Clean Harbors Inc (CLH) 2023 Q3 法說會逐字稿

Greetings, and welcome to Clean Harbors Third Quarter 2023 Earnings Conference Call. (Operator Instructions) As a reminder, this conference is being recorded.

您好，歡迎參加 Clean Harbors 2023 年第三季財報電話會議。 （操作員指示）謹此提醒，本次會議正在錄製中。

It is now my pleasure to introduce your host, Michael McDonald, General Counsel. Thank you, sir. You may begin.

現在我很高興向您介紹主持人，總法律顧問邁克爾麥克唐納。謝謝你，先生。你可以開始了。

Thank you, Christine, and good morning, everyone. With me on today's call are our Co-Chief Executive Officers, Eric Gerstenberg and Mike Battles; and our EVP and Chief Financial Officer, Eric Dugas; and SVP of Investor Relations, Jim Buckley. Slides for today's call are posted on our Investor Relations website, and we invite you to follow along.

謝謝克里斯汀，大家早安。與我一起參加今天電話會議的有我們的聯合執行長 Eric Gerstenberg 和 Mike Battles；以及我們的執行副總裁兼財務長 Eric Dugas；投資者關係高級副總裁吉姆巴克利 (Jim Buckley)。今天電話會議的幻燈片已發佈在我們的投資者關係網站上，我們邀請您關注。

Matters we are discussing today that are not historical facts are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Participants are cautioned not to place undue reliance on these statements, which reflect management's opinions only as of today, November 1, 2023. Information on potential factors and risks that could affect our results is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision to the statements made today other than through filings made concerning this reporting period.

我們今天討論的非歷史事實的事項被視為 1995 年《私人證券訴訟改革法案》含義內的前瞻性陳述。請參與者不要過分依賴這些陳述，這些陳述僅反映管理層截至今天的意見， 2023 年11 月1 日。有關可能影響我們業績的潛在因素和風險的資訊包含在我們向SEC 提交的文件中。除了透過與本報告期間相關的文件提交之外，本公司沒有義務修改或公開發布對今天所做的聲明的任何修改結果。

Today's discussion includes references to non-GAAP measures. Clean Harbors believes that such information provides an additional measurement consistent historical comparison of its performance. Reconciliations of these measures to the most directly comparable GAAP measures are available in today's news release, on our website in the appendix of today's presentation.

今天的討論涉及非公認會計原則措施。 Clean Harbors 認為，此類資訊提供了與其績效歷史比較一致的額外衡量標準。這些指標與最直接可比較的公認會計原則指標的調節可在今天的新聞稿中找到，在我們網站上今天簡報的附錄中。

Let me turn the call over to Eric Gerstenberg to start. Eric?

讓我把電話轉給埃里克·格斯坦伯格開始。艾瑞克？

Thanks, Michael. Good morning, everyone, and thank you for joining us. Turning to our Q3 financial performance on Slide 3. Our Environmental Services segment delivered its eighth consecutive quarter of profitable growth in Q3, and we expanded our margins by 120 basis points. While we experienced some planned challenges in the quarter, demand remains high for those scarce assets that support our disposal and recycling services.

謝謝，麥可。大家早安，感謝您加入我們。轉向幻燈片 3 上我們第三季度的財務業績。我們的環境服務部門在第三季度實現了連續第八個季度的盈利增長，並且我們的利潤率擴大了 120 個基點。儘管我們在本季度遇到了一些計劃中的挑戰，但對支持我們的處置和回收服務的稀缺資產的需求仍然很高。

Within our services businesses, our trained and skilled workforce continues to be highly utilized and in demand from customers. Our SKSS segment faced some production challenges at our re-refineries in the back half of the quarter that led to lower-than-expected sales volumes and profitability. While volumes were off, pricing significantly improved in late Q3, with our aggressive shift to a higher charge for oil throughout Q3, we cycled through our higher-priced inventory, and we have returned to full production in our plans to start Q4. All of this will enable us to end the year strong in SKSS. Mike will discuss more of this in his prepared remarks.

在我們的服務業務中，我們訓練有素、技術精湛的員工隊伍持續受到高度利用，並受到客戶的需求。本季後半段，我們的 SKSS 部門在再煉油廠面臨一些生產挑戰，導致銷售量和獲利能力低於預期。雖然銷量下降，但第三季末的定價顯著改善，隨著我們在整個第三季度積極轉向提高石油價格，我們循環利用了價格較高的庫存，並在第四季度開始的計劃中恢復了全面生產。所有這些都將使我們能夠在 SKSS 領域取得強勁的業績。麥克將在他準備好的演講中討論更多相關內容。

Given some of the challenges arising in both operating segments, we fell short of our financial expectations in Q3. About half of the Q3 miss was related to Environmental Services segment and the other half was related to SKSS. We will get more into the details in each in a moment, but we believe our Q3 shortfall is unrelated to demand or market conditions. We believe the outlook for both segments continues to be strong.

鑑於兩個營運部門都面臨一些挑戰，我們第三季的財務預期未達。第三季業績不佳的一半大約與環境服務部門有關，另一半與 SKSS 有關。我們稍後會詳細介紹每個細節，但我們相信第三季的短缺與需求或市場狀況無關。我們相信這兩個領域的前景仍然強勁。

Before turning to the segment detail, I want to highlight our outstanding safety results. Safety forms the backbone of our reputation and our relationship with our customers. In Q3, the team battled through record-breaking summer heat and other adverse weather conditions to deliver a quarterly TRIR of 0.62, the best Q3 in our history, which keeps us on track to achieve our ambitious annual TRIR goal of 0.70. To everyone on our team listening today, thanks for all you do and keep everyone safe and allow our colleagues to go home uninjured every day.

在討論該細分市場的詳細資訊之前，我想先強調一下我們出色的安全成果。安全是我們聲譽以及與客戶關係的支柱。在第三季度，該團隊克服了破紀錄的夏季炎熱和其他惡劣天氣條件，實現了0.62 的季度TRIR，這是我們歷史上最好的第三季度，這使我們有望實現0.70 的雄心勃勃的年度TRIR 目標。感謝我們團隊中今天聆聽的每個人，感謝你們所做的一切，確保每個人的安全，讓我們的同事每天都能夠毫髮無傷地回家。

Turning to Environmental Services on Slide 4. Segment revenue increased 6% due to growth of our services businesses, higher disposal revenue and the addition of Thompson Industrial. Overall, growth was underpinned by a mix of pricing and volume initiatives in the various business units. In Q3, our Safety-Kleen Environmental Services business led the way with 14% top line growth, extending its already outstanding 2023. Parts washer services were up from prior year, reflecting the expansion of Everyday's customer base for its core offerings. Field Service revenue was up 3% in the quarter, despite no large-scale emergency response events and a limited number of medium-sized projects.

轉向幻燈片 4 上的環境服務。由於我們的服務業務增長、處置收入增加以及 Thompson Industrial 的加入，部門收入增長了 6%。整體而言，各業務部門的定價和銷售措施共同推動了成長。第三季度，我們的Safety-Kleen 環境服務業務以14% 的營收成長領跑，延續了2023 年本來就表現出色的業績。零件清洗機服務較去年有所成長，反映出Everyday 核心產品客戶群的擴大。儘管沒有大規模緊急應變事件且中型項目數量有限，但本季現場服務收入仍增加了 3%。

Technical Services rose slightly year-over-year, less than we expected, largely resulting from the backup of the incineration network and lower fuel recovery revenue this year versus last, when diesel prices hit $7 a gallon. While our facilities revenue grew in Q3, we expected a stronger performance, but we were impacted by the additional maintenance days, particularly in late September. Overall, our plants have been running extremely hard since the pandemic with a highly complex waste streams and significant volumes of containerized waste.

技術服務比去年同期略有增長，低於我們的預期，這主要是由於焚燒網路的支援以及今年柴油回收收入較去年下降（當時柴油價格達到每加侖 7 美元）。雖然我們的設施收入在第三季有所增長，但我們預計業績會更強勁，但我們受到了額外維護天數的影響，特別是在 9 月底。總體而言，自疫情爆發以來，我們的工廠一直在極其艱難地運行，廢物流高度複雜，貨櫃廢物量巨大。

During the quarter, we had a pull forward of planned Q4 turnaround at our El Dorado facility to September to improve performance, which cost us approximately $8 million to $9 million of aggregate EBITDA between repairs and lost revenue. We also made some needed preemptive repairs and other critical investments at other locations that yielded about $3 million in additional costs than originally expected. We have been doing considerable repair work this year at our Southern plants due to the after effects of the deep freeze in the winter of 2021 and other small freeze earlier this year.

本季度，我們將埃爾多拉多工廠第四季度的檢修計劃提前至 9 月，以提高績效，這導致我們在維修和收入損失之間損失了約 800 萬至 900 萬美元的 EBITDA 總額。我們還在其他地點進行了一些必要的先發製人的維修和其他關鍵投資，導致比最初預期的額外成本約 300 萬美元。由於 2021 年冬季深度冰凍和今年早些時候其他小冰凍的後遺症，我們今年在南方工廠進行了大量維修工作。

Given these events, incinerator utilization came in below our Q3 expectations at 86%, flat with the prior year. Average incineration pricing was up 3% in the quarter due to continued pricing initiatives offset by limitations on processing our backlog of containerized incineration waste in the quarter, mainly related to our plant turnarounds. We view this mix shift as temporary as the plants are running well today. The backlog in drum count, both at our site and within the marketplace remains at extremely high levels, which will drive more favorable mix in the coming quarters. Landfill volume in the quarter was up 19% as we won several large projects, including one in Western Canada. Base business and landfills also remains healthy.

鑑於這些事件，焚化爐利用率低於我們第三季 86% 的預期，與前一年持平。本季平均焚燒價格上漲了 3%，原因是持續的定價措施被本季積壓的貨櫃焚燒廢棄物處理限制所抵消，這主要與我們的工廠週轉有關。我們認為這種混合轉變是暫時的，因為工廠目前運作良好。我們的工廠和市場內的鼓數量積壓仍然處於極高水平，這將在未來幾季推動更有利的組合。由於我們贏得了幾個大型項目，其中包括加拿大西部的一個項目，本季的垃圾掩埋量增加了 19%。基地業務和垃圾掩埋場也保持健康。

Industrial Services grew 5% in the quarter as we expanded our presence in the Southeast and into some select verticals such as the steel industry through the Thompson acquisition. The team is focused on capturing significant cost synergies through Thompson and our second full year of owning HPC to improve margins in this business. Our results throughout 2023 reflect our success in those efforts.

隨著我們透過收購 Thompson 擴大了在東南部的業務並進入了鋼鐵業等一些特定垂直行業，工業服務在本季度增長了 5%。該團隊致力於透過 Thompson 和我們擁有 HPC 的第二個完整年來獲得顯著的成本協同效應，以提高該業務的利潤率。我們 2023 年全年的成果反映了我們在這些努力中所取得的成功。

Turning to overall segment profitability. Adjusted EBITDA growth was 11%, far outpacing revenue as we leverage our network and vital fixed assets. The productivity and efficiency initiatives we have -- that we have ongoing in both our plants and our service branches are having a positive impact on margins. We are taking out costs to counter inflation, but we are also exploring ways to apply data analytics, AI and robotic process automation to make profitability gains as we grow the business in the coming years. In Q3, we saw our ES margins top 25% with solid growth, and we see the opportunity to increase our longer-term ES margins to 30% or higher.

轉向整體部門獲利能力。由於我們利用我們的網路和重要固定資產，調整後 EBITDA 成長率為 11%，遠遠超過收入。我們在工廠和服務部門持續實施的生產力和效率措施對利潤率產生了積極影響。我們正在削減成本來應對通貨膨脹，但我們也在探索應用數據分析、人工智慧和機器人流程自動化的方法，以便在未來幾年發展業務時提高獲利能力。在第三季度，我們的 ES 利潤率高達 25%，並且穩定成長，我們看到了將長期 ES 利潤率提高到 30% 或更高的機會。

Before handing it off to Mike, let me provide an update on the construction of our Kimball incinerator on Slide 5. The $180 million project is proceeding extremely well. I recently traveled out to the facility and met with Nebraska Governor, Jim Pillen, whose administration has been very supportive of this project and the jobs it will bring to the western part of his state. Governor Pillen and the other elected officials signed the final steel beam that was put in place as part of the topping off ceremony in early October.

