canadian operations onto this platform will allow us to more efficiently manage our resources. And we believe this in turn should lead to incremental benefits for the bottom line.

Our technological capabilities are not limited to our internal operations, but extend to our customers as well. Our plans call for a steady rollout of our new compliance management software to our customer base in the second half of the year.

Looking ahead, we believe Clean Harbors is well-positioned for growth. Our 25th year in business is off to a great start. Site Services is exhibiting strong momentum, exiting this first quarter and moving in -- some of the emergency response projects we're involved with during Q1 have carried over now into Q2 as well. We're continuing to seek opportunities to build our brand and expand our footprint by opening Site Service offices in new geographies. Within Tech Services, we're going to continue to pursue those large facility-type projects to seek to maintain a good mix of business for our incinerators and our landfills. And in response to a challenging price environment, we will continue to look for additional ways to reduce expenses and improve our overall margins. We certainly have a lot of initiatives under way. We've got 20 operationally excellent teams that really should enable us to achieve our goals for this year.

For the second quarter of 2005, the Company expects to grow revenues in that 5 to 6% range year-over-year and generate EBITDA in the range of 21.5 to $23.5 million.

And now, before opening the call up for questions, I'd like to take this opportunity to publicly thank Mark Burgess for his contribution, certainly, here to Clean Harbors. As many of you know, Mark will be leaving us shortly to assume an executive position in another company outside the environmental service sector. Since joining Clean Harbors in 2003, Mark has been instrumental in helping us to align our cost structure, reduce expenses, complete the integration of CSD and comply with the new Sarbanes-Oxley requirements. We're currently seeking a new CFO and have retained an executive search firm to assist us in this process. And in the interim, we have a seasoned financial team in place to handle the CFO responsibilities.

With that said, Star, will you please open up the call for any questions there might be?

(Operator Instructions). Lionel Jolivalt (ph), Goldman Sachs.

Good morning and congratulations in the quarter. First, quick question on the pricing side. Mark, you mentioned that you were seeing signs that the pricing environment was somewhat improving. Could you be a little bit more specific? Are you talking about incineration or landfills?

There are signs in both sectors on particular waste streams that there may be some firming in pricing. But again, I think it's important to understand that while we are seeing that in some waste streams, the majority of our waste streams continue to be quite competitively priced.

Okay. And then, I think you mentioned that landfill volumes were up 9% and you said that incineration volumes were up slightly. What is slightly? Are we talking about 1 or 2% or is it closer to 10%?

Like 1%. Very, very close to last year's levels. And primarily that was the result of, again, the planned scheduled maintenance shutdown days that we normally incur in Q1.

Okay, and then the 1.9 million legal reserve that was removed and that was associated with an environmental matter, which facility was it associated with?

This is Bill Geary. It was not associated with a particular facility. It related to a Superfund -- a potential Superfund liability. I would prefer not to discuss the matter because the legal reasoning and analysis is privileged and the matter will be subject to potential future litigation.

Okay. And then on the cost side, clearly your margins are significantly -- and you've taken a lot of cost out of the system. Do you still have a lot of costs to take out of the system at this point on the margin expansion or should we think that the margin expansion will come primarily from increased volumes and improved pricing? Basically, I mean, what kind of cost reductions or cost initiatives do you still have in store at this point?

We still have a number of cost reduction initiatives. I mentioned transportation is one and implementing some of our wireless technology is others. But we believe that there's a lot more efficiency that we can put into the business. I think we also, I think, can do a much better job from a sourcing standpoint in trying to leverage our buying power. I think that's something that is on the front burner this year as well. So I think there's still a lot of improvement here that needs to be made to improve our cost structure.

Okay, and last question, you mentioned that you were starting to look at alternatives to reduce the costs associated with the LC facility. What kind of alternatives are you looking at, first? And second thing, are you in discussions with your insurance company to reduce the collateral that you have to post for some of the environmental liabilities, since -- basically since your performance has improved and it seems that it's relatively quiet on the environment outside of the business?

As it relates to the SBLC (ph) facility, we've had initial conversations with our agent and others as to what appropriate market placing might be on that facility. And as a result of those discussions, we think in the next several months we will be looking very seriously at alternatives to hopefully reduce that cost, but probably maintain from a structure perspective something fairly similar. Secondly, as it relates to discussions with our insurance carrier, we -- as previously disclosed, we have a three-year program with that carrier. At this point, we have not initiated discussions to reduce collateral, specifically. But clearly that will be one of the things that we do as time evolves further this year.

