Clean Harbors Inc (CLH) 2012 Q4 法說會逐字稿

Greetings and welcome to the Clean Harbors Inc fourth-quarter 2012 conference call. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation.

(Operator Instructions)

As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host, David Musselman, General Counsel for Clean Harbors Inc. Thank you, Mr. Musselman, you may now begin.

Thank you, Kevin, and good morning, everyone. Thank you for joining us today. On the call with me are Chairman and Chief Executive Officer, Alan S. McKim, and Vice Chairman, President and Chief Financial Officer, Jim Rutledge. 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 this date, February 20, 2013. Information on the potential factors and risks that could affect the Company's actual results of operations is included in our filings with the SEC. 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 this morning's call, other than through SEC filings that will be made concerning this reporting period.

In addition, I would like to remind you that today's discussion will include references to non-GAAP measures. Clean Harbors believes that such information provides an additional measurement and consistent historical comparison of its performance. A reconciliation of the non-GAAP measures to the most directly comparable GAAP measures is available in today's press release, which can be found on our website, www.CleanHarbors.com. And now I'd like to turn the call over to our CEO, Alan McKim. Alan?

Thanks David, and good morning, everyone. Before going through how our segments performed this quarter, I would like to talk about our acquisition of Safety-Kleen. We have now owned Safety-Kleen for approximately seven weeks, and I can say we are just as excited today about the value and prospects we see for our combined Company as we were when the acquisition process began. We continue to believe that there was a great deal for Clean Harbors and our shareholders. We view it as an excellent opportunity to build an even greater company together. When the deal was announced back in October, we held a conference call to discuss Safety-Kleen. And as we have gotten to know the business and the employees better, it has reinforced many of the primary factors behind the transaction, and we have more to share with you today.

Safety-Kleen is the established leader in four important lines of business, small quantity waste generators, parts washers, used oil collection, and re-refining of lubricants from waste oil. The revenues of Safety-Kleen are relatively predictable, although they have some seasonality, which Jim will explain in his review. The small quantity generator line of business is approximately $200 million in revenue and broadens our service portfolio and leverages our waste treatment network and capabilities, which supports our one-stop shop philosophy with customers. Safety-Kleen handles a substantial amount of waste volumes and, that is all starting to be directed into our disposal network. Due to its leadership in the SQG market, Safety-Kleen has built an enormous customer base of more than 200,000. One of the things we've learned since completing the acquisition is just how little overlap there is between our two organizations in terms of customers and revenue. In fact, of Safety-Kleen's $1.4 billion in annual revenue, we've determined that only about $70 million of that overlaps with ours. That translates into many cross-selling opportunities for both sides.

The parts washer business, along with its sale of allied products, accounts for proximally $265 million in revenue. We see tremendous growth opportunity to grow this line of business across North America, particularly across our Canadian infrastructure and our Canadian customer base. The addition of Safety-Kleen, with its closed loop recycling approach, greatly enhances our commitment to sustainability. And that is an area that is only going to be getting stronger in the years ahead. We see growing long-term demand for recycled products including the re-refined oil.

The third line of business is Safety-Kleen's waste oil collection business, which is approximately $225 million. They are the largest gatherer of waste oil in North America, collecting over 200 million gallons of waste oil from a large diverse customer base. They have significant scale in this business, including 155 branches, 450 waste oil trucks, and close to 1000 rail cars to efficiently transport this waste. We are leveraging our rail infrastructure and our collection network to allow this business to run at an even lower cost.

The fourth line of business, which is recycled lubricants, exceeds $640 million. Safety-Kleen has a significant cost advantage in this line of business in that it has more control over its feedstock, and its feedstock is significantly cheaper than that of users of virgin product. This is due to the waste oil gathered from 1,000's of accounts I previously mentioned. Revenues are derived from base oil sales and blended oil sales. Blended oil has been an area of expansion for Safety-Kleen and a $15 million blending facility was constructed late last year at its East Chicago facility.

The Group II lube oil market in the US has been under significant pressure in recent months due to a number of factors and we believe will be improving in the coming months. Our response has been lowering Safety-Kleen's pay for oil program to combat the current pricing abnormalities in the market and also accelerating our cost reduction initiatives. We remain confident about the long-term outlook for this market, and we intend to capitalize on the underlying trends in this market in the years ahead. The blended oil market is less sensitive to Group II lube pricing swings, and we will continue to focus on this outlook for our re-refined oil, particularly our EcoPower line of recycled blended products. Overall, we feel great about the valuable assets that we've acquired, particularly now that we've spent some time gaining a better understanding of the personnel, the branch locations, and the equipment that Safety-Kleen brings to Clean Harbors.

Our integration teams have been hard at work for the past three months looking at ways to best unlock the value of our combined organization. On the cost side, our teams are identifying areas where we believe we can eliminate or lower expenses while improving efficiencies and streamlining functions. The integration teams now have over 500 identified projects or tasks to execute on, which include, for example, the reduction in redundant personnel and processes, increased asset utilization, gaining economies of scale in areas such as procurement, and leveraging our IT systems, and on and on. Most of these 500 identified projects are focused on cost reduction. Because we feel we have control to manage our costs well, we are now targeting $60 million to $65 million in synergies this year, up from our previously announced target of $30 million. We look forward to sharing our progress with you as the year unfolds in this area.

On the organizational side, we have now aligned the Company into four businesses which make up for more than $3.7 billion in revenues in our 2013 guidance. First, there is a Safety-Kleen business under Bob Craycraft, who was the former CEO of Safety-Kleen and a 20 year oil executive. Second, the Environmental business being led by Eric Gerstenberg, a 24-year Clean Harbors veteran. Third, our Industrial and Field Services business being led by Dave Parry, also a 25-year veteran of Clean Harbors. And lastly, our Oil and Gas Field Service business will be led by Laura Schwinn, who we announced the hiring of this morning. Laura joins us from Halliburton after a highly successful career there where she was most recently vice president of Drill Bits and Services, and she also worked at Schlumberger earlier in her career, and a twenty-year veteran in the oil business.

Those first three businesses each account for about $1 billion in annual revenue, with Safety-Kleen being a little north of that. The Oil and Gas Field Service business accounts for approximately $500 million in revenues. These four organizations deliver about 55 lines of business, and it is these four businesses that will continue to drive waste volumes into our disposal network across North America. I hope this gives everyone a more detailed look at our business and the exciting opportunity we see at Clean Harbors. So with that, let's take a look at 2012.