在將其交給 Mike 之前，讓我在幻燈片 5 上介紹 Kimball 焚燒爐的最新建設情況。這個耗資 1.8 億美元的項目進展非常順利。我最近前往該設施並會見了內布拉斯加州州長吉姆·皮倫（Jim Pillen），他的政府非常支持該項目及其將為該州西部地區帶來的就業機會。皮倫州長和其他民選官員簽署了最終鋼樑的簽字儀式，該鋼樑是 10 月初封頂儀式的一部分。

When I visited the site, I was impressed by how well all the key components of the plan are coming together. Our team is doing a terrific job keeping us on track and on budget. As you can see on the slide, the rotary kiln is now in place as is the central steel structure of the plant itself. In the coming months, we will be moving forward rapidly with construction. Our initial goal when we launched this project was to have the facility operational in the first half of 2025. Given that we are slightly ahead of schedule today, we are now targeting the new Klin start date to be prior to the year-end 2024.

當我訪問該網站時，該計劃的所有關鍵組成部分的完美結合給我留下了深刻的印象。我們的團隊做得非常出色，使我們的預算保持在正軌上。正如您在幻燈片上看到的，迴轉窯和工廠本身的中央鋼結構現已就位。在接下來的幾個月裡，我們將迅速推進建設。我們啟動專案時的最初目標是讓設施在 2025 年上半年投入營運。鑑於我們今天的計劃稍微提前，我們現在的目標是新的 Klin 啟動日期在 2024 年底之前。

We are all excited to ship this incinerator into operation. Given the demand we continue to see in the marketplace along with what we expect to see in the years ahead from reshoring, national infrastructure investments and other trends. We are having good discussions with customers about their future needs as well as ongoing conversations with owners of captive incinerators. We expect 70,000 tons of capacity in Kimball to be readily absorbed by the marketplace.

我們都很高興將該焚燒爐投入運作。鑑於我們在市場上持續看到的需求以及我們預計未來幾年會因回流、國家基礎設施投資和其他趨勢而出現的情況。我們正在與客戶就他們的未來需求進行良好的討論，並與自備焚燒爐的所有者進行持續的對話。我們預計金博爾的 70,000 噸產能將很容易被市場吸收。

With that, let me turn things over to Mike to discuss SKSS and the capital allocation. Mike?

接下來，讓我把事情交給 Mike 來討論 SKSS 和資本分配。麥克風？

Thanks, Eric, and good morning. We're all excited to see Kimball come online as rapidly as possible. It will be a big win for the company and our stakeholders.

謝謝，埃里克，早安。我們很高興看到 Kimball 盡快上線。對於公司和我們的利害關係人來說，這將是一個巨大的勝利。

Moving to SKSS on Slide 6. This segment underperformed this quarter, but we're seeing much better days here in Q4. On the top line, Q3 SKSS revenue declined 21%, primarily due to lower base oil pricing versus a year ago when supply and scarcity drove pricing to record levels. We entered Q3 in a downward trend in pricing with posted pricing dropping $0.60 in Q2, including a June reduction that impacted us in the first part of Q3. Subsequently, prices stabilized in mid-August, followed by a second price increase in September. Given the rising pricing environment, some of which did not take effect until October, we're off to a good start in Q4 selling base oil in October at favorable pricing.

轉到幻燈片 6 上的 SKSS。該細分市場本季表現不佳，但我們在第四季度看到了更好的日子。從營收來看，第三季 SKSS 營收下降了 21%，主要是因為基礎油價格較去年同期下降，當時供應和稀缺導致價格達到創紀錄水準。當我們進入第三季時，定價呈下降趨勢，第二季發布的定價下降了 0.60 美元，其中 6 月的降價在第三季的第一部分影響了我們。隨後，8月中旬價格企穩，9月第二次漲價。考慮到不斷上漲的定價環境（其中一些直到 10 月才生效），我們在 10 月以優惠的價格銷售基礎油，在第四季度取得了良好的開端。

Looking at year-over-year profitability, after our record Q3 adjusted EBITDA a year ago, lower pricing in this year's third quarter put pressure on our adjusted EBITDA and margins. In terms of expectations, the biggest factor to our miss in this segment was interruptions to expected production at several of our 8 re-refineries, including a delayed restart of our California facility. These reductions had the dual impact of higher-than-expected plant costs as well as lower volume of base oil and other products for us to sell.

就同​​比盈利能力而言，繼一年前第三季調整後 EBITDA 創紀錄以來，今年第三季較低的定價給我們調整後 EBITDA 和利潤率帶來了壓力。就預期而言，導致我們未能實現這一目標的最大因素是我們 8 個再煉油廠中的幾個工廠的預期生產中斷，包括我們加州工廠的延遲重啟。這些減少造成了工廠成本高於預期以及我們銷售的基礎油和其他產品數量減少的雙重影響。

In fact, in September, we sold more than 4 million gallons less of base oil than we had forecasted when we spoke to you in early August. These repairs and costs were all completed in Q3 and said that our plants have run extremely well, including our California facility. As most of you know, we actively manage the re-refining spread in this business. As we've outlined on previous calls, base oil pricing was on a downward trajectory for much of the year until recently. In response to market conditions, the SKSS team has been hypervigilant in addressing the spread compression we saw in the first 3 quarters. We have continued to collect the volumes we need for our plants at the best pricing possible to stabilize that spread.

事實上，9 月份，我們售出的基礎油比 8 月初與您交談時的預測少了 400 萬加侖以上。這些維修和費用均在第三季完成，我們的工廠運作得非常好，包括我們的加州工廠。正如你們大多數人所知，我們積極管理這項業務的再精煉價差。正如我們在之前的電話會議中概述的那樣，直到最近，今年大部分時間基礎油價格都處於下行軌道。為了因應市場狀況，SKSS 團隊一直高度警覺地解決前三個季度出現的價差壓縮問題。我們繼續以盡可能最好的價格收集工廠所需的數量，以穩定價差。

In Q2, we shifted from a pay-for-oil or PFO approach to a charge-for-oil model. In Q3, we raised that average CFO even further, while collecting 59 million gallons. As we look ahead to the fourth quarter, we see both ends of our re-refining spread improvement. We consumed our higher-priced inventory in Q3 and will benefit from lower-cost inventory being sold in Q4. In addition, the 2 price increases we saw in the back half of Q3 were also benefit us in Q4 as we tend to sell greater volumes in the quarter.

在第二季度，我們從以石油付費或 PFO 方式轉變為按石油收費模式。在第三季度，我們進一步提高了平均 CFO，同時收集了 5900 萬加侖。當我們展望第四季時，我們看到再煉油價差的兩端都有所改善。我們在第三季消耗了價格較高的庫存，並將受益於第四季銷售的低成本庫存。此外，我們在第三季後半段看到的兩次價格上漲也使我們在第四季度受益，因為我們傾向於在本季度銷售更大的銷售。

Blended product is another area where we see incremental sales momentum. This value-added set of products is derived from processing our base oil into finished lubricants such as such as hydraulic motor -- motor oil or hydraulic fluid. Blended product sales accounted for 21% of the total output of our plants in Q3. That's up from 17% a year ago and 19% in Q2 as we continue to win customers in this area.

混合產品是我們看到銷售成長動能的另一個領域。這套加值產品源自於將我們的基礎油加工成成品潤滑油，例如液壓馬達－機油或液壓油。第三季度，混合產品銷售佔工廠總產量的21%。隨著我們繼續贏得該領域的客戶，這一數字高於一年前的 17% 和第二季的 19%。

Our direct volumes, which represent our closed loop approach, were at 8% in Q3, up from 7% in Q2. Our goal remains to increase our blended volumes not only this year, but on a go-forward basis with both direct and wholesale channels.

我們的直接銷售（代表我們的閉環方法）在第三季為 8%，高於第二季的 7%。我們的目標仍然是不僅在今年增加我們的混合銷量，而且在未來的基礎上透過直接和批發管道增加我們的混合銷量。

Overall, it's been a challenging year for SKSS, but the team has managed well through the pricing terminals. We are on track for record collections at favorable CFO levels and will deliver annual volume produced in our plants will produce -- will deliver record annual volume produced in our plants despite the Q3 upsets.

總體而言，對於 SKSS 來說，這是充滿挑戰的一年，但團隊在定價終端方面表現出色。我們預計以有利的 CFO 水平實現創紀錄的收款，並將實現我們工廠的年產量——儘管第三季度出現了混亂，我們的工廠仍將實現創紀錄的年產量。

Strong Q4 will enable us to conclude Q3 and enter Q4 on a positive note in this segment. Even within a weak Q3, we expect this segment to still deliver on adjusted EBITDA margin north of 20% this year. It remains a strong cash flow generator and a high ROIC business for us.

強勁的第四季度將使我們能夠以積極的態度結束第三季並進入第四季度。即使第三季表現疲軟，我們預計該細分市場今年調整後的 EBITDA 利潤率仍將超過 20%。對我們來說，它仍然是一個強大的現金流發生器和高投資回報率業務。

One of the ways we intend to profitably grow SKSS in the coming years is to upgrade some of our Group II output into Group III products. We're excited to share today that we recently concluded a successful scale pilot project to make Group III oil at one of our plants. We are confident that we'll meet the required industry specifications to sell it into the marketplace. The value of qualified Group III base oil versus Group II varies over time, but more recently, it typically carries a premium of $1 to $2 per gallon.

我們打算在未來幾年實現 SKSS 獲利成長的方法之一是將我們的部分 II 類產品升級為 III 類產品。今天，我們很高興與大家分享，我們最近成功完成了一個規模試點項目，在我們的一家工廠生產 III 類石油。我們相信我們將滿足將其銷售到市場所需的行業規格。合格的 III 類基礎油相對於 II 類基礎油的價值隨時間而變化，但最近，通常每加侖溢價 1 至 2 美元。

Throughout 2024, we intend to scale up the project and initially produced a few gallons -- a few million gallons of Group III oil at one of our locations. We will then -- we will then bring that successful program to some other facilities in the coming years to extract even more value from existing assets.

在整個 2024 年，我們打算擴大該項目的規模，並首先在我們的一個地點生產幾加侖——數百萬加侖的 III 類石油。然後，我們將在未來幾年將這個成功的計劃帶到其他一些設施，從現有資產中提取更多價值。

Turning to Slide 7 and our capital allocation strategy. Nothing that happened in Q3 changes our perspective on the Vision 2027 strategy that we laid out at our Investor Day in March. We expect to grow both organically and through acquisition. Given the highly leverageable network of assets and people, we have seen the positive margin improvement that economies of scale provide for both cost synergies and cross-selling. So whether it's pursuing the next Kimball lite internal project for accretive acquisitions, we have multiple avenues for growth. We continue to assess opportunities to invest in CapEx to drive organic growth.

轉向投影片 7 和我們的資本配置策略。第三季發生的任何事情都沒有改變我們對 3 月投資者日制定的 2027 年願景策略的看法。我們期望透過有機成長和收購實現成長。鑑於資產和人員的高度槓桿化網絡，我們已經看到規模經濟為成本協同效應和交叉銷售帶來的利潤率的積極改善。因此，無論是追求下一個 Kimball lite 內部專案以進行增值性收購，我們都有多種成長途徑。我們繼續評估投資資本支出的機會，以推動有機成長。

On the M&A front, we evaluated a number of candidates in Q3 and, as always, remain highly selective. We continue to see a healthy flow of potential transactions for both operating segments. Eric Dugas will cover our balance sheet in more detail, but I wanted to highlight that we are very well positioned to be opportunistic with respect to potential M&A. At year-end, we expect to be at our lowest leverage point in more than a decade.

在併購方面，我們在第三季評估了一些候選者，並一如既往地保持高度選擇性。我們繼續看到兩個營運部門的潛在交易保持健康發展。杜加斯（Eric Dugas）將更詳細地介紹我們的資產負債表，但我想強調的是，我們處於非常有利的位置，可以在潛在的併購方面抓住機會。到年底，我們預計槓桿率將達到十多年來的最低點。

To summarize, while our Q3 results did not meet our expectations, we view the factors behind our performance and short term in nature. We expect our ES segment to deliver -- to continue to deliver profitable growth and margin improvement in the coming quarters. We see high demand for our services nearly across the board with customers valuing our breadth of offerings and strong service and safety record. We expect each of our 4 businesses within the ES segment to achieve profitable growth in 2023.