And really last thing on the environmental side, your environmental liabilities on the balance sheet were reduced slightly from year-end. Any development on this side, and particularly, have you heard anything on the Devil's Swamp Lake situation.

Was it Devil's Swamp?

No.

No.

No, it's still in the information gathering stage.

John Riley, CJS Securities.

Good morning, and great quarter, gentlemen. First question I have is you've highlighted 7 million of your increased revenue came from market share gains. Who do you believe that you're taking market share from?

I think we said market share and market conditions in general. I think it's a combination of both.

Right.

So, rather than specifically disclosing various competitors, I think the good news is that on a number of contracts that have been out to bid, we've been successful in realizing those business opportunities.

Have you seen any benefit from taking some incineration volume from companies that were doing it in-house as a result of the new MAC guidelines?

Yes, we are seeing volumes in that respect. We haven't yet seen the tonnage -- overall tonnage that we would've expected or hoped for up until this point. But we're still watching a number of capped bids (ph) very closely and in some cases bidding on some business that we hope is going to be outsourced. But, nothing at this point yet.

Great. And then you also mentioned that you had more maintenance at your incineration facilities in Q1. Is that also -- do you expect the same trend to continue this year? Do you expect higher maintenance, or was this just something seasonal that you chose to do?

No, this was just something seasonal from a timing perspective as it related to down days required in order to make sure the incinerators run efficiently. In Q2, that number will be significantly less than what it was in Q1.

At what utilization do you think that you can start to turn down some of the lower-margin tonnage that comes into your incineration?

I think we have been doing that a little bit in the past quarter. I think as an industry, I think incineration has been relatively robust. I think capacity utilization, I think, across all of the industry looks to be about 92%. We've seen in some cases when incinerators are going down, be that for planned shutdown or event, that it really backs up volumes in the marketplace. So we think the industry in general is running at a pretty good utilization right now. And that's enabled us to selectively looking at redirecting some of our low-margin streams to alternative technology so that we can replace that with that high-margin business.

Great. Another question, just on the cost savings side. You mentioned that you're beginning to see some savings from telecom. Could you quantify that? And then also, I know that you had been targeting in and around $5 million for annual savings in that range. Do you still think that is achievable and when you think that we'll be able to see that?

We're going through all of those efforts right now and really don't have an update on that. But as time goes on, we'll be able to give better guidance on that.

Great. And then just one last thing. I know that you've also -- you didn't mention any cost savings from integrating some of your ITs and some of your systems. Is there a time at which -- at this point during the year -- a specific time at which point those systems, you're going to get timing on integrating those?

I think it's probably going to be throughout this year that we'll be migrating those across all of our U.S. and Canadian operations, and I think that will be an ongoing investment that we're going to continue to make to, again, just streamline our processes and improve our business. We've been paying particular focus on our whole logistics side of our business so that we can improve in that overall utilization of our trans (ph) equipment. But I think it would be premature, maybe, to spell out exactly what that savings is going to be. But we are making a pretty substantial investment there in IT.

Congratulations and good luck, Mark, in your new venture.

Larry Taylor, Credit Suisse First Boston.

A couple of questions. First of all, Mark, I wonder if you could break down capital expenditures versus the environmental expenditures during the quarter?

Yes. Environmental expenditures were roughly $2 million of the total.

Okay, thanks. Secondly, in terms of coming back to these cost cuts, I wonder if it might be possible to discuss the order of magnitude -- the size -- you talked about saving $2 million in external transportation, for example. How much of a total opportunity do you think there is for transportation sourcing and some of these other initiatives?

Well, we're certainly going to have some strong partnerships with outside carriers, and so we're not going to totally internalize all our transportation. We've got some strong relationships with some of our long haul carriers that are managing some of our vans and some of our tanker business out there. But there's a lot of expenditures going on on our rolloff business, our whole container management side of our business. We've kind of broken it down and said that if we could cut that $60 million down to $30 million outside spend, and the other $30 million of additional equipment and asset utilization and internal utilization that, in turn, there could be a 15 or 20% reduction in overall cost on that $30 million delta. So I think that's in the neighborhood of what we think on a percentage basis we could save by internalizing half our trans.

Okay, that's helpful. And, on the sourcing side, when you take the first cut at that, the order of magnitude -- the potential size of that you think it might be?

You know, there are so many areas of spending that the Company is focusing on. We have outsourced, for example, to a third party the buying and sourcing for a lot of materials and supplies that we use routinely throughout the 100 or so locations that we have. But looking at some of the bigger areas like chemicals, for example, either through a reuse program or better sourcing initiative, there's just so many different areas of spend that we're really trying to focus on. But I think we're in the real early stages of trying to come up with real good targets. Mainly, I think because the last six months we've had so much effort on a number of other initiatives, particularly in this whole Sarbanes-Oxley area and 404. So we want to get back on track, now that we've got that behind us, and get moving on the sourcing.