Starting with our Q4 results, on balance, the fourth quarter was a good quarter for us. We grew our top line from the same period a year ago. Similar to the third quarter, we saw the benefits of our diverse business model with strong growth in our Field Services and Industrial Services segment more than offsetting a year-over-year decrease in our Oil and Gas Field Service segment. The slowdown in our Oil and Gas business affected our margins in the quarter, but another primary factor was the cost associated with our acquisition of Safety-Kleen, which we completed late in December. We estimate those costs of approximately $9 million in the quarter as we completed the transaction and ramped up our integration teams.

Turning back to our segment performance, Technical Services was a steady performer for us this past quarter. Utilization at our incinerators was 90%, which is down slightly from the 90.9% we generated in Q4 of last year, but still an extremely high level where we can maximize our profitability. For the full-year, our incinerators achieved a utilization of 90.3%, 100 basis points above 2011. Our landfill business had another great quarter. While we fell just short of matching the record setting quarter we had in Q3, we increased our volumes by 64% from Q4 a year ago. Similar to Q3, this strong performance was the result of Bakken-related work, and several ongoing large-scale projects. For the year in total, tonnage in our landfills in 2012 increased 58%.

Within our field services segment, we generated double-digit organic growth in our base business in Q4 through a mix of large projects and routine maintenance work. We also saw our first major emergency response event of the year with Hurricane Sandy striking the East Coast in late October. Cleanup work related to that storm contributed about $12 million in the quarter. At the peak of the response, we had about 750 Clean Harbors related personnel working on a number of sites. Much of the work, particularly at our utility clients, was completed quickly once the storm waters receded.

Our Industrial Service segment delivered another strong quarter of double-digit growth. While part of that is from acquisitions, there was a nice level of organic growth as well. The three biggest contributors were activity in the oil sands regions, our catalyst business, and lodging. Lodging has grown rapidly for us in the past few years and has been an area that we have invested in. The result is that in 2012 our total lodging business exceeded $210 million, up from about $120 million in 2011. Our bookings in this business remained at a high-level, and we expect continued growth in 2013. Within the oil sands, we continue to see steady demand for many of our Industrial Services, and in Q4, we won a broad mix of projects.

Lastly, our Catalyst business was very strong in 2012 and Q4 was no exception. To accelerate the growth of this business and to capitalize on the market demand, we acquired Catalyst Services in late December. Through its highly trained staff, the company provides catalyst handling services to the refinery, chemical and other industries. They have US operations in four states and Canadian operations in Alberta and Ontario. The company, which generated approximately $35 million annual revenue, further enhances our capabilities and reinforces our position as the premier provider of catalyst services in North America.

Finally, within our Oil and Gas Field Service segment, we experienced a year-over-year decline as the winter drilling season has not been as robust as we saw in 2011. In Western Canada, rig counts are down about 10% to 15% which affected our rental business in the quarter. At the same time, the US market has been transformed from the fourth quarter of 2011 due to the shift in early 2012 by many energy producers away from dry gas towards liquid rich gas and oil plays. As we've outlined on our past two calls, we've had to reposition some of our solids control assets and rental equipment due to the shift in the marketplace. The repositioning is now essentially complete, and while it hurt that business during 2012, we believe we are now in a far better position. At the start of 2012, our rental packages were primarily at the sites of six major customers; today we've expended that number to more than 20 customers, which lowers our client concentration and exposure to near-term market shifts. Overall, our Oil and Gas Field Service segment still generated more than $100 million in revenue in Q4 through a broad range of projects from seismic and survey work to drilling and completion services to the ongoing production and maintenance work.

Looking at 2012 on the whole, it was another record year for Clean Harbors as we continued our steady expansion. We grew the business by 7% and exceeded $2 billion for the first time in our history. We achieved record results from many of our lines of business. These more than offset some of the disruptions we faced during the year such as in the energy space. We concluded the year with the acquisition of Safety-Kleen, which forms the next platform of growth for us.

Looking ahead to 2013, we remain encouraged about our prospects. In the near-term, we are focused on aggressively proceeding with the next stages of the Safety-Kleen integration. Overall, the comprehensive sales and expense reduction initiatives we have underway will support our performance this year. At the same time, we see substantial cross-selling and long-term growth opportunities within each of our segments as the underlying industry and outsourcing trends remain favorable to us.

So with that, let me turn it over to Jim for the financial review and guidance. Jim?

Thank you Alan, and good morning, everyone. We reported Q4 revenue of $559 million versus $545.9 million in the same period a year ago. I should point out that the revenues in Q4 of this year did not include any revenues from Safety-Kleen as we close the acquisition near year-end. The year-over-year increase was driven by solid performances in our Industrial Services and Technical Services segments, as well as the $12 million contribution from our cleanup work on Hurricane Sandy, offset by softness in some parts of our Oil and Gas Field Services segment. Also, please note that as we did last quarter, in the financial section of today's news release, we included the segment revenue and adjusted EBITDA information that is typically in our 10-Q each quarter. I'd like to point out here that we are still in the process of finalizing our SEC reporting segments as part of our integration process with Safety-Kleen. Our revised segments will be included as part of our Q1 reporting process.

Alan talked about how our individual segments performed. To provide some additional perspective on our Q4 results, here's a snapshot of how our key verticals performed. Oil and Gas production was our largest vertical in the quarter, accounting for 14% of total revenue, but down about 30% from a year ago when we reported an outstanding quarter. Reduced customer demand in gas plays continues to weigh on this vertical as overall drilling activity is down. On the positive side, we have won expanded projects with several of our key customers, and activity levels remain strong in the Western Bakken region.

Chemicals remained one of our largest verticals, also at 14% of quarterly revenue and up 23% from a year ago. We experienced solid growth in our base business, particularly with our agricultural chemicals customers. This was supported by our successful ongoing cross-selling efforts to our chemical customers. Also, as we saw in Q3, the low price of natural gas was favorable to the petrochemical segment as a number of chemical firms restarted their idled ethylene crackers, which led to increased incineration waste volumes from this vertical. Refineries and upgraders were again our third-largest vertical at 13%. The bulk of this growth is the direct result of our refinery cross-selling program that I mentioned in our prior call. This cross-selling more than offset the reduction we experienced in large project revenue.