總而言之，雖然我們第三季的業績沒有達到我們的預期，但我們看到了業績背後的因素和短期性質。我們預計我們的 ES 部門將在未來幾季繼續實現獲利成長和利潤率改善。我們看到對我們服務的需求幾乎全面，客戶重視我們廣泛的產品和強大的服務和安全記錄。我們預計 ES 領域的 4 項業務將在 2023 年實現獲利成長。

Our backlog of ways positions us to close out the year on an upward trajectory. The plans are running great and the project pipeline within the ES segment also remains healthy as spending on reshoring, government infrastructure and regulatory-driven cleanups continue.

我們積壓的方法使我們能夠以上升的軌跡結束這一年。這些計劃進展順利，隨著回流、政府基礎設施和監管驅動的清理支出的持續進行，ES 領域的專案管道也保持健康。

Within SKSS, we remain focused on controlling costs across the business, particularly on the collection side, while still ensuring expense supply to maximize output at our re-refineries. Given where base oil and lubricant markets are today, we expect to post a large sequential increase in profitability in Q4 and enter 2024 with positive momentum in this business.

在 SKSS 內，我們仍然專注於控制整個業務的成本，特別是收集方面的成本，同時仍然確保費用供應，以最大限度地提高我們再精煉廠的產量。鑑於基礎油和潤滑油市場目前的狀況，我們預計第四季度的獲利能力將大幅連續成長，並進入 2024 年，該業務將呈現積極勢頭。

With that, let me turn it over to our CFO, Eric Dugas.

接下來，讓我將其交給我們的財務長 Eric Dugas。

Thank you, Mike, and good morning, everyone. Turning to the income statement on Slide 9. As Eric and Mike outlined, Q3 was a challenging quarter for us compared to expectations, particularly on the plant side, but the overall demand picture remains strong. Our ES segment continued to achieve profitable revenue growth, which essentially offset the year-over-year top line decline in SKSS that was driven by lower base oil pricing and resulted in Q3 revenues that were essentially flat with a year ago.

謝謝你，麥克，大家早安。轉向幻燈片 9 上的損益表。正如 Eric 和 Mike 所概述的那樣，與預期相比，第三季度對我們來說是一個充滿挑戰的季度，特別是在工廠方面，但總體需求情況仍然強勁。我們的 ES 部門繼續實現盈利性收入成長，這基本上抵消了 SKSS 因基礎油定價較低而導致的同比收入下降，並導致第三季度收入與去年同期基本持平。

As Eric Gerstenberg outlined at the start of the call, adjusted EBITDA came in below our expectations at $255 million, compared with the $308.6 million in Q3 last year. Our adjusted EBITDA margin in the quarter was 18.7%. Gross margin in the quarter was 30.9%, lower than Q3 of last year, due to large year-over-year decline in SKSS.

正如 Eric Gerstenberg 在電話會議開始時所概述的那樣，調整後 EBITDA 為 2.55 億美元，低於我們的預期，而去年第三季為 3.086 億美元。本季調整後的 EBITDA 利潤率為 18.7%。由於SKSS年減，該季毛利率為30.9%，低於去年第三季。

While ES gross margin was up 190 basis points to 33.2% as we offset inflation and wage pressures with appropriate pricing increases and realized cost savings. We remain focused on increasing productivity and operational efficiencies, along with pricing initiatives within ES, to continue to drive margin expansion.

ES 毛利率增加了 190 個基點，達到 33.2%，因為我們透過適當的價格上漲抵消了通膨和工資壓力，並實現了成本節約。我們仍專注於提高生產力和營運效率，以及 ES 內的定價舉措，以繼續推動利潤率擴張。

SG&A expense as a percentage of revenue was 12.5% in Q3 due to higher IT investments and related professional fees. For the full year, we now anticipate being in the mid-12% range. Overall, the team has done a good job managing SG&A headcount while battling inflation and wage pressures.

由於 IT 投資和相關專業費用增加，第三季 SG&A 費用佔收入的百分比為 12.5%。對於全年，我們現在預計將在 12% 的中間範圍內。總體而言，該團隊在應對通貨膨脹和薪資壓力的同時，在管理 SG&A 員工人數方面做得很好。

Depreciation and amortization in Q3 increased to $93 million, consistent with our expectations and reflecting the Thompson acquisition completed earlier this year. For 2023, we continue to anticipate depreciation and amortization in the range of $350 million to $360 million.

第三季的折舊和攤提增加至 9,300 萬美元，與我們的預期一致，並反映了今年稍早完成的 Thompson 收購。對於 2023 年，我們繼續預期折舊和攤提將在 3.5 億至 3.6 億美元之間。

Income from operations in Q3 was $154.4 million, down from prior year as expected, given lower overall profitability. Net income for the quarter was $91.3 million, resulting in earnings per share of $1.68.

由於整體獲利能力下降，第三季營運收入為 1.544 億美元，低於上年預期。該季度淨利潤為 9,130​​ 萬美元，每股收益為 1.68 美元。

Turning to the balance sheet highlights on Slide 10. Cash and short-term marketable securities at quarter end were $420 million, up approximately $94 million from June. In looking at our debt portfolio, we remain very comfortable with where we sit today. We ended this past quarter with debt of $2.3 billion and with no currently outstanding amounts coming due until 2027. Leverage on a net debt-to-EBITDA basis as of September 30 remained at approximately 2x, and our weighted average pretax cost of debt at the end of Q3 was 5.4% with approximately 85% of our portfolio being at fixed rates.

轉向投影片 10 中的資產負債表要點。季末現金和短期有價證券為 4.2 億美元，比 6 月增加約 9,400 萬美元。審視我們的債務組合，我們對目前的狀況仍然感到非常滿意。截至上一季末，我們的債務為23 億美元，目前在2027 年之前沒有到期未清債務。截至9 月30 日，淨債務與EBITDA 的槓桿率仍約為2 倍，我們的加權平均稅前債務成本為第三季末的利率為 5.4%，其中約 85% 的投資組合採用固定利率。

Starting to cash flows on Slide 11. Cash provided from operations in Q3 was $220.1 million. CapEx net of disposals was $105.4 million in the quarter, up from prior year due to the Kimball project, which accounted for $22 million of our Q3 CapEx. In the quarter, adjusted free cash flow was $114.7 million. For 2023, we continue to expect our net CapEx to be in the range of $400 million to $420 million. Full year spend on the Kimball incinerator is now expected to be approximately $85 million. In addition to that project, we continue to see synergies to invest in other areas of the business, including equipment and our transportation fleet. These investments will minimize third-party rental spending as well as maintenance costs by replacing older equipment and foster growth through those added resources.

從幻燈片 11 開始現金流量。第三季營運提供的現金為 2.201 億美元。本季扣除處置後的資本支出為 1.054 億美元，高於去年同期，這得益於 Kimball 項目，該項目占我們第三季資本支出的 2,200 萬美元。本季調整後自由現金流為 1.147 億美元。 2023 年，我們繼續預期淨資本支出將在 4 億至 4.2 億美元之間。 Kimball 焚燒爐全年支出預計約 8,500 萬美元。除了這個專案之外，我們還繼續看到投資其他業務領域的協同效應，包括設備和我們的運輸車隊。這些投資將透過更換舊設備來最大限度地減少第三方租賃支出和維護成本，並透過這些增加的資源促進成長。

We also are continuing to invest in our plants, including winterization projects and our incinerators down south. During Q3, we bought back more than 58,000 shares of stock at a total cost of $10 million. Approximately $85 million remains on our existing buyback program.

我們也繼續投資我們的工廠，包括防凍項目和南部的焚燒廠。第三季度，我們回購了超過 58,000 股股票，總成本為 1,000 萬美元。我們現有的回購計畫還剩約 8,500 萬美元。

Moving to Slide 12. Based on our Q3 results, and current market conditions for both our operating segments, we are revising our 2023 adjusted EBITDA guidance to a range of $1.005 billion to $1.025 billion, with a midpoint of $1.015 billion. Looking at our annual guidance from a quarterly perspective, we expect Q4 adjusted EBITDA to be approximately 15% above Q4 of 2022 as we expect growth in both of our operating segments.

轉到投影片 12。根據我們第三季的業績以及兩個營運部門目前的市場狀況，我們正在將 2023 年調整後 EBITDA 指引修訂為 10.05 億美元至 10.25 億美元範圍，中間值為 10.15 億美元。從季度角度來看我們的年度指引，我們預計第四季度調整後 EBITDA 將比 2022 年第四季高出約 15%，因為我們預計兩個營運部門都會成長。

For full year 2023, adjusted EBITDA guidance will translate to our operating segments as follows: in Environmental Services, we now expect adjusted EBITDA at the midpoint of our guidance increase nearly 15% in the full year of 2022. With the Q3 plant challenges behind us, we expect higher production levels in Q4 as demand for our services continues to be robust.

2023 年全年，調整後的EBITDA 指引將轉化為我們的營運部門，如下：在環境服務領域，我們現在預計2022 年全年指導中點的調整後EBITDA 將成長近15%。第三季工廠的挑戰已經過去，由於對我們服務的需求持續強勁，我們預計第四季度的產量水平會更高。

For SKSS, we now expect full year 2023 adjusted EBITDA at the midpoint of our guidance to decrease in the 40% range due to lower base oil pricing this year versus last. With the recent uplift in base oil pricing that Mike referenced, we expect to see a sequential increase in Q4 from Q3 that should allow us to close out the year strong.

對於 SKSS，由於今年基礎油價格低於去年，我們現在預計 2023 年全年調整後 EBITDA 將在我們指引的中點下降 40%。隨著麥克提到的基礎油價格近期上漲，我們預計第四季將比第三季連續上漲，這將使我們能夠以強勁的勢頭結束今年。

Our corporate segment, at the midpoint of our guide, we now expect negative adjusted EBITDA to be up approximately 9% this year from 2022. This reflects areas such as increasing insurance costs and salaries and benefits as well as the impacts of the Thompson acquisition. In light of the reduction in adjusted EBITDA, we are also revising adjusted free cash flow expectation for 2023. We now expect free cash flow to be within the range of $300 million to $330 million for a midpoint of $315 million.

我們的企業部門，在我們的指南的中點，我們現在預計今年負調整後的 EBITDA 將比 2022 年增長約 9%。這反映了保險成本、工資和福利的增加以及湯普森收購的影響等領域。鑑於調整後 EBITDA 的減少，我們也修訂了 2023 年調整後自由現金流預期。我們現在預計自由現金流將在 3 億至 3.3 億美元之間，中位數為 3.15 億美元。

Let me remind everyone that this year's free cash flow guidance includes approximately $85 million for the Kimball incinerator project. If you add that spend back, the midpoint of our adjusted free cash flow guidance would be about $400 million or approximately 40% of our current adjusted EBITDA midpoint expectation.

讓我提醒大家，今年的自由現金流指引包括用於 Kimball 焚燒爐工程的約 8,500 萬美元。如果將這筆支出加上去，我們調整後的自由現金流指引的中點將約為 4 億美元，即我們目前調整後 EBITDA 中點預期的約 40%。

In conclusion, I want to echo some of the thoughts that both Mike and Eric shared. While we reported results below our expectations, nothing that has occurred in the quarter has changed our view of Clean Harbors' multiyear growth prospects. Despite the planned challenges in the quarter, our ES segment delivered top line growth and leverage that to achieve meaningful margin expansion and increased EBITDA. In our SKSS segment, our re-refineries are all back running well again, and our California re-refinery is back online. We expect a good Q4, enabling us to exit '23 with positive momentum.