But, Larry, as we've talked about earlier, we had set targets of 15 to $20 million in cost reductions for these operational excellence teams that Alan referred to. And you know, I think when it's all said and done, we still believe that those are targets that can and will be achieved.

And what percentage -- we've seen a $2 million reduction -- what percentage, you know, sort of beyond the 2 million do you think you've achieved so far, looking at this quarter, as a run rate?

I don't know if we're ready really to disclose that at this point, but as we talked about earlier, we think within 18 months that hopefully we'll be at that kind of -- we will have realized that kind of number.

Okay. You've got a lot of cash on the balance sheet, last quarter, this quarter. What do you see is the use of that cash?

We're still -- we're actively looking at a number of different acquisition opportunities, particularly in the site service sector. So at this point in time, that would probably be our primary focus. And as we continue to hopefully run the business better and manage the balance sheet better, we'll even have more cash that we can utilize for that purpose.

Okay. That is -- well, actually, you know, with respect to the acquisitions, while we're on that subject, maybe one quick question there. Sort of the timing of when we might see something along those lines and relative size, sort of order of magnitude, what are we talking about?

We don't have anything in the pipeline right now. We have been presented with a lot of opportunities. I think I mentioned in our last quarterly call, a lot of opportunities have presented themselves and we've been looking and doing some due diligence out there. But nothing that I would think we're going to be reporting here in the short term.

The typical size of company that we've been looking at it in that 5 to $15 million range, whether it be in helping us further internalize trans (ph), so maybe looking at some specialized allers (ph) out there that could help us expedite that internalization effort, or expanding our Site Services footprint and maybe even helping us grow into a new line of business in a very small way to help us launch some of the other growth initiatives that we're looking at. So it's in that 5 to $15 million range, I think it's safe to say.

(Operator Instructions). James Capella, Kern Capital.

Can you guide us as to the tax rate -- effective tax rate going forward?

We have a significant amount of NOLs, you know, in the U.S., and so we're just a -- going to be a taxpayer in Canada. And as I discussed as it related to the overall expected tax expense for '05, it should be somewhere in that $3 million range.

Okay, that's down from last year now.

That's correct, because in June of last year, we entered into a reorganization of our Canadian entity that was a bit more tax-friendly than what we previously had structured.

Gotcha. And how about the gross margin for second quarter and throughout?

Haven't given guidance on that at this point.

Would it be anything significantly different than what we've seen in the past?

We've given guidance on SG&A and revenue and EBITDA, so I'd encourage you to take a look at those numbers and back into it.

Jeremy Zhu, Wedbush Morgan Securities.

Great quarter. A quick question about the other income. You include a couple of items in there. Can you just give us a breakdown of relative size of those items?

Sure. In Q1 '05, we recorded roughly a $600,000 gain associated with the business interruption claim that had been filed and we settled with an insurance carrier as it related to a fire that had taken place several years ago. So that's the Q1 '05 explanation. In Q1 '04, when we had the preferred stock as part of our capital structure, every quarter we were required to mark-to-market the embedded derivative feature associated with that preferred stock. And there were some wild swings in earnings that were incurred back at that point in time as a result of that exercise. I think the good news is that because we refinanced that preferred stock, that will no longer be applicable to us going forward.

So the disposal of assets is not included in that other income? Or it is?

It is, but it's a very -- to the extent that there was a gain or loss is a very, very small piece of what that total is.

Do you expect that to change much at all going forward?

The other income?

Yes, other income disposable of assets?

We continue to remain focused on selling assets that are on our balance sheet that we think we can liquidate. So, from a cash-flow perspective, we're hopeful that over the next 12 months, we can be successful in selling those assets. We believe that the way that they're booked right now is appropriate. And as it relates to any earnings loss or gains, that number should be minimal. That being said, when you sell a property, you can always be surprised on the upside or the downside.

Have you been more surprised on the upside or more surprised on the downside?

I think we've -- I think we've valued the properties appropriately.

(Operator Instructions). At this time, there are no further questions. Mr. Geary, are there any closing remarks?

No, I will defer to Mr. McKim.

Okay, great. Thanks, everyone, for participating on today's call. We look forward to speaking to you again on our Q2 call. We'd also like to mention we would encourage you and our shareholders to attend our annual meeting on May 12, which will be held here in Boston. Thanks again.

This concludes today's Clean Harbors conference call. You may now disconnect.