Oil and Gas Exploration accounted for 10% of revenue, but was down slightly from Q4 2011. The main factor here is the lower rig count, as well as several jobs in Alaska that were postponed. General manufacturing had another strong quarter in Q4 due to some nice project wins, particularly from the high tech and aircraft markets, accounting for 9% of revenue, up 24% from a year ago. Some of the other significant contributors in Q4 included brokers at 5%, utilities at 5%, terminals and pipelines at 4%, and several others including pharmaceuticals at 3%. Of that group, I'd like to highlight our terminals and pipelines, which grew more than 50% from a year ago. The bulk of that growth came from the Alberta market. In both Canada and the US, this vertical won multiple small projects in the quarter with many in the several $100,000 range. I hope this vertical review gives you some additional insight into our Q4 revenue performance.

Moving back to the income statement, gross profit for the quarter was $159.2 million or a gross margin of 28.5%, compared with a gross profit of $172.7 million, or a gross margin of 31.6% in the same period last year. The declining gross margin is primarily due to the mix of business in the quarter and the higher margins we enjoyed in Q4 2011 within our Oil and Gas Field Services segment. Turning to expenses, SG&A was $75.6 million or 13.5% of revenue, compared with $75.4 million or 13.8% in Q4 a year ago. SG&A was slightly above our target range of 12.5% to 13% of revenues. The primary factor this quarter was expenses related to the Safety-Kleen acquisition and its integration.

On the past several conference calls, we outlined a wide range of cost reduction programs we had underway. Over the course of 2012, we were targeting more than $30 million in cost savings in areas such as outside transportation, procurement, and recruitment, as well as realizing the synergies that remain from our 2011 acquisition of Peak. Some of these savings helped offset the increases we experienced in labor, commodity and healthcare costs. Looking ahead to 2013, as Alan mentioned, we are targeting $60 million to $65 million in synergies from Safety-Kleen this year.

In Q4, depreciation and amortization increased 26% year-over-year, to $44.9 million. The reasons behind this increase are twofold. First, the acquisitions that we have completed in the past 12 months have brought a significant amount of equipment. Second, we once again had very high landfill volumes in Q4, which increased our amortization expense. For the full-year, our depreciation and amortization totaled $161.6 million. For 2013, we are targeting D&A, depreciation and amortization, for the year in the range of $255 million to $265 million including Safety-Kleen.

Income from operations for Q4 was $36.2 million or 6.5% of revenues, compared with $59.2 million or 10.9% of revenues in Q4 2011. This decrease reflects the higher level of depreciation that I just mentioned, and expenses associated with the Safety-Kleen acquisition in the fourth quarter. Safety-Kleen acquisition related expenses, which we estimate totaled about $9 million, weighed on our Q4 adjusted EBITDA results as well, as we generated $83.6 million or a margin of 15%. This compares with $97.4 million or a margin of 17.8% recorded in Q4 of last year.

Turning to our taxes, back in 2007, we implemented the Fin 48 accounting standards and began accruing taxes on an unrecognized tax benefit in accordance with the standard. We recently determined that the liability associated with those accruals needed to be reversed because of expired statutes of limitations of reserves for potential taxes. As a result, we recorded a non-cash benefit of $52.4 million in the fourth quarter of 2012. This resulted in an income tax benefit for the quarter compared with the year ago quarter when our effective tax rate was 21% due to the favorable release of unrecognized tax benefits related to an earlier acquisition. Looking ahead for the full-year 2013, we are currently estimating our effective tax rate to be in the range of 36.5% to 37.5%. For the fourth quarter, we reported net income of $61.9 million, or $1.11 per diluted share, compared with $38.2 million or $0.72 per share in the same period last year.

Fourth-quarter 2012 net income included the uncertain tax position benefit that I just described. I should point out again here that we include -- incurred about $9 million in costs associated with the Safety-Kleen acquisition and integration this quarter. Turning to our balance sheet, while our Q4 income statement did not include any contributions from Safety-Kleen in the quarter, we did combine the balance sheets of our two organizations at year-end as the transaction was completed on December 28, prior to the closing of our books. I did want to call attention to the fact that the balance sheet numbers we have included in today's press release are preliminary. Due to the complexities of an acquisition the size of Safety-Kleen, there may be some changes in certain line items, mostly related to the allocation of the purchase price, as we prepare for the filing with the SEC of our 10-K, which we expect to do on March 1. We do not expect any of these changes to be material in nature, although there may be some reclassifications in the $20 million range as we finalize our balance sheet.

Cash and marketable securities as of December 31 were $241.6 million, down from $534.7 million at the end of Q3, which reflects the completion of the Safety-Kleen deal. Total accounts receivable increased to $568.5 million at quarter end from $433.8 million at the end of Q3. Safety-Kleen's contribution to accounts receivable was approximately $132.9 million. In Q4, we lowered our DSO to 72 days, which was a 3 day improvement from the 75 days we had reported in both Q2 and Q3 this year. Our target DSO level remains at 70 days or less with respect to our legacy Clean Harbors business, but we still believe we are a few quarters away from this level given our acquisition activity in the past year. We have also estimated that our initial DSO combined with Safety-Kleen will be approximately 61 days, and we are targeting a level below 60 days over the next few quarters. Environmental liabilities at year-end rose to approximately $221.5 million, which includes about $60.3 million from Safety-Kleen's balance sheet.

CapEx for Q4 was approximately $65.4 million, which is up from the $47.4 million we spent in Q3. For the year, our CapEx totaled $196 million, slightly above the level we had alluded to on our Q3 call. As a reminder, the bulk of that figure, approximately $120 million, is targeted towards internal investments, which we consider to have a high rate of return. The remaining $75 million consists of maintenance CapEx. For 2013, we are currently targeting CapEx in the range of $260 million to $270 million. This includes a maintenance CapEx level of an estimated $120 million, which reflects the addition of the Safety-Kleen assets. Our cash flow from operations in 2012 was approximately $325 million, compared with $179.5 million in 2011.

Moving now to our guidance. Based on our 2012 performance and current market conditions, today we are confirming our previously announced 2013 guidance. We continue to expect 2013 revenues in the range of $3.72 billion to $3.77 billion with adjusted EBITDA in the range of $605 million to $620 million. Full-year adjusted EBITDA guidance excludes an estimated $20 million of one-time non-cash acquisition-related fair value adjustments to Safety-Kleen's inventory value and deferred revenue to be amortized in our Q1 results.