最後，我想回應麥克和艾瑞克共同的一些想法。雖然我們報告的業績低於我們的預期，但本季發生的任何事情都沒有改變我們對 Clean Harbors 多年成長前景的看法。儘管本季面臨計劃中的挑戰，但我們的 ES 部門實現了營收成長，並利用這一成長實現了有意義的利潤率擴張和 EBITDA 的增加。在我們的 SKSS 部門，我們的再煉油廠全部恢復正常運行，我們的加州再煉油廠也重新上線。我們預計第四季度業績良好，使我們能夠以積極的勢頭退出 23 年。

Looking ahead, we remain enthusiastic about our growth prospects in both segments. Our sales and project pipelines remain healthy. And finally, while I appreciate the fact that analysts and investors want to ask about our expectations for 2024, consistent with our historical practices, we are not providing guidance at this time as we have a budgeting process that we need to complete first.

展望未來，我們仍然對這兩個領域的成長前景充滿熱情。我們的銷售和專案管道保持健康。最後，雖然我很欣賞分析師和投資者想詢問我們對 2024 年的預期，但與我們的歷史慣例一致，我們目前不提供指導，因為我們需要先完成預算流程。

I will say that there is nothing in our 2023 performance or in the market today, that leads us to meaningfully deviate from the 2024 expectations that we assumed in our Vision 2027 organic growth model that we introduced back in March. And as Mike mentioned, we also intend to remain opportunistic on the acquisition front to complement our organic growth.

我想說的是，我們 2023 年的業績或當今的市場沒有任何東西會導致我們明顯偏離我們在 3 月份推出的 2027 年願景有機增長模型中假設的 2024 年預期。正如麥克所提到的，我們還打算在收購方面保持機會主義，以補充我們的有機成長。

With that, Christine, please open up the call for questions.

克里斯汀，請打開提問電話。

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

（操作員說明）我們的第一個問題來自泰勒布朗和雷蒙德詹姆斯的線路。

So I want to kind of make sure I have it. So I know that you didn't give specific Q3 guidance, but you obviously had a number implied in your prior midpoint. So can you guys kind of walk us through the delta of, call it, this $255 million versus maybe the 2 -- I'm going to say, $285-ish million, it was likely in that prior guidance. So basically, how does that $30 million breakdown? Was it $8 million to $9 million from Arkansas, $3 million from some other incinerators and then the rest was SKSS, is that a good way to break it down? Or just any help there would be helpful.

所以我想確保我擁有它。所以我知道你沒有給出具體的第三季指導，但你顯然在先前的中點中隱含了一個數字。那麼，你們能否帶我們了解這個 2.55 億美元的三角洲，與先前的指導中可能提到的 2 億美元——我想說，2.85 億美元左右。那麼基本上，這 3000 萬美元是如何分解的呢？阿肯色州提供 800 萬至 900 萬美元，其他一些焚燒廠提供 300 萬美元，然後剩下的由 SKSS 提供，這是分解它的好方法嗎？或只是任何幫助都會有幫助。

Yes. Sure, Tyler. This is Mike, and I'll answer the question. So the way it broke down from what we said 90 days ago was about $12 million of the miss was in the Environmental Services segment. As Eric mentioned in his prepared remarks, is centered around pulling the turnaround forward around -- along with some other challenges, some preemptive things we did at the other plants. About $13 million of the miss is in the SKSS segment, and that has a double impact of a plant going down late in the quarter as well as -- so that's additional cost to get it back online as well as a lost revenue from not being able to sell that much oil in Q4.

是的。當然，泰勒。我是麥克，我來回答這個問題。因此，與我們 90 天前所說的相比，它的細分方式是環境服務部門的損失約為 1200 萬美元。正如艾瑞克在他準備好的演講中提到的，重點是推動扭虧為盈——以及其他一些挑戰，以及我們在其他工廠所做的一些先發製人的事情。其中約 1,300 萬美元的失誤發生在 SKSS 部門，這會產生雙重影響，即工廠在本季度末停產，因此恢復生產需要額外成本，而且由於無法恢復生產而造成收入損失。能夠在第四季度出售那麼多石油。

And as I said in my remarks, we were down 4 million gallons in the month of September, which was a surprise to us. The last piece was corporate costs -- last piece, Tyler, was corporate costs of about $5 million. There was some one-off projects we did that cost us more than we expected in the quarter as well as insurance costs.

正如我在發言中所說，9 月我們減少了 400 萬加侖，這讓我們感到驚訝。最後一個是公司成本——泰勒，最後一個是約 500 萬美元的公司成本。我們做的一些一次性項目的成本以及保險成本都超出了我們在本季的預期。

And then on SKSS, what exactly happened? Was it a mechanical issue? Was it a chemistry problem? I'm just curious.

那麼在 SKSS 上到底發生了什麼事？是機械問題嗎？是化學問題嗎？我只是好奇。

Yes, Tyler, this is Eric. Just to clarify that within SKSS, we were starting up. We didn't have an accelerated turnaround come forward from Q4 into Q3. And SKSS, what we were doing is we were restarting our California-based plant coming online for base oil. We started that plant up earlier in the year. We were making VGO. And as we progress through Q3 -- as we progressed into Q3, we anticipate being online for base oil and generating base oil and selling that volume.

是的，泰勒，這是艾瑞克。只是為了澄清一下，在 SKSS 內，我們正在起步。從第四季到第三季度，我們沒有加速週轉。 SKSS，我們正在做的是重新啟動我們位於加州的工廠，以生產基礎油。我們在今年早些時候啟動了該工廠。我們正在製作 VGO。隨著我們進入第三季度，我們預計將在線生產基礎油並生產基礎油並銷售該數量的基礎油。

Actually, we brought it online delayed in the quarter at the tail end of Q3, which was the effect there. Along with some other minor production issues at some of the other plants. But the core issue in our SKSS segment was bringing on the California refinery later than we expected generating base oil.

實際上，我們在第三季末的季度推遲了它的上線，這就是那裡的效果。以及其他一些工廠的一些其他小型生產問題。但我們 SKSS 部門的核心問題是加州煉油廠的投產時間晚於我們預期的基礎油產量。

Okay. Okay. That's very helpful. On the Group III pilot program, I think, Mike, you said it would be a few million gallons in '24, but how big do you think that could be over the next few years? Seems like $1 or $2 uplift is a pretty big deal. And was that contemplated in that Vision 2027?

好的。好的。這非常有幫助。關於第三組試點計劃，我想，麥克，你說過 24 年將達到幾百萬加侖，但你認為未來幾年會達到多少？看起來 1 或 2 美元的提升是一個相當大的問題。 2027 年願景中是否考慮過這一點？

Tyler, so yes, we did envision having some Group III base oil in the Vision 2027 is kind of how we get back to 2022 levels, how we get back to $300 million plus. Group III base oil was certainly part of that. We think that gets up to -- depending on how we do it and how many plants we can roll it out to. It was a very successful pilot. It could be 25 million gallons or greater. And so I'm of the view over the next couple of 3 years, that becomes part of our process, and we are really excited about that pilot, and we're going to make a lot of that base oil in 2024. We're going probably use it more internally to make blended oil ourselves, but there will be something to sell in the marketplace, and we're excited about that.

泰勒，是的，我們確實設想在 2027 年願景中使用一些 III 類基礎油是我們恢復到 2022 年水平、恢復到 3 億美元以上水平的一種方式。第三類基礎油當然是其中的一部分。我們認為這取決於我們如何做以及我們可以將其推廣到多少家工廠。這是一次非常成功的試點。可能是 2500 萬加侖或更多。因此，我認為未來 3 年，這將成為我們流程的一部分，我們對該試點感到非常興奮，我們將在 2024 年生產大量基礎油。我們」我們可能會更多地在內部使用它來自己製造混合油，但會有一些東西可以在市場上出售，我們對此感到興奮。

Okay. Good. And my last one here. I know there'll probably be some talk about demand. It sounds like demand is pretty good. But did the auto industry disruptions impact you at all noticeably in Q3?

好的。好的。還有我在這裡的最後一個。我知道可能會有一些關於需求的討論。聽起來需求還是不錯的。但汽車產業的混亂在第三季對您有明顯影響嗎？

Yes, Tyler. Eric answering here. We did have some effect of the auto strikes, both in our industrial services business and some of the waste streams that some of the supporters, suppliers to the auto industry have. They were off in Q3. But we see that coming back as we get into Q4 here.

是的，泰勒。埃里克在這裡回答。汽車罷工確實對我們產生了一些影響，無論是在我們的工業服務業務中，還是在汽車行業的一些支持者、供應商所產生的一些廢物流中。他們在第三季就被淘汰了。但當我們進入第四季時，我們看到這種情況又回來了。

Our next question comes from the line of Michael Hoffman with Stifel.

我們的下一個問題來自邁克爾·霍夫曼（Michael Hoffman）和斯蒂菲爾（Stifel）的對話。

Your day reminds me of an old John Wayne movie, when we got asked off day or day off. So when I look at -- just to get the numbers right, I mean, the simple math is you land on ES at around $1.89 billion, $1.90 billion, SKSS set $185 million. You got $259 million of corporate overhead. There's your midpoint of your guidance. Is that -- to Mike, that's the neighborhood we should be in, right? I mean that's this...

你的一天讓我想起約翰韋恩的一部老電影，當時我們被請了一天或一天​​的休息。因此，當我考慮時，為了獲得正確的數字，我的意思是，簡單的數學計算是，ES 的估值約為 18.9 億美元、19 億美元，SKSS 設定為 1.85 億美元。您獲得了 2.59 億美元的公司管理費用。這就是你的指導的中點。對麥克來說，那是我們應該待的社區，對吧？我的意思是這個...

Yes. Yes, maybe a little lighter in SKSS and maybe a little higher in ES, but I think directionally, you're right.

是的。是的，也許 SKSS 稍微輕一點，ES 可能會更高一點，但我認為從方向上來說，你是對的。

Okay. So that puts us -- if I'm a little lighter, I'm in a $56 million, $57 million kind of quarter pace. You can't annualize it because 1Q is a little weaker. But if I did a sort of 3x that plus the 1Q, that puts us in the low $200s million for next year. I know you're not doing guidance, but we all have the model, and it would be silly for us to be sent out there with something stupid.

好的。因此，如果我稍微輕一點，我的季度營收將達到 5,600 萬美元、5,700 萬美元。你不能將其年化，因為第一季有點弱。但如果我把這個數字加到第一季的 3 倍，那麼我們明年的營收就只有 2 億美元。我知道你不是在做指導，但我們都有模型，如果我們帶著愚蠢的東西被派到那裡，那就太愚蠢了。

Yes. Mike, I think as I said in my remarks, we can't give kind of full year guidance, but I think you're kind of within the area code of what we're thinking there.

是的。麥克，我認為正如我在演講中所說，我們無法提供全年指導，但我認為您的情況符合我們的想法。

And then back to, if you have just normal plant activity, utilization rates, normal maintenance cycles, again, we're sitting here looking at something that's like 7%, 8% segment EBITDA growth in the ES business, that's not an unrealistic way to think about it as well.

然後回到，如果你有正常的工廠活動、利用率、正常的維護週期，那麼我們坐在這裡看著 ES 業務中 7%、8% 的 EBITDA 增長，這並不是一個不切實際的方式也要考慮一下。

Yes. No, that makes sense to us. And just to ground people in the -- for the year, if we hit the midpoint for Environmental Services, if we hit the midpoint of our guide we gave this morning for the year, for 2023, it will be 9% revenue growth, 15% EBITDA growth and 150 basis points of margin expansion in 2022. So to think for a moment that 6%, 7% or whatever number you were talking about, Michael, about EBITDA growth into 2023 -- 2024, excuse me, that doesn't seem crazy for me.

是的。不，這對我們來說很有意義。只是為了讓人們了解這一年，如果我們達到環境服務的中點，如果我們達到我們今天早上給出的今年指南的中點，那麼 2023 年收入將增長 9%，15 2022 年EBITDA 增長%，利潤率擴張150 個基點。邁克爾，想一想6%、7% 或你所說的任何數字，關於2023 年至2024 年的EBITDA 增長，對不起，這並不重要。對我來說似乎很瘋狂。

Yes. And just to reiterate one other final point. Each quarter this year, as you know, Michael, our performance in the ES segment has outpaced our expectations. And we continue to have margin expansion throughout the course of the year to back up what Mike was saying. So very strong outlook in ES continues.

是的。只是重申最後一點。今年每個季度，邁克爾，你都知道，我們在 ES 領域的表現都超出了我們的預期。我們全年的利潤率繼續擴大，以支持麥克所說的。因此，ES 的前景依然非常​​強勁。

So one of the things -- and I'm going to oversimplify this, and it's not that Clean Harbors was never been pricing. But I think that the industrial waste industry has adopted a pricing mantra coming out of hyperinflation that is different than history. What comfort can you give us all that discipline can -- it didn't get tarnished in 3Q or going into 4Q and is in case is sustainable. You can manage an overall price cost spread, and therefore, it's a component of organic growth and operating leverage going into '24.

因此，其中一件事——我將把這一點過於簡單化，這並不是說 Clean Harbors 從未定價過。但我認為，工業廢棄物產業在惡性通貨膨脹中採用了與歷史不同的定價口號。紀律可以帶給我們什麼安慰——它沒有在第三季或進入第四季受到玷污，而且萬一是可持續的。您可以管理整體價格成本差，因此，它是 24 世紀有機成長和營運槓桿的組成部分。

Yes, Michael, it's Eric Dugas. I'll take this one and then I'll allow Eric and Mike to kind of chime in. But pricing continues to be a strategic initiative of ours. In Q3 here for the reasons we've discussed, we did have the plant challenges. We did have a small mix change for some of the streams that we didn't see come through that are coming back through in October here. But I would think going forward pricing will continue to remain quite strong. And just to kind of provide a little color in more recent times, we're seeing kind of early returns in October here where the volumes are extremely strong. The trend volumes are at kind of an annual high here. And really, that just gives us some good evidence that going forward, pricing momentum remains.

是的，邁克爾，我是艾瑞克·杜加斯。我會接受這個，然後我會讓艾瑞克和麥克插話。但定價仍然是我們的策略舉措。在第三季度，出於我們討論過的原因，我們確實遇到了工廠挑戰。我們確實對一些我們沒有看到的串流進行了小的混合更改，但這些串流在 10 月會在這裡返回。但我認為未來定價將繼續保持相當強勁。為了給最近的情況提供一些色彩，我們在 10 月看到了早期的回報，成交量非常強勁。這裡的趨勢交易量處於年度高點。事實上，這只是給我們提供了一些很好的證據，表明未來定價勢頭仍然存在。

Thanks, Michael. Just to add, we're going to successfully hit our target this year of over $200 million of price increases to really occur of what's been happening with inflation across the business and expand our margins. As we go into next year, we fully anticipate that we'll hit a goal north of $150 million. And that's going to be tempered a little based on inflation coming down a little bit. But we have -- we continue to be very regimented on our approach of making sure our price improvement helps us to expand in margins, but also continues to accelerate past our increase in costs.

謝謝，麥可。補充一點，我們今年將成功實現漲價超過 2 億美元的目標，以真正解決整個企業的通貨膨脹問題並擴大我們的利潤。進入明年，我們完全預期我們將實現 1.5 億美元以上的目標。隨著通膨略有下降，這種情況將會有所緩和。但我們仍然嚴格控制我們的方法，以確保我們的價格改善有助於我們擴大利潤，但也繼續加速超越成本的成長。

Yes, Michael. And one last point that both of those points are really sound from Eric and Eric, but the -- what allows us to get that price is that the sales pipeline remains very strong. And I want to make sure that people on the call understand that, that our sales pipeline as we go into Q3, it was actually higher than Q2 and the higher has been all year. So when you think about -- in pipeline, they're just at their sales pipeline. Sometimes they don't materialize. But make no mistake that we feel good about going -- allowing us to get that price is the pipeline that allows us to kind of continue to drive that price.

是的，邁克爾。最後一點是，艾瑞克和艾瑞克的這兩點確實是合理的，但讓我們能夠得到這個價格的是銷售管道仍然非常強勁。我想確保電話會議上的人明白，當我們進入第三季度時，我們的銷售管道實際上高於第二季度，而且全年都是如此。因此，當你想到 - 在管道中時，他們只是在銷售管道中。有時它們不會實現。但毫無疑問，我們對此感覺良好——讓我們獲​​得這個價格是讓我們能夠繼續推動這個價格的管道。

Okay. And then this is a nuanced question, Eric Dugas. In the revised EBITDA buildup, you have about a $16 million dip at the midpoint in net income, but you only have a $10 million in cash flow from operations. So is there a working capital savings that's been captured to help keep the free cash at that midpoint of $315 million?

好的。這是一個微妙的問題，埃里克·杜加斯。在修訂後的 EBITDA 累積中，淨利潤中點大約下降了 1,600 萬美元，但營運現金流只有 1,000 萬美元。那麼是否可以節省營運資金來幫助將自由現金保持在 3.15 億美元的中點？

Yes, I think that's right, Michael. We are seeing some good improvement here on the working capital side and just looking at kind of trends and how it plays out in Q4. That's exactly kind of how we're thinking about it.

是的，我認為是對的，邁克爾。我們在營運資金方面看到了一些良好的改善，只是看看趨勢及其在第四季度的表現。這正是我們的想法。

And you'll keep -- you'll be able to hold on to that going to next year. This isn't a timing issue. This is structural.

你將能夠堅持到明年。這不是時間問題。這是結構性的。

Correct. Free cash flow next year continues to look pretty strong.

正確的。明年的自由現金流看起來仍然相當強勁。

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

我們的下一個問題來自 David Manthey 和 Baird 的對話。

First question, should you read anything into the fact that deferred revenues ticked down a bit sequentially despite the lower-than-expected utilization. And then if you could talk about the price mix and the backlog, I think you might have mentioned it, but is the value sitting there higher than what you incinerated this quarter?

第一個問題，儘管利用率低於預期，但遞延收入卻連續略有下降，您是否應該對此有所了解？然後，如果您可以談論價格組合和積壓，我想您可能已經提到過，但是那裡的價值是否高於您本季焚燒的價值？

Yes, David, this is Eric. I'll take that. Yes, we did have a slight tick down in the deferred inventory. However, based on that pull forward of our turnaround, our incineration drum deferred inventory actually went up throughout the quarter. So we continue to have significant drum inventory to work off as we proceed through the fourth quarter and into 2024. So that really makes up the substantial part of the difference there.

是的，大衛，這是艾瑞克。我會接受的。是的，我們的遞延庫存確實略有下降。然而，基於我們扭虧為盈的提前，我們的焚化桶遞延庫存實際上在整個季度都有所增加。因此，從第四季度到 2024 年，我們仍然有大量的鼓庫存需要處理。因此，這確實彌補了差異的很大一部分。

And Dave, I'm not sure if you're asking about price of mix. So pricing in incineration was low single digits, 3%, I think, was the number. But really, that's pricing up 8% or 9% and mix kind of bringing it back down to 3%. And so that's really what's happening here. So the pricing that we talked about with Michael and other investors, that remains very strong going into 2024.

戴夫，我不確定你是否在問混合價格。因此，焚燒的定價很低，我認為是 3%。但實際上，價格上漲了 8% 或 9%，混合後價格又回落至 3%。這就是這裡發生的事情。因此，我們與邁克爾和其他投資者討論的定價在 2024 年仍然非常強勁。

Got it. And then second, on a mid-80s incinerator utilization you've been reporting lately, at the time in the past, that used to be consistently 90% plus. Is utilization going to be lower on a secular basis today for some reason? Or is that extra, say, 5% of future opportunity?

知道了。其次，根據您最近報告的 80 年代中期焚化爐利用率，在過去，該利用率一直在 90% 以上。由於某種原因，目前的利用率是否會因長期原因而降低？或者說，這是否是額外的未來機會的 5%？

Yes, Dave, I'll take that. This is Eric. Our incineration utilization each quarter of this year, our low point was the first quarter where we were dealing with some of those freeze issues. Our expected annual utilization would be in the high 80s on an annual basis. This year, we'll come in at that 85%, 86%, 87% on an annual basis. .

是的，戴夫，我會接受的。這是埃里克。我們今年每季的焚化利用率，我們的最低點是第一季度，我們正在處理其中一些凍結問題。我們預計每年的利用率將在 80 左右。今年，我們的年增長率將達到 85%、86%、87%。 。

The reason that incineration utilization runs in that area is because of our focus on really managing significant amount of drums and high-value direct burn waste stream, which puts it in that midpoint. As we look at project business, other things that would add on to the utilization, such as the things that are out there, as PFOS opportunities are up for the project business coming from super fund sites. That's where we would leverage that incinerator utilization into those very high 80s and into the low 90s area.

在該區域進行焚燒利用的原因是我們專注於真正管理大量的桶子和高價值的直接燃燒廢物流，這使其處於中間點。當我們考慮專案業務時，其他會增加利用率的東西，例如現有的東西，因為來自超級基金網站的專案業務的 PFOS 機會正在增加。這就是我們將焚化爐利用率利用到 80 年代的極高水平和 90 年代的低水平區域的地方。

And just to clarify for some investors that we have a 70,000 ton incinerator in El Dorado, Arkansas. A down day is a lot of production. We don't assume any days in that calculation. So that when we say kind of high 80s, that's assuming a normal amount kind of down days. And so that's really the -- I want to make sure people understand that we'll never get to 100% because there will be -- we take those plants down twice a year, and for maintenance. And so those are part of the calculation of utilization.

只是為了向一些投資者澄清，我們在阿肯色州埃爾多拉多擁有一座 7 萬噸焚化廠。停工的一天意味著大量的生產。我們在計算中不假設任何天數。因此，當我們說 80 多歲時，這是假設正常的下跌天數。所以這確實是——我想確保人們明白我們永遠不會達到 100%，因為我們每年會關閉這些工廠兩次，並進行維護。這些都是利用率計算的一部分。

Our next question comes from the line of Jerry Revich with Goldman Sachs.

我們的下一個問題來自高盛的傑瑞·雷維奇（Jerry Revich）。

Mike, going forward you starting a new streak here starting today. It's been quite a run.

麥克，從今天開始，你將在這裡開始新的連勝。這是一次相當長的奔跑。

I was wondering who was going to bring it.

我想知道誰會帶來它。

Can I ask on Kimball, nice to hear that the plant is coming online nicely. Can you update us on how quickly you expect to ramp up the earnings power of that plant over what time horizon? Can you hit the type of numbers we were talking about at the Analyst Day now that we're coming closer to that date?

我可以問一下金博爾嗎，很高興聽到工廠正在順利上線。您能否向我們介紹您預計在多長時間內提高該工廠盈利能力的最新情況？既然我們已經接近分析師日，您能說出我們在分析師日討論的數字類型嗎？

Yes. Jerry, Eric here. As we go into the tail end of 2024, we'll begin to bring online and process through many of the backlog of drums. As we go into 2025, we'd expect that we'd be in that 20,000 to 40,000 tons range, beating through that unit as we go forward and ramp up from there. Our expected overall operational utilization should be in that 50,000 to 55,000 tons over the course of 2 to 3 years.

是的。傑瑞、艾瑞克在這裡。當我們進入 2024 年末時，我們將開始上線並處理許多積壓的鼓。當我們進入 2025 年時，我們預計我們的產量將在 20,000 至 40,000 噸範圍內，並在此基礎上繼續前進並逐步增加。我們預計 2 至 3 年內的整體營運利用率應為 50,000 至 55,000 噸。

That's a quick start. Okay. Great. And then in terms of just to expand on the Group III economics. Can you just say more, if you don't mind, what's the CapEx per gallon, just to expand on that opportunity set? And I don't know if you're willing to venture an estimate on looking across your footprint. Where do you think the facilities have an out space and capability set to roll out if you do decide to roll it out across the portfolio in SKSS?

這是一個快速的開始。好的。偉大的。然後就擴展第三組經濟而言。如果您不介意的話，您能否多說一下，每加侖的資本支出是多少，只是為了擴大這一機會集？我不知道你是否願意冒險評估一下你的足跡。如果您決定在 SKSS 的產品組合中推廣這些設施，您認為這些設施有哪些空間和能力可以推廣？

Yes, Jerry. So I'll start on this, this is Mike. So I'd say that the CapEx required is not a ton of CapEx to kind of drive Group III. It's really getting a high-quality base oil, high-quality used motor oil to derive that Group III quality. So that's the challenge, right? So you want to try to make sure you're capturing high-quality Group III oil and getting it into our plant and allowing it to run and uninterrupted. So you can't mix Group II with Group III, it gets contaminated, so you've got to be very careful on that. So it's really a lot of process change and a lot -- maybe some other things like that. I'm not sure it's going to be a huge CapEx item. I don't know, Eric, you want to add anything to that?