With that Kevin, could we please open up the call for questions?

We will now be conducting a question-and-answer session. In the interest of time, we ask that you please limit yourselves to one question and one follow-up question.

(Operator Instructions)

Al Kaschalk, Wedbush Securities.

I want to try and focus on the outlook in the business first. In terms of margin performance, could you maybe highlight where, on an EBITDA basis, you are seeing some headwinds to your outlook, whether that be pricing or volume? Clearly Oil and Gas was a little bit shorter than maybe your internal expectations for Q4, but trying to think how we should think about the several businesses as we roll into '13?

Sure, Al, this is Jim. I'll start it, and if Alan wants to add anything. As you mentioned, the Oil and Gas piece of the business, with some of -- with the gas price being down and some of the lower rig counts that are part of the Western Canadian winter drilling program, certainly has put a -- some pressure on the EBITDA margins in that business. While Q1 will still be a strong quarter relative to the rest of the year, it is down substantially from last year's first quarter when rig counts were a lot higher and gas prices were higher. I think in the Industrial Services, there I don't see any issues.

I think that we're doing well in that segment. I think the -- both in oil sands, the other industrial customers, and our lodging businesses is all performing well, and I expect margins to do well there. I think clearly with the -- and also I would add that, with Technical Services, our environmental business, that group continues to produce excellent margins with improvements as they make facility improvements and in areas of high utilization where they are able to make some pricing gains. The area of -- that, in the Safety-Kleen acquisition, as Alan pointed out in his comments, that with some of these pricing pressures that we've seen a little bit of an imbalance there with Q2. I'm sorry, I'm used to talking about quarters, Q2 -- Group 2 base oils being actually lower than Group 1 base oils, which is fairly unusual, but given that business, we do see a little pressure in margins relative to last year. And that's about all I would put on it, Alan, if you want to add anything.

Yes, I think it is really just, particularly in the Safety-Kleen side, good, steady, predictable revenues on the pots washing business, on the oil collection side of -- there is some seasonality obviously in the first quarter on their collection business, their oil collection business. But I think once this Group 2 pricing issue gets resolved where -- it's really hasn't trended together with crude like it typically has, and the correlation is broken, but we have seen some positive movement over the last few days, and we're hoping that, that is going to resolve itself.

Okay. And, before my follow-up, Jim, I don't know if at some point during the call you can provide clarity on the EBITDA reconciliation, but is the -- should we think that, that acquisition cost on net tax of about $7.3 million or $7.5 million should be adjusted into EBITDA, relative to your guidance? And then also, on an EPS reconciliation, if you could maybe walk us down to a more normalized $1.11, what that would look at. But my follow-up question is, more on -- in terms of the waste volumes, you have had some very good contributions here over 2012. How is the volume outlook in terms of whether that is projects or just the inherent nature of the business, and with that, is there any pricing concern that you are seeing in the market today?

Pricing on which side, Al?

Just on the -- particularly as it relates to the waste volumes, which is now a pretty good size business for you. Well, landfill I guess is what I'm referring to, more disposable waste volumes.

On the waste disposal side, our landfill volumes, we have our normal base customers and certainly then we have our large-event project business. And I don't think that business has really changed much. We have been more successful. I think our sales and business development efforts have really paid off for us, and I think we are seeing nice strong volumes, even though our Oil and Gas segment has been down, particularly our solids control packages and some of our other rental assets. The relationships we have now in the Oil and Gas plays has really helped our landfill business.

Our North Dakota landfill has been extremely busy. We've added a lot more capacity and are going to continue to build that out. But we are also seeing other landfill volumes, too, as it relates to drill cuttings and other sledges and a lot of field services opportunity in the Oil and Gas area. So, as much as we've seen pressure on both pricing and utilization of our centrifuge packages, we still have benefited a lot on the environmental side. We've added a lot of roll off containers out there, we're getting a lot more waste movement into our facility.

So, we feel very, very good about the overall drivers into our landfill business in general. I would also mention, just in the fourth quarter, the documented costs that we have include a lot of consulting work and other professional fees. But you can just imagine, when we are taking on an acquisition of this size, with 4,300 additional employees, the amount of energy and effort, travel, the cost that goes in, all of the internal focus on making sure that, that day one plan on the 28th was prepared. And all of the work that has gone on throughout the last seven weeks -- it has been a tremendous effort by our organization. And they really did a great job of continuing to service our customers and have what I would consider a very respectable fourth quarter, even in light of this great opportunity that we put together here with Safety-Kleen.

Thanks, Alan.

The only thing I would add, Al, to your point about the $7.5 million after-tax, it was about $9 million to $10 million that we had costs, integration costs and acquisition-related costs during Q4. So, clearly, that was all outside of the norm. It included everything from finance commitment fees to consultants that were helping us with integration through legal fees through all that.

Typically would have been capitalized under previous rules, but today that is all expense.

Absolutely. It's all expense.

Hopefully that helps.

Hamzah Mazari, Credit Suisse.

The first question is just, Alan, maybe if you could help us understand how much more volatile is your business now with all the Oil and Gas exposure relative to pre-2010? And also include Safety-Kleen in there. And is it fair that you believe that you can offset the increased volatility in the business by increased cross-selling? And how should we think about cross-selling? Is that like a 2-point contributor to revenue if one thinks about normalized revenue growth in your business of call it high-single digit? Any color there would be helpful.

Sure, well, I guess I would just preface my comments by saying everything we do is about oil and chemicals. All the environmental work that we do, oil spill cleanup work, chemical work, everything we do is derived around oil and other chemical waste. We have had to manage that commodity through our fuel surcharges on our transportation side of our business, our energy costs and running our incinerators, so forth and so on. So I think we just look at oil, and certainly the Oil and Gas business is something that we are very familiar with and know how to deal with it. I think that, when you think about the Safety-Kleen lube oil business, that business certainly is a commodity business, but we have, we believe, a significant cost advantage in that we can control the cost of our feed product by what we pay or what we charge customers for our feed, for our waste oil.