是的，傑瑞。那我就從這個開始吧，這是麥克。所以我想說，驅動第三組所需的資本支出並不是大量的資本支出。它實際上是透過高品質基礎油、高品質廢機油來獲得 III 類品質。這就是挑戰，對吧？因此，您要盡力確保捕獲高品質的 III 類石油並將其輸入我們的工廠並使其不間斷地運作。所以你不能將第二組與第三組混合，它會被污染，所以你必須非常小心。所以這確實是很多流程的改變，還有很多——也許還有其他類似的事情。我不確定這將是一個龐大的資本支出項目。我不知道，艾瑞克，你想補充什麼嗎？

No, I think that's fair, Mike. I think we have some minor changes to do. We have capacity that we've set aside a few of our smaller plants to be able to properly aggregate and run those units dedicated to making it Group III. And we'll be rolling that out as we go through 2024 and into 2025.

不，我認為這是公平的，麥克。我認為我們需要做一些小小的改變。我們有能力預留一些較小的工廠，以便能夠正確聚合和運作那些致力於使其成為第三組的單位。我們將在 2024 年和 2025 年期間推出此計劃。

So Jerry, I don't think it's going to be a huge cost item to get to that answer, but I do think it's going to be a great bridge as we try to bridge back to the $300 million. I think that's going to be a great bridge to kind of get us there.

所以，傑瑞，我認為得到這個答案不會是一個巨大的成本項目，但我確實認為這將是一座偉大的橋樑，因為我們試圖恢復到 3 億美元。我認為這將成為我們實現這一目標的一座偉大橋樑。

And can I ask the blue-sky scenario, how many gallons can we produce, what's our best sense?

我可以問一下，在藍天情境下，我們可以生產多少加侖，我們的最佳感覺是什麼？

Yes. We said on that. We got asked that earlier, 25 million gallons we thought would be a good goal to try to get to that answer. That's going to take some work, but that's a very reasonable goal.

是的。我們對此說過。早些時候有人問我們，我們認為 2500 萬加侖是一個很好的目標，可以嘗試得到這個答案。這需要一些工作，但這是一個非常合理的目標。

Across the footprint. Okay.

越過足跡。好的。

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

我們的下一個問題來自諾亞·凱與奧本海默的對話。 。

(inaudible).

（聽不清楚）。

Mr. Kaye, you need to disconnect the other line, you were getting an echo.

凱先生，您需要斷開另一條線路，您收到了迴響。

All right. I'll (inaudible).

好的。我會（聽不清楚）。

Our next question comes from the line of James Ricchiuti with Needham.

我們的下一個問題來自詹姆斯·里基烏蒂（James Ricchiuti）和李約瑟（Needham）的對話。

Apologies, I joined the call a little bit late. You may have covered this. Did you say what Thompson added and whether you're on track with your expectations for full year adjusted EBITDA in '23 for this business?

抱歉，我加入通話的時間有點晚了。您可能已經涵蓋了這一點。您是否說過 Thompson 補充的內容以及您對該業務 23 年全年調整後 EBITDA 的預期是否符合預期？

Yes. We were -- this is Eric Dugas speaking. We were on track for -- to add an incremental about $12 million was the budget we had, a target for Thompson in total, and that's kind of what we're trending towards in the year.

是的。我是艾瑞克·杜加斯（Eric Dugas）。我們的預算是增加約 1200 萬美元，這是 Thompson 的總體目標，這也是我們今年的趨勢。

Got it. And a follow-up question for me is just I wonder if you can give us an update on some of the initiatives you have with respect to PFAS.

知道了。我的一個後續問題是，我想知道您是否可以向我們介紹您對 PFAS 採取的一些舉措的最新情況。

Yes, James, this is Eric. I'll take that. We continue to really focus on our total solutions portfolio for PFAS. We've implemented successfully with our field crews being able to perform sampling. We perform analysis within our lab network. We're bringing that online to help our customers get a baseline understanding of their PFAS contamination levels.

是的，詹姆斯，這是艾瑞克。我會接受的。我們繼續真正專注於 PFAS 整體解決方案組合。我們已經成功實施，我們的現場工作人員能夠進行採樣。我們在實驗室網路內進行分析。我們將其上線，以幫助我們的客戶對其 PFAS 污染水平有基本了解。

We've seen our pipeline continue to grow around not only drinking water, industrial waters as well as remediation events. And through our network, we continue to believe along with our incineration testing that we've accomplished that we've shown that incineration destruction, high-temperature, rectal thermal and incineration through our units is really the preferred method, and we've communicated that throughout our customer network. And so our total solutions of sampling, analysis, drinking water, industrial water, remediation, transportation, disposal, leveraging our incineration network, our landfills and our water treatment plants, continues to be a real successful outlook for us as our pipeline grows.

我們看到我們的管道不僅圍繞飲用水、工業用水以及修復活動繼續增長。透過我們的網絡，我們仍然相信，隨著我們已經完成的焚燒測試，我們已經證明，透過我們的裝置進行焚燒破壞、高溫、直腸熱和焚燒確實是首選方法，並且我們已經溝通過貫穿我們的客戶網路。因此，隨著我們管道的成長，我們的採樣、分析、飲用水、工業用水、修復、運輸、處置的整體解決方案，利用我們的焚燒網絡、垃圾掩埋場和水處理廠，繼續成為我們真正成功的前景。

Any change in your expectations with respect to this as you look out over the next year? And again, I know you're not giving guidance for '24, but just a small part of your business. I'm just wondering if this is moving perhaps more slowly or if you're seeing the traction with your customers with respect to (inaudible).

展望明年，您對此的期望有什麼改變嗎？再說一遍，我知道您不是在提供 24 小時的指導，而只是您業務的一小部分。我只是想知道這是否進展得更慢，或者您是否看到了客戶對（聽不清楚）的吸引力。

Yes. I would say, James, there's still much to come with the regulatory parameters to be laid out, but I would tell you that our pipeline has grown. And that -- we continue to be optimistic as we go into 2024 about how leveraging our total solutions for all of our customer base, which is quite diverse, as you know, will really yield rewards for us across the network.

是的。我想說，詹姆斯，監管參數還有很多工作要做，但我會告訴你，我們的管道已經擴大。進入 2024 年，我們繼續樂觀地認為，如何利用我們為所有客戶群（如您所知，非常多樣化）提供的整體解決方案，真正為我們整個網路帶來回報。

Jim, just to -- Eric, just to interject and make sure I was clear with the answer on Thompson. The $12 million incremental EBITDA, that's what we're kind of forecasting in the ES Services segment, there's obviously also some incremental kind of corporate-related costs of $2 million to $3 million there. So you're looking at a $9 million kind of all-in number from Thompson this year.

吉姆，只是想——艾瑞克，只是想插話一下，確保我清楚地回答了有關湯普森的問題。 1200 萬美元的增量 EBITDA，這是我們對 ES 服務部門的預測，顯然還有一些與企業相關的增量成本為 200 萬至 300 萬美元。所以你看到的是湯普森今年的總獎金是 900 萬美元。

And the Thompson team, I know they're listening on the call, we're actually doing a great job. The innovation is going very well. We're really pleased with the early days in the Thompson acquisition. So we're really excited by it.

湯普森團隊，我知道他們正在聽電話，我們實際上做得很好。創新進展順利。我們對湯普森收購的早期階段感到非常滿意。所以我們對此感到非常興奮。

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

我們的下一個問題來自 CJS 證券的拉里·索洛 (Larry Solow)。

Most of my questions have answered. I do have a couple. Mike, I am looking forward to the new scoreboard going up in the office too. Just a couple -- I guess just a follow-up on the PFAS you mentioned sort of waiting for some regulatory stuff to come down. What -- can you give us sort of a high level from where we stand today? What can we look for, I guess, it'd probably be more towards the end of this year or maybe in '24 on the regulatory front in terms of milestones to kind of look for?

我的大部分問題都得到了解答。我確實有一對。麥克，我也期待辦公室出現新的記分板。只是一些——我想這只是你提到的 PFAS 的後續行動，有點等待一些監管內容的出台。你能為我們介紹一下我們今天所處的高水準嗎？我想，我們可以尋找什麼，可能會在今年年底，或者可能在 24 年監管方面尋找里程碑？

Really standards we're looking for, Larry, around remediation and what contamination in industrial and particularly contaminated soils that would set a baseline to get activity to begin to remediate down to those standards. That's what we're looking for.

拉里，我們正在尋找有關修復的真正標準，以及工業污染和特別是污染土壤中的哪些污染，這將為開始修復至這些標準的活動設定基準。這就是我們正在尋找的。

Any time line on that, that's -- is that a -- that's a 2024 event?

任何時間線，那是——那是——那是 2024 年的事件嗎？

Yes. We would hope that in 2024, we would see some strong movement towards those standards being set.

是的。我們希望在 2024 年，我們能夠看到朝著制定這些標準邁出的強勁步伐。

So the regulatory EPA in December, but they said August earlier. So it's been moved couple of point. So they are (inaudible) probably we wouldn't want to draw lines to stand, but what we've heard is kind of mid-December, but I heard mid-August a few months ago.

所以EPA在12月監管，但他們說8月更早。所以它被移動了幾個點。所以他們（聽不清楚）可能我們不想劃定界限，但我們聽到的是 12 月中旬，但我幾個月前聽說是 8 月中旬。

Right. I think I heard late December too, and last, so I thought maybe that might push into '24, but even so, hopefully, within the next 6 months or something, we get something, at least, right, some more clarity on it. Right. Okay. And then just a follow-up just on incinerated business. And obviously, you mentioned we're still kind of running a capacity-constrained environment.

正確的。我想我也聽說了12 月底，也是最後一次，所以我想也許這可能會推遲到24 年，但即便如此，希望在接下來的6 個月或其他時間內，我們至少能得到一些東西，對吧，對此有更多的澄清。正確的。好的。然後是關於焚燒業務的後續行動。顯然，您提到我們仍然在運行容量受限的環境。

Can you just kind of give us sort of a state of the union there? What -- I know I think Veolia had a little more capacity this year. I don't know if the other small guys are putting through some throughput improvements, but kind of where we stand there. It sounds like you guys are confident that you'll have -- that your increased volume will be filled pretty quickly. Just kind of what gives us that confidence? And I think you mentioned some potentially more closing captives there? If you can give us some of your update on that front, that would be great.

您能為我們介紹一下那裡的國情咨文嗎？什麼——我知道我認為威立雅今年的產能有所增加。我不知道其他小公司是否正在進行一些吞吐量改進，但這就是我們的立場。聽起來你們很有信心——增加的音量很快就會被填滿。是什麼給了我們這樣的信心？我想你提到了一些可能更多的封閉俘虜？如果您能給我們一些這方面的最新信息，那就太好了。

Yes, Larry, a few items there. First, I'd like to clear up that Veolia has not been able to bring on early capacity this year. So that they're the same time line we are, in fact, it might be a little bit longer than what we're anticipating. Our pipeline working with our captive continues to be strong. The overall industry capacity continues to be very challenged, as this is why we're investing in Kimball, while Veolia is investing. We think that capacity even with the coming on of both the plants, capacity will be tight, will continue to be tight in the years to come.

是的，拉里，那裡有一些東西。首先，我想澄清一下，威立雅今年未能實現早期產能。因此，它們與我們的時間線相同，事實上，它可能比我們預期的要長一點。我們與自保公司合作的管道仍然強勁。整個產業的產能仍面臨很大的挑戰，這就是我們投資金博爾、而威立雅投資的原因。我們認為，即使兩家工廠都已投產，產能仍將緊張，未來幾年將繼續緊張。

The captive relationships that we have are outstanding. They are -- everybody who has a captive is also a customer of ours, and we continue to work closely with them as they change their waste stream mix to be able to make sure that we are making adjustments with our plants to be able to support whatever captive closures may come.