And so as much is we are dependent upon the majors on pricing for base Group 2 oil, we have a lot of control in our pricing environment for both the collection side as well as adding more value on the blended site. And so you will see us, over the coming quarters here and in the future, focus more on that less volatile area on base lube oil and focus more on that blended area. I think in regard to our exposure in general, for example in the gas area -- natural gas area, we have enough assets and equipment around about 150 drill rigs. And considering there is over 2,000 drill rigs out there, we don't think we are overly exposed there. We just have got ourselves -- or had got ourselves, or Peak had been too concentrated on a limited group of customers.

And so we've added a lot of sales folks. We've expanded our relationships with more accounts. We've tried to provide a more environmental-friendly bundled service to the drilling rigs, so that we could really differentiate ourselves significantly from simply just a rental company. And that particularly is focused on handling the waste side of the business as well as the processing of the waste on the drill sites. So, I guess -- I'm sorry, it's a pretty long-winded answer, but we are very capable of managing our way through this -- through the environment that we operate in here.

That is helpful, I appreciate that. And just a follow-up. You highlighted four different business lines, I know you're going to come up with your new segmentation at Q1. What are your thoughts on -- do you need a COO position, given the Company is now over $2 billion? You have all these different businesses, but yet you want to be a one-stop environmental shop. How should people think about that role and the need for that role as you've grown over the years?

Well, I try to lay out the four presidents who run the business, who basically have both sales, marketing, and the various lines of business within their various groups. And then there is certainly corporate marketing and other corporate shared services organizations that report up to Jim and others here in the HR organization. But I think we've got a great structure, a tremendous amount of talent, 20 plus years experience across all four of those leaders in the business. And then as we, particularly at the Board level has looked at succession planning and looked across the organization, that is always part of our quarterly reviews. And so, quite honestly, as the Company continues to grow, we will continue to look at the structure of the business. But what we laid out this morning for you is how we look at the business today and how we're going to run essentially a $4 billion business.

Okay, thank you.

Larry Solow, CJS Securities.

Two questions, just in terms of the guidance, fair to say that the legacy guidance which you basically gave in November and reaffirmed in early January, late December. Is that pretty much unchanged?

That is correct, Larry.

Okay, so just in terms of Safety-Kleen, obviously it looks like your overall bottom-line numbers have not changed. But, can you just help me just understand a little bit more, so the synergies I imagine are all cost synergies, or is it -- how is revenue remaining in a similar ballpark? Is it just because you are getting less margin on this -- from the pricing pressure?

Well, I think on the synergy side, we continue to see opportunities on both cost and revenue. But the ones that really are controllable are the ones that we are communicating to you, which is really the cost side. On the sale side, there is some wonderful opportunities to grow the top line of this business, but it's a lot easier for us to manage cost than it is revenues, when you're dealing with this new environment and with these new lines of business. So, those numbers we talked to you about are purely cost.

Right, so I'm just trying to -- and maybe it is just a rounding error, but just trying to factor in how the -- looks like your revenues will probably be somewhat less than originally expected if you assume this lower pricing assumption. As to how you offset -- are you offsetting that through -- looks like on the bottom line through cost synergies, but how is the revenue number -- is the revenue number virtually unchanged and you're just getting lower margin on that? Or is -- I'm just trying to reconcile that.

Well, probably on Safety-Kleen, you're going to see a little bit lower revenue obviously because of the pricing on the base lube oil. We did acquire CSI, which is about $35 million of revenue. And so that is why we are pretty consistent on guidance. One kind of washes the other.

Got it, so you're putting the catalyst assets in there as well.

Yes, and we've got over 200 turnaround scheduled so far this year. Our catalyst business is booked. And we are adding staff there. We are a market leader in Canada and one of the top two in the US. We expect to become the number one market leader across North America in catalyst and exceed $100 million overall in that business. That is our goal. But we are -- we're certainly saw some pressure on the Safety-Kleen side, and that catalyst business has offset that.

And if I could just follow-up with on question. So the imbalance in the Group 2, help me just understand, isn't -- in the overall lube oil market, isn't there some seasonality, and are you assuming -- it sounds like there is a temporary imbalance that has been exacerbated in recent months, are you assuming some rebound in this? Are your estimates based on not really much of a rebound even though you're hopeful you'll get one?

We plan for the worst and hope for the best, that is our way of running the business, here. We have seen some recent price improvements, literally, today, and last week. But those have not been assumed in our numbers. We are assuming that we are going to continue to see this depressed pricing environment. And, until we see an improvement on it, that is how we're going to manage the cost side of business.

Got it, great. Thanks very much, Al.

Adam Thalhimer, BB&T Capital Markets.

Quickly on adjusted EPS for the quarter, what are you using for adjusted EPS for Q4?

When you say adjusted EPS, what are you referring to, Adam?

Well, I didn't -- obviously the GAAP EPS was $1.11, and there are a few moving parts there, I was just wondering how the moving parts might factor into an adjusted EPS number?

Yes, the major -- obviously, during the fourth quarter and as you say, there are a few moving parts there. One, we issued more shares. So, we issued 6.9 million shares. We also had about $9 million to $10 million in acquisition related costs during the quarter. That affected the quarter. So, clearly, the number would have been higher. But there are -- there is also additional interest expense from the debt offering that we did to finance the deal in advance of closing. So, there are a group of adjustments that I think the number could be within a range. But those are the main components if you wanted to see if you could calculate that range yourself.

Okay. And then, where do you think the incinerator capacity utilization could go now that you own Safety-Kleen?

Well, our incineration utilization is extremely high. We have spent capital last year and an additional new $10 million of capital this year for a third incinerator. So we anticipate, based on what we see in the marketplace and our own needs, the additional capacity. And so we are moving forward with that. And so, yes, we will see an increased utilization of our incinerators. And probably an improvement in pricing, just because the overall mix will improve.

Got it. Okay, thank you very much.

David Manthey, Robert W. Baird & Company.

First off, at the end of October of last year, you estimated that Safety-Kleen's 2012 adjusted EBITDA would be $172 million. And I know it is not in your results for the fourth quarter, but can you tell us what the actual Safety-Kleen EBITDA for 2012 ended up being?

I don't have that. I think they estimated about $160 million, and I think it was somewhere around that number, it might've been a little bit less, Dave, but I don't have that precise number for you.

Okay. And then, in terms of the structure of that business, with the -- I'm interested in the costless collars primarily. Have those kicked in at all in the fourth quarter or in the first quarter here as spreads have come in?

No, they haven't. And, David, the way we look at that costless collar, it is more or less insurance or downside protection, if crude cost went below -- in the case of the forwards that we have outstanding right now, if crude went below $70 a barrel, and the top side would be $130 a barrel. So as crude moves within that range, there really isn't any effect there. So, I think it is the other initiatives that Alan talked about, increasing the blended stock that we sell, as well as managing that spread business. As you know, we don't buy crude to re-refine, it is waste oil. This really is a waste business where they recycle that waste oil into lubricants. So, managing that spread and increasing our additive production is really the way we are managing that potential volatility, not really through this hedging.

Yes, okay. And then, in terms of -- I'm thinking seasonality here and how the synergies come into play -- I believe in the recent past you have indicated that with the current mix of business you would have a much more even seasonality through the year, constant quarters first through fourth versus the seasonality you had historically. And I'm wondering if you still see that as the case. And, as you look at these synergies, the $60 million to $65 million, I would assume that those will ramp up through the year. But can you talk about what the first quarter might look like relative to, again, seasonality plus any of these synergies rolling in here?

Yes, it is a great question, Dave. And let me try to give some insights on that because, clearly, the environmental business pre, say, 2009 was seasonal toward the middle of the year. The winter months were the weaker time frames, because during the winter, the environmental business does get slower, just due to transportation, due to work in the field, winter environment. And then, when we increased our exposure to the Oil and Gas and Energy business, with respect to Western Canada, we saw an increased seasonality in Western Canada because of the winter drilling programs. Now, with Safety-Kleen, we are going back -- being that, that is such a large acquisition and in the environmental business, it is leaning more toward the greater seasonality toward the middle of the year. Think of it in terms of, again, they are collecting hazardous waste just as we are, plus solvents, plus oil. So all that movement of waste in the early part of the year and at the end of the year when it's wintertime is lower. But also, when you think of the lubricant sales that they make, the oil changes and all that, typically you don't get as many oil changes and lubricant change outs in the winter. It is more geared toward the spring, summer, and fall months.

So, all that being said, this acquisition has actually evened out our business to some degree where our quarters are almost even. But if I had to give some insights into how that might fall, I would look at Q1 as being more like maybe 24% of the revenues of the year. And then I would look at Q2 as being more like 25%, then Q3 being 26%, and then Q4 being back down to 25%. And I know those are small changes in percentage, but they are big amounts in revenue dollars. Now, on the margin side, recognizing that the environmental business does carry a higher margin, particularly in the disposal side of our business, we would expect that Q1 would be under the -- well, first of all, for the full year, we said our guidance was in that low 16% margin range. How that would spread out during the year, I think we would probably be more in the 13% range in Q1 of an EBITDA -- adjusted EBITDA margin. But then that would increase to about 16% in Q2, and then as high as 18%, which should be the strongest quarter. And, as you saw before when I said 26% of revenues, you get that operating leverage to go up to that 18%, and then maybe 17% or so in Q4. And what's also going on in those later quarters, as you accurately pointed out, is that you see those synergies coming into play, more so in Q2 through Q4, although there is some right in Q1 that we were able to do right off the bat; we've already got $5 million plus that will be in Q1.

Okay.

Hoping that gives some insight there.

Just one clarification on what Alan said earlier. You said that your assumption is that spreads remain where they are. So, just using crude versus Group 2, $0.70 or something is what is baked into your assumption for this guidance, is that correct?

Yes, we are doing -- yes but, we are doing some work on the pay-for-oil side, as Alan pointed out, and we've made some gains there and that is reflected in there as well. So, it is the whole spread, it is roughly that. As you know, we don't by crude, so it is not always exactly what you see in the spread. We are managing that total spread in the other ways that we talked about.

Makes sense. All right. Thank you very much.

Sean Hannan, Needham & Company.

So, on the Oil and Gas side, realizing that this side of the business has been a bit depressed. I think that, within the industry, there is a good amount of hope for some recovery for counts as we get to the end of '13. And, wanted to see if we could get your perspective around that thought and the thought process for how that could return in the end of the year. And then, if there are any drill down perspectives you might have around whether being liquid rich focused or whether some of that activity could be driven more in one region versus another, that would be helpful. Thanks.

So, I -- certainly with the acquisition of Peak particularly, it gave us a number of new lines of business that we could expand here in the United States and relocate some of those assets in those expertise here. And when we acquired that business, in '11, they were extremely busy, but it was really focused on the Marcellus area, almost entirely. And so, because we were already in North Dakota, we looked to expand our presence in the Bakken area there. In Western Canada, we're certainly in the Bakken in the Saskatchewan area and in the Alberta -- Southern Alberta market, but for the most part, we have been tied to those two plays. We have certainly tried to expand our customer base, as I mentioned earlier, but we are also expanding our presence into some of the other Oil and Gas plays that, quite frankly, we are missing out on right now.

And so there is an effort for us to expand. But again, not to go beyond the scope of the services that we offer today, which is essentially running our assets around those 150 drill rigs or so, but just to make sure that we can get our utilization at the levels and get our pricing at the levels that we were at in the fourth quarter of '11. When you really look at what that business did right after our acquisition, it did extremely well for us. And we saw a good business in the first few months of this year, in 2012. And then it really tapered off, as we know, when natural gas went under $2 for a little while there. So --

And now it's $4.

And now it's $4, or moving back towards $4. So, we are doing a lot of things, Sean, in that area. Does that help answer the question?

That is useful, thanks. If I could have a follow-up, here, really as a question around the Safety-Kleen integration. Since you have now closed the deal, I realize that -- and you actually also shared some of this with us today, that it is proceeding very well. But, usually there are some types of surprises, either up or down. And so, just looking to see if we can get a perspective from your vantage point, what perhaps are you seeing that you are most impressed by or present better opportunities, particularly as we look at the revenue and the cross sell versus your prior thoughts? And, conversely, what are some areas where you expect you might have to put in a little bit more work? I suspect that re-refined lube oil could be an area there, but any color would be helpful.

Sure, I guess I would first say that it's been an impressive organization to begin working with, and the people that we found at Safety-Kleen have tremendous pride in their brand, their work, years and years of service. Some of the folks that we've come to meet and work with, 25-year Safety-Kleen veterans that have gone through a tremendous amount of change in their organization. And so, a lot of folks willing and wanting to work together with us as we integrate our two systems, integrate our businesses. There was some nice overlapping business that Safety-Kleen had. For example, their total project management business, which is about a $50 million business, was their effort to add more lines of business to their existing customers. And most of that total project management work evolved around lab pack services, bulk disposal, field services. And so we have moved that business under the Field Services business, and we believe we can now help accelerate what they were trying to do across their customer base. Just tremendous growth opportunities on the Field Services and other environmental services that Clean Harbors offers today.