我們擁有的俘虜關係非常出色。他們是——每個擁有俘虜的人也是我們的客戶，當他們改變廢物流組合時，我們將繼續與他們密切合作，以確保我們對我們的工廠進行調整，以便能夠支持無論可能發生什麼封閉式關閉。

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

我們的下一個問題來自 Tobey Sommer 與 Truist 的對話。

I wanted to start and maybe you could dig into and speak to what the right level of sort of ongoing corporate call growth there should be, you mentioned insurance a couple of times, maybe you could disaggregate some of the influences in the reported quarter year-over-year. And then help us understand an expectation for a trajectory over time going forward.

我想開始，也許您可以深入探討並討論持續的企業呼叫增長的正確水平應該是多少，您多次提到保險，也許您可以分解報告季度中的一些影響 -超過一年。然後幫助我們了解對未來一段時間軌跡的期望。

Yes. Sure, Tobey. It's Eric. I'll take that one. So when you think about kind of the year-over-year growth that we saw, obviously, still seeing inflationary pressures on wages. And things -- obviously, I think all companies are seeing that and we're seeing it as well. So you see some increases there. You also see some increases from investments that we're making in several of our technology platforms. So those are probably the 2 largest year-over-year.

是的。當然，托比​​。是埃里克。我會接受那個。因此，當你考慮我們看到的同比增長時，顯然工資仍然面臨通膨壓力。顯然，我認為所有公司都看到了這一點，我們也看到了這一點。所以你會看到那裡有一些增加。您還可以看到我們對多個技術平台的投資增加。所以這些可能是同比最大的兩個。

Going back to salary and wages. I think the team has done a great job kind of keeping corporate headcount very flattish throughout the year, absent the Thompson acquisition. So that's how it would kind of bridge the year-over-year. I think as you go forward, we're certainly trying to keep corporate costs as a percentage of overall revenue, I think kind of below that 5% range. And then year-over-year, every year, we target $100 million worth of cost savings initiatives. Many of those are in the corporate area. We'll continue to target those. But we usually target a 3% to 4% year-over-year growth rate on those.

回到工資和工資。我認為，在沒有湯普森收購的情況下，該團隊在全年保持公司員工人數持平方面做得很好。這就是它如何彌合逐年的變化。我認為，隨著你的前進，我們肯定會努力將公司成本佔總收入的比例保持在 5% 以下。然後，我們每年都會制定價值 1 億美元的成本節約計畫目標。其中許多都在公司領域。我們將繼續瞄準這些目標。但我們通常將這些目標設定為 3% 至 4% 的年成長率。

And just to be fair, Tobey, we continue to make investments in our people. We continue to drive -- to absorb health care costs of our employees, which has helped drive turnover down -- almost 40% down from the 2000 -- voluntary turnover down, 35%, 40% down from the 2022 highs. And that really is a testament to us continuing to make investments in our people not just through better base wages, better benefits, better opportunities, better career opportunities. And I really think we're seeing the benefit of that. As Eric talked about the safety stats, they talked about and how proud we have those and then has a direct relationship to us lowering voluntary turnover because we know in the first 6 months, first year, first deployment, that's what injuries having. So we're really proud of that. It's not free to add these additional costs to our employees are really proud of what we're doing there.

公平地說，托比，我們繼續對我們的員工進行投資。我們繼續推動——吸收員工的醫療保健費用，這有助於推動員工流動率下降——比 2000 年下降近 40%——自願流動率下降，比 2022 年高點下降 35%、40%。這確實證明了我們繼續對員工進行投資，而不僅僅是透過更好的基本薪資、更好的福利、更好的機會、更好的職業機會。我真的認為我們已經看到了這樣做的好處。當艾瑞克談到安全統計數據時，他們談到了我們對這些數據感到多麼自豪，然後與我們降低自願離職率有直接關係，因為我們知道在前6 個月、第一年、第一次部署中，這就是受傷的情況。所以我們對此感到非常自豪。增加這些額外成本並不是免費的，我們的員工對我們在那裡所做的事情感到非常自豪。

So we're, I don't know, plus or minus 7 months post get together for Investor Day in Chicago area. What do you feel more comfortable about at this point over the time period you outlined? Is it the organic revenue growth or the margin expansion?

所以，我不知道，我們是在芝加哥地區舉行投資者日聚會後的正負 7 個月後進行的。在您概述的時間段內，您目前對什麼感到更舒服？是有機收入成長還是利潤率擴張？

So Tobey, it's interesting. So when we started the year, just to get -- just to level set people. We had Environmental Services guided at the midpoint of our guide, what we said back in March, we said it'd be a little over $1 billion. And where we ended, if you take the midpoint of our guide, is almost $1.1 billion. So that's up $80 million, $90 million, depending on what Math use year-over -- from where we started the year to end the end of the year, that really bodes well for 2024. That is $4 billion up to $5 billion comes from the ES businesses.

托比，這很有趣。因此，當我們開始這一年時，只是為了讓人們達到水平。我們在指南的中點對環境服務進行了指導，正如我們在 3 月所說的那樣，我們說這將略高於 10 億美元。如果你看我們指南的中點，我們的結論是幾乎 11 億美元。因此，這增加了 8000 萬美元、9000 萬美元，具體取決於 Math 每年使用的內容——從我們年初到年底，這對 2024 年來說確實是個好兆頭。這 40 億美元到 50 億美元來自ES 業務。

So that type of EBITDA growth, we're hopeful -- and margin expansion, 150 basis points I mentioned earlier, is something that we're really, really excited about. Because I think that, as Eric said in his remarks, I'm trying to get to 30% is a good goal for us in ES. And you say, well, we're at -- we'll end the year at 24%, 25%. And is it really possible to get the 30% from there. And the answer is, if you look at for the last 5 years, we did improve almost exactly 500 basis points from 2018 to the midpoint of our guide in 2023. So that 500-basis point seems very reasonable, including buying businesses like HPC and Thompson, which had lower EBITDA margins going into it, and we're really proud about how we've been able to improve those are there.

因此，我們對這種類型的 EBITDA 成長充滿希望，而我之前提到的利潤率擴張，即 150 個基點，是我們真正非常興奮的事情。因為我認為，正如 Eric 在他的演講中所說，我努力達到 30% 對我們 ES 來說是一個很好的目標。你說，好吧，我們今年年底的成長率將達到 24%、25%。真的有可能從那裡得到30%嗎？答案是，如果你看看過去 5 年，我們確實從 2018 年到 2023 年指南的中點提高了幾乎 500 個基點。因此，500 個基點似乎非常合理，包括購買 HPC 和湯普森的EBITDA 利潤率較低，我們對如何改善這些利潤感到非常自豪。

So when you think about kind of the Investor Day presentation we did back in late March, I'm really much more excited about the growth in the Environmental Services business as we go into 2024, given all the factors I just mentioned. The good margin expansion, the good EBITDA growth and the backlog at the end of the year of a sales pipeline that's even better than when we started the year.

因此，當您想到我們 3 月底在投資者日所做的演示時，考慮到我剛才提到的所有因素，我對進入 2024 年環境服務業務的成長感到更加興奮。良好的利潤率擴張、良好的 EBITDA 成長以及年底銷售管道的積壓甚至比年初還要好。

Yes. Tobey, just to build on that a little bit more, as Mike articulated, our revenue and EBITDA and margin expansion in our ES business throughout the course of the year since our Investor Day has really exceeded our expectations. And we continue to see growth there. We -- our pipeline, as mentioned earlier by Mike, our pipeline continues to be growing in all areas of our ES business. I'd also say, though, that when we started the year on the Investor Day, the SKSS business, we've been always really looking at that business. It's a strong business. It produces a great ROIC.

是的。托比，在此基礎上再進一步，正如邁克所闡述的那樣，自投資者日以來，我們的收入和 EBITDA 以及 ES 業務的利潤率在這一年中的擴張確實超出了我們的預期。我們繼續看到那裡的成長。我們——我們的管道，正如麥克之前提到的，我們的管道在 ES 業務的所有領域都在持續成長。不過，我還要說，當我們在投資者日開始新的一年時，SKSS 業務，我們一直在真正關注這項業務。這是一項實力強勁的業務。它產生了很好的投資報酬率。

It's been a challenging year there as we've gotten through the year as we go into fourth quarter, where our team has done an outstanding job of switching from a pay-for-oil scenario to a charge for oil as we exit Q3. We anticipate a strong fourth quarter and that bodes well as we go into the 2024 and years to come to meet and exceed our SKSS. And the tidbit that we talked about, about Group III.

這是充滿挑戰的一年，因為進入第四季度後我們已經度過了這一年，我們的團隊在第三季結束時從按石油付費方案轉變為按石油費收費做出了出色的工作。我們預計第四季將表現強勁，這預示著我們將在 2024 年和未來幾年達到並超越我們的 SKSS。還有我們談到的關於第三組的花絮。

We're ahead of schedule, producing Group III or doing that pilot program than where we expected to be back in the Investor Day. So there is -- and we have some cost opportunities and some plant expansions there as well. So we're bullish about that business as well. It's a nice margin business. It's stabilizing as we're exiting this year. And we're -- we feel strong about how it will perform in 2024.

我們比計劃提前完成了第三組的製作或試點項目，比我們預期在投資者日回來的時間要早。所以，我們在那裡有一些成本機會和一些工廠擴建。所以我們也看好這項業務。這是一項不錯的利潤業務。隨著我們今年的退出，它正在趨於穩定。我們對 2024 年的表現充滿信心。

Our next question comes from the line of Jon Windham with UBS.

我們的下一個問題來自瑞銀集團的 Jon Windham。

Just a quick point of clarification. Did you say the Safety-Kleen plants were back to normal operations as of October 1 or at some point in the fourth quarter?

只是簡單地澄清一下。您是否說 Safety-Kleen 工廠已於 10 月 1 日或第四季的某個時候恢復正常運作？

October 1. We've been not enrolling. We're going to have a really good October, Jon.

10 月 1 日。我們一直沒有報名。我們將會度過一個非常美好的十月，喬恩。

All right. Great. And maybe just the other question, I'd be really interested to hear how you're thinking about the higher interest rate environment. I would think there's a bit of asymmetric pain in the market, less on you and more on some of your potential M&A targets. And if you think that's an opportunity to get better valuations maybe over the next year on some potential M&A?

好的。偉大的。也許只是另一個問題，我真的很想聽聽您如何看待更高的利率環境。我認為市場上存在一些不對稱的痛苦，更多的是你的一些潛在的併購目標，而不是你的痛苦。如果您認為這是在明年某些潛在併購中獲得更好估值的機會？

Yes, Jon. We think that the increase in iterates is a positive opportunity for us as we look at acquisitions and opportunities. We think it can bode well. We -- as Mike mentioned in his script, we have a strong M&A pipeline. We're going to continue to be opportunistic for both sides of the business, and we think it bodes well for us. It presents us with more opportunity.

是的，喬恩。我們認為，當我們考慮收​​購和機會時，迭代的增加對我們來說是一個積極的機會。我們認為這是個好兆頭。正如麥克在劇本中提到的，我們擁有強大的併購管道。我們將繼續為業務雙方提供機會，我們認為這對我們來說是個好兆頭。它為我們提供了更多的機會。

And Jon, just Eric chime in here. I think I'd be remiss if I didn't mention our balance sheet right now is very strong. I mentioned in my prepared remarks, kind of our debt-to-EBITDA leverage ratio is about 2x. It's actually -- it's going to end up as we -- if Q4 plays out like we think it will, the strongest it's been in a decade. So not only do we think we have a great debt portfolio, maybe we're at a little bit of an advantage, as you mentioned, to our competitors, but we really think we're in a good spot to be able to be aggressive if we need to be.

喬恩，艾瑞克插話了。如果我沒有提到我們現在的資產負債表非常強勁，我想我就是失職了。我在準備好的發言中提到，我們的債務與 EBITDA 的槓桿比率約為 2 倍。事實上，如果第四季的表現像我們想像的那樣，那麼最終的結果將會是十年來最強勁的。因此，我們不僅認為我們擁有良好的債務組合，正如您所提到的，也許我們對我們的競爭對手有一點優勢，但我們確實認為我們處於能夠積極進取的有利位置如果我們需要的話。

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

我們的下一個問題來自諾亞·凱與奧本海默的對話。

Okay. I'm crossing my fingers here. Can you hear me clearly?

好的。我在這裡交叉手指。你聽得清楚我說話嗎？

No.

不。

First time on the call, Noah?