And, again, working with their organization, we've found it to be extremely exciting. One of the negative things is, they've got great systems. And so we often try to come into a deal like this here where we can bring in our huge information management platform and really create a lot of value by taking out a lot of work content. In the case of Safety-Kleen, some great systems. And so, choosing the best of both, integrating them together, having them all on one financial system. We are happy to say we are running the books in January on PeopleSoft, which is our financial system. So, a lot of great things. Probably the only headwind, which was really outside of our control, is what we saw in the last 60 days which is more in the pricing of that Group 2 oil.

Okay. Thank you very much for all the color.

We are trying the best we can.

Michael Hoffman, Wunderlich Securities.

A couple mechanical questions. On the environmental group, you've talked about organic growth, historically mid-single digit. Should we think about that as the carry-through into '13, or is there something better with things like the shale [take 2] plant coming back online or the breadth of refining turnarounds? How do I think about organic growth?

I think organic growth in the environmental business, I think in the mid- to high-single digits, maybe 6%, 7% range is about right, Michael.

Okay. And same question on Industrial Services, the breadth of that -- and I think of that as lodging, your industrial maintenance and cleaning, the E&P production side, that more contracted work. What is the organic growth there?

Organic growth would be in the low- to mid-teens percentage-wise. Now, you will see a greater percentage over 20% actual growth because of the acquisitions. But if you take that out and you get to the organic growth, you're probably in that 11%, 12% range.

Okay. And then, on the Oil and Gas margin trend, is it fair -- if I look at upstream E&P capital spending, it's going to -- projected to be down first half of year, but up in the second, flat year-over-year, is that how I should think about how your business will track? It's just going to correlate to that capital spending trend and upstream capital spending onshore US?

As far as the margin?

Yes.

I still think the first quarter -- even though the revenues in the Oil and Gas year over year are down over 20% because of the winter drilling programs in the first quarter, I do still believe that the margins will exceed 20% in that first quarter, because that is the busy time for them, and the asset utilization in place and the leverage and all that will give them a higher margin. I think then when you go into the second quarter, up there when you have the breakup and when you see the Oil and Gas business in Western Canada calm down, you're probably in the mid-teens by then. And then, toward the end of the year, as you progress toward the end of the year into the third quarter, you're back into the hitting the 20% range and into the winter of Q4. That is pretty much the flow of the margins the way I look at it.

Okay. And then, you had an early breakup last year if I remember correctly, relatively warm.

Yes, it was mid-March, actually.

And it's really cold this year, so are you thinking the breakup might be a little later?

It could be, it's tough to say, but we are being conservative. We still expect a big decline versus last year, like I talked about, over 20% in the revenues, still.

Fair enough. And then, a housekeeping item, there is a corporate items number in your adjusted EBITDA for the legacy company, it was $112 million, what's that number look like as the [newco]?

I think that, that is -- let's see, wait a minute -- it is probably closer to over $200 million, if you're thinking about corporate. I'm thinking somewhere between $200 million and $220 million, roughly in that area, if you include all of their sales and marketing and their administrative added to ours.

Okay. And then, can you give us a sense of what you think cash from operations will be for '13?

I would say we are going to cross $400 million. I think we will cross $400 million in cash flow from operations, and free cash flow will be in the $140 million range, somewhere around that.

Okay. And then, on the blending side, two questions on refining. Breslau was supposed to be adding a 10 million-gallon expansion. Did they?

Yes, they did.

So, now we are at 160 -- 170 of input versus the 160 legacy.

Yes.

And then, what is the approximate amount of blending you do today as a percentage of what you're producing?

I think it is almost 50% right now, in volume.

Okay, and that is up from?

A couple of percentage points lower last year. Earlier part of the year.

And what would you like it to be?

100%. (laughter) No, I'm --

I think there is a need to continue to provide our customers with base lubricants, and we want to continue to do that. But I think we want to continue to expand the amount of blended products we have and the packaging of those blended products just beyond just bulk. And they've got some wonderful products they've got certification on, and we think we can continue to grow them. We're going to grow them across the Clean Harbors network. We've got a lot of assets, here. And we believe with the large fleets out there, and a lot of our customers that operate a lot of fleets, that we can help them sell their products. So, we believe that is a nice growth opportunity here.

Okay. And then, can you help us, on the collection of the used oil, that is a feedstock for the refining business. Approximately what is the percentage of your cost of making a gallon of lube oil is the feedstock?

I would probably be guessing a little bit here, Michael. But we collect over -- including Murphy's Oil, which is our waste-oil business, we collect over 210 million gallons. Some of that oil is going into the re-refinery, some of it is sold as a recycled fuel oil, and so there are various markets that we operate in. I don't have that number right here in front of me. Maybe on our next call we will be able to give you some more color, if that's okay.

Okay. Fair enough. Just the point of it being, if you can do what you suggest you can do on controlling the cost of the collection and it is a big part of cost of goods sold making base lube, and then you're blending 50%, you got an awful lot of play there on managing a gross margin in the re-refining business.

That is right.

It's not quite 100% exposure of, the base lube price went down $0.29 and we'll take it straight on the nose.

Yes, exactly.

And then, on the synergies, how much of that $60 million is, there is two of something and you only need one versus you can run this business more profitably?

I'm not sure we're following you, are you talking about --

There are two people doing the same job, that is a synergy.

I would say probably a third of that to maybe 40% or something like that is two -- one where two was previously, yes.

So, that -- given how less profitable the environmental part of Safety-Kleen was, it seems like there's more runway here for opportunity

Yes, but it is really across both organizations. When you overlay both organizations together, there is a lot of opportunity here. Safety-Kleen had some great people and processes and managing a large network across North America, we want to certainly leverage that. The Safety-Kleen brand is going to stay in place, and the marketing organization there under Curt Knapp and Bob Craycraft are going to continue to grow that business, add more parts washing machines, collect more oil, leverage Clean Harbors' customer base. There's just a lot of great people, and so it is really on both sides.

Okay. And then, last question, there was -- EPA issued boiler rules in December and, while they wanted everybody to believe it was very narrowly impacting the industry, lots of industry is going -- oh my goodness. So, how does that play into your Company today?

We continue to follow these new and evolving regulations as they go through. And part of our focus on building out more capacity is in anticipation of more companies finding it cheaper to outsource rather than to comply, in some cases.

Okay, very good. Thank you very much for your help.

Richard Wesolowski, Sidoti & Company.

Regarding the plan to reduce the prices in the pay-for-oil operation, would you say that Safety-Kleen's pricing strategy was out of sync with the smaller competitors, or rather, are you now attempting to lead the market from a -- to a better pricing stream from a place where it was already consistent with everybody else?

Go ahead. You want to try it, Jim?

I'll just start it, Rich. Clearly, I think it is all about managing that spread. And Clean Harbors, as you know, has over $100 million -- prior to Safety-Kleen, over $100 million in spread businesses, whether it is transformers that we're taking from utility companies, and there's copper inside -- we are actually paying for those transformers, whereas they used to pay us to take them -- or we have -- in the Northeast, we take waste oil, and have for decades, and also with solvents. We recycle solvents at two plants that we own.

So what we have learned over the years is that you really do have to work with both sides. Both are customers. It is not like one is a supplier and the other is the customer. They are both customers. So, you really have to work on both ends. I think that Safety-Kleen, I don't think they did a bad job at all. I think they did a good job doing it. But I do think, in combination with us and the broad array of recycling that we do and the greater exposure to customers, large and small, that we believe we can add to that management. That's what -- I don't know, Alan?

And they have been in this business for a long time, and they have got some great talented people that run the business extremely well. And we're probably not going to be able to sit here after several weeks and say we know it better. But we have some ideas on ways that we think we can improve the business, both on the cost side regarding the gathering and the rail and the movement of waste, but also on the pricing side, hopefully add some value there.

Yes.

Right. So, my translation would be, perhaps Clean Harbors, in combination with Safety-Kleen, could get a better price in the pay for oil than Safety-Kleen could have gotten by themselves?

I'd like to think so. Yes.

Okay. Is the Company still contemplating a new re-refinery in the Gulf Coast region?

We are still contemplating that. We will be actually meeting on that next month.

Okay.

So we're still looking at that.

Shifting over to the disposal business, I'll take for granted that you're raising prices this year in incineration, but I'm wondering whether there's any opportunity to do the same in the landfill side. Especially in the base category.

I think, certainly on the incineration side, I think our customers know, as we continue to deal with new regulations and more capital needed to be invested in our plants, that they want us to be around and they know that we need to have a profitable business there. So I think we've seen good success on the pricing side there. I think on the landfill side, there's probably still an over-capacity situation in some markets, and so pricing has been pretty much under pressure for the last four or five years, and we don't see any change. But, in others, we've enjoyed some price increases there. And, so it's a -- I would say it's more of a local or regional pricing scheme on landfills. And we are optimistic at this point, let's put it that way.

Okay, appreciate it.

Jamie Sullivan, RBC Capital Markets.

Thanks. I know the call is running long, so I appreciate you squeezing me in. First, on Safety-Kleen, the outlook for 2013, excluding the synergies, it looks like they are assuming around $120 million in EBITDA. You talked about assuming no improvement in the spread side of the business, just wondering how you're thinking about their environmental side and how that -- how you're looking at growth in 2013. Because it seems that you are almost assuming a 4Q run rate and so, you would actually have some additional conservatism there and for re-refining if we're getting growth out of the environmental side.

Yes, I think on the waste side, clearly, bringing the disposal capability to Safety-Kleen will enable us to capture more volume at small quantity generators. Clearly, Safety-Kleen needed to work with third parties, and they did effectively. But I think we bring more value to the table now. So, I do believe that there's increases there. We haven't been aggressive, though, on building that into this model here. But, we do think that's perhaps some of the upside.

And I would say, since Bob joined Safety-Kleen 1.5 years or so ago, and his focus has been improving pricing on the environmental side, and he instituted a number of initiatives. And I know our pricing folks, working in conjunction with theirs, have been on the same page in regard to where they are taking that business. So, I think you will see some benefits, there.

Okay, great, that is helpful. And just as a follow-up, you talked about how the portfolio is a little bit more complex today. Alan, just wondering with the volatility and the stock that we've seen over the last few months, are you thinking any differently about the portfolio and strategically what you want to do with all of the parts?

I think when you look at the customer base we have and the lines of business that we are -- and the jobs that we do for them, I think we've got a wonderful portfolio. There's obviously some small one-offs that might not fit in the end, but they are not large. But, through our line of business specialists and the way that we have aligned our sales organizations under our four businesses, I think we have tremendous opportunity in front of us. That being said, as the Company has grown to the size it is at, it is a complex business. And the systems that we have, the business processes that we use are complicated. And so, training people, getting them up to speed, and expanding the cross-selling efforts and educating and training our sales force, all of that is a big part of our rollout this year. I don't think it is unexpected to see the kind of turmoil or change going on in our Company, simply because we are growing or have grown so quickly. But I think the portfolio is very, very good.

All right, thanks very much.

Larry Solow, CJS Securities.

Quickly, on the synergies, and I know you mentioned that it's going to scale up as the year progresses. The $60 million to $65 million number, is that a realized number in 2013? Or is that a number you reach at year end as we head out into '14?

No, that is a realized number, Larry.

So, as we look into '14, I guess we could assume this number is higher?

Higher, that's exactly right.

Last question, on the gross margin, and you guys certainly discussed product mix and whatnot impacted the Q4. As we look out and you clearly gave some overall margin assumptions for '13, but do you expect this number to -- excluding Safety-Kleen, which I know lowers that a little bit, but do you expect this number to bounce back some?

Yes, well I think the -- if I look at the full year with Safety-Kleen, because they are coming in with a lower margin and certainly we are improving it during the course of the year, we will probably wind up in that 27% to 28% gross profit margin level.

Okay.

And SG &A would probably be in that 11%,12% range.

Great, thank you very much.

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

Thanks, again, to everyone for joining us today. We look forward to updating you on our progress throughout 2013. We will be presenting at several conferences in the weeks ahead, and we will speak with most of you again on our Q1 call early in May. So, have a great and safe day. Thank you.

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