諾亞，第一次打電話嗎？

It feels like it. And I want to start with a very basic one. So the turnaround at El Do, that was pulled from 4Q into 3Q, right? And so if that was an $8 million to $9 million hit, I mean basic question, why doesn't that just roll over to 4Q? Why does it actually impact the full year outlook?

感覺就像是這樣。我想從一個非常基本的開始。 El Do 的扭虧為盈從第四季度拉到了第三季度，對吧？因此，如果這是 800 萬至 900 萬美元的收入，我的意思是基本問題，為什麼不直接滾動到第四季？為什麼它實際上影響全年前景？

Yes. We do see improvement there as we go into Q4. Some of it will come back, but some of it also, Noah, quite frankly, is kind of like an airline seat, you don't get it back as readily as you would like.

是的。當我們進入第四季度時，我們確實看到了改善。其中一些會回來，但諾亞，坦白說，其中一些也有點像航空公司的座位，你不會像你希望的那樣輕易地把它拿回來。

Yes. So some of that was just kicked out. Is that a fair assessment, some of the ways that you hope to internalize was kicked out of the network? Or is -- and I think that relates to the deferred revenue question, right?

是的。所以其中一些就被踢掉了。這是一個公平的評估嗎？你希望內化的一些方式被踢出了網路？或者是——我認為這與遞延收入問題有關，對吧？

Yes. So some of that, I guess, you would look at it, that will -- there's going to continue to be pent-up demand more at our customer sites that within our network. As I said earlier, our incineration drum count, our deferred inventory of incineration drums went up. So it will take us some time to work that down as we go through fourth quarter and into 2024, building a new plant. But we did -- there is a backlog that continues to exist, probably grow a little at customer sites. So that we failed to be able to service as much as we would have liked in Q3. So there's some additional pent-up demand there that will work through with them.

是的。所以，我想，你會看到其中一些——我們的客戶站點將繼續存在比我們網絡內更多的被壓抑的需求。正如我之前所說，我們的焚燒桶數量和焚燒桶的遞延庫存都增加了。因此，從第四季到 2024 年，我們需要一些時間來解決這個問題，建造一座新工廠。但我們做到了——積壓的訂單繼續存在，可能在客戶現場略有增加。因此，我們無法在第三季提供我們希望的服務。因此，還有一些額外的被壓抑的需求可以與他們一起解決。

And we also want to make sure, Noah, that we meet Q4 expectations. I would say that there's probably a little bit of services baked into that number. You come to the conclusion, you just flip flop it why you change the number. The answer is we want to starting new street.

諾亞，我們也想確保我們達到第四季的預期。我想說這個數字可能包含了一些服務。你得出結論，你只需翻轉它為什麼改變數字。答案是我們要開始新的街道。

Appreciate that. And then, Mike, you had put out some good data points around the improving labor situation. I want to ask, is that going on industry-wide? Are industry-wide labor constraints at all easing? Is there sort of a freeing up of capacity to serve because certainly, that has been a boon to pricing in the space. And I just want to make sure that as we think about the setup for industrial services and field services, in particular, into next year, that those sort of favorable constraints to your pricing and market share aren't abating?

感謝。然後，麥克，您就改善勞動力狀況提出了一些很好的數據點。我想問一下，全行業都這樣嗎？全行業的勞動限制是否有所緩解？是否有某種程度的釋放服務能力，因為這當然有利於該領域的定價。我只是想確保，當我們考慮工業服務和現場服務的設置時，特別是明年，這些對您的定價和市場份額的有利限制不會減弱？

Yes. No, I'd love to say it's all us. It's all us. We did it ourselves, but I think that trending why people are definitely, definitely coming down. People are still scarce asset, makes them -- we're replacing kind of temporary labor and things like that, which has helped our margins in Industrial Services. And so I think that voluntary turnover coming down, we're really proud of that. We've made a lot of investments in that. I think the industry is coming down a little bit. But make no mistake, we're using our people to an offset for temporary labor and that's being able to drive margin improvement. Eric, you want to add anything to that?

是的。不，我想說的是我們所有人。都是我們。我們自己做到了，但我認為趨勢是人們絕對、絕對下降的原因。人才仍然是稀缺資產，我們正在取代臨時勞動力之類的東西，這有助於我們在工業服務業的利潤率。因此，我認為自願離職率下降，我們對此感到非常自豪。我們在這方面進行了大量投資。我認為這個行業正在走下坡。但毫無疑問，我們正在利用我們的員工來抵消臨時勞動力，這將能夠推動利潤率的提高。艾瑞克，你想補充什麼嗎？

Yes, I definitely think, Noah, across the board, we're ahead of our peers in reducing our level of turnover, strengthening our employee base, the quality of our employees, how we've been hiring, how we've been attracting, retaining them. It's -- the team has just done a nice job across the business in reducing turnover.

是的，我絕對認為，諾亞，我們在降低人員流動率、加強員工基礎、員工素質、招聘方式、吸引人才等方面都領先於同行。 ，保留它們。該團隊剛剛在整個業務中在減少人員流動方面做得很好。

A number of -- there are so many initiatives that we've been deploying across our employee base to reduce those. And I think we're ahead. Our efforts are ahead of what -- how the industry, I think, is performing based on our efforts. And it shows up of how we've been able to better service our customers and not have as much backlog in a number of different areas. And we've heard that from our customers. So that's good.

我們已經在我們的員工基礎上部署了許多措施來減少這些。我認為我們領先了。我認為，我們的努力領先於業界基於我們努力的表現。它顯示了我們如何能夠更好地為客戶提供服務，並且在許多不同領域沒有那麼多積壓。我們從客戶那裡聽到了這一點。所以這樣很好。

And I guess just to close the circle, that should give you runway for continued margin expansion in those lines of business, right? I mean, whatever the macro does right now is going to affect that. But even if it's sort of a low-growth industrial production environment, you've got some internal levers here that are going to continue to carry over?

我想只是為了結束這個循環，這應該為您在這些業務領域持續擴大利潤提供跑道，對吧？我的意思是，無論宏觀現在做什麼都會影響這一點。但即使這是一種低成長的工業生產環境，這裡也有一些內部槓桿可以繼續延續下去嗎？

Yes. I'd fight an example of that in our -- in some of our Field Services businesses, we had some subcontracting that we were doing to help us with some projects. We really had a concerted effort to eliminate that subcontract and reduce it with our own employees, and that comes with margin improvement and better service to our customers. So, yes.

是的。我會在我們的一些現場服務業務中舉一個例子，我們正在進行一些分包，以幫助我們完成一些專案。我們確實齊心協力消除了分包合同，並減少了我們自己員工的分包合同，這帶來了利潤率的提高和為客戶提供更好的服務。所以，是的。

And better safety and a lot of other things, too.

還有更好的安全性和很多其他的東西。

Our final question is from Michael Hoffman with Stifel.

我們的最後一個問題來自 Michael Hoffman 和 Stifel。

Tetra Tech got an $800 million award to do some PFAS work. Is there a -- and that's all engineering related. So is there a possibility you've got a role in that? And then on the PFAS issue, we need the drinking water final role in December, but we still need the circle ruling in February as well to get those two things behind us before we really break the dam open here on the PFAS side.

Tetra Tech 獲得了 8 億美元的獎勵來進行一些 PFAS 工作。有沒有——這都是與工程相關的。那麼你有可能在其中扮演一個角色嗎？然後在 PFAS 問題上，我們需要在 12 月發揮飲用水的最終作用，但我們仍然需要在 2 月進行裁決，以便在我們真正打開 PFAS 方面的大壩之前將這兩件事拋在腦後。

Fair to say, Michael, first commenting on the Tetra Tech. There was multiple awards that went out and to really change out the AFFF to another non-PFAS related material. We -- certainly, our team was well ahead of that announcement, aligning ourselves with those awards to be able to work with them directly to provide solutions for the proper disposal of that AFFF.

公平地說，邁克爾首先評論了 Tetra Tech。有多個獎項頒發並真正將 AFFF 更改為另一種非 PFAS 相關資料。當然，我們的團隊早在宣布這一消息之前就已經做好準備，與這些獎項保持一致，以便能夠直接與他們合作，為正確處置該水成膜泡沫提供解決方案。

So a nice opportunity for us to continue to improve prove out. And also on the circle, yes, we need that to really happen for us, as mentioned earlier, to get that definition completed here, hopefully, with what's going on in Washington and some of the turbulence that doesn't get delayed again. But we really need those standards out there in the marketplace.

這對我們來說是一個繼續改進的好機會。同樣在圈子上，是的，我們需要這種情況真正發生在我們身上，正如前面提到的，希望在這裡完成這個定義，華盛頓正在發生的事情和一些動盪不會再次被推遲。但我們確實需要市場上的這些標準。

Okay. And then Mike Battles, on the blending, when you say 25 million gallons, that's taking the direct from 8%, which would be something like $12 million, so doubling the blending or the direct number, when you say 25...

好的。然後 Mike Battles，關於混合，當你說 2500 萬加侖時，這是直接從 8% 中扣除，大約是 1200 萬美元，所以當你說 25 時，將混合或直接數字加倍…

It's a different -- it's kind of a different answer. When I talk about Group III, we're going to use some of that in our own production next year, but ultimately, we see Group III being sold as base oil to third parties. When we talk about that growth to a much higher number. That's -- the 2024 item is more of a cost save for us instead of buying third-party Group III oil to supplement our base oil to make to make blended lubricants. We're going to use their own stuff, which is a cost saver in probably the first half of 2024. And as we ramp that up in the back half, I think there's going to be some to sell.

這是一個不同的——這是一個不同的答案。當我談到第三類油時，我們明年將在自己的生產中使用其中一些，但最終，我們看到第三類油將作為基礎油出售給第三方。當我們談論成長到更高的數字時。也就是說，2024 年產品對我們來說更多的是節省成本，而不是購買第三方 III 類油來補充我們的基礎油來製造混合潤滑油。我們將使用他們自己的東西，這可能會在 2024 年上半年節省成本。隨著我們在下半年加大力度，我認為會有一些可以出售。

Yes, Michael, just to add on that, when you think about that 25 million gallon number of Group III that we'll be making and looking to achieve as the goal that Michael articulated, that's selling material that we're currently selling at a Group II rate and converting it to a group III. So 25 million gallons less of the goal of Group II sales but selling that as a Group III product. That's how you should think of that.

是的，邁克爾，補充一點，當你想到我們將生產 2500 萬加侖的 III 組並希望實現邁克爾所闡述的目標時，這就是我們目前以II 組速率並將其轉換為 III 組。因此，比第二組銷售目標少了 2500 萬加侖，但將其作為第三組產品銷售。你應該這樣想。

Got it. All right. So I conflated two different topics then. What's the possible -- how much higher can the percent of direct blending go? If it's 8% today, can it be 20%?

知道了。好的。所以我當時把兩個不同的主題混為一談。有什麼可能——直接混合的百分比可以提高多少？如果今天是8%，可以是20%嗎？

This has been a challenge for us. Mike, this has been a challenge for us for a number of years. We continue to work with some large fleets to drive more blended gallons to direct and through the closed-loop model. I hate to say that we're close on some, but we always continue to work through that and drive that type of growth.

這對我們來說是一個挑戰。麥克，多年來這對我們來說一直是個挑戰。我們繼續與一些大型車隊合作，驅動更多的混合加侖直接通過閉環模型。我不想說我們已經接近某些目標，但我們總是繼續努力解決這個問題並推動這種類型的成長。

Our performance over the last couple of months has been improving as we've shown in consecutive quarters, our direct blended oil sales has improved quarter-over-quarter. And there, the team has really done a nice job of continuing to ramp that up and the success seems better as we go through each month of the year.

正如我們連續幾個季度所顯示的那樣，過去幾個月我們的業績一直在改善，我們的直接混合油銷售逐季有所改善。在那裡，團隊確實做得很好，繼續提升這一點，而且隨著我們經歷一年中的每個月，成功似乎越來越好。

Okay. And then on Kimball, you all had given us how to layer in the capital spending. So we did $45 million in '22. Originally, we going to do $90 million this year, so we're $85 million, but you're pulling forward the opening date. So should we us $55 million for next year?

好的。然後在 Kimball 上，你們都告訴我們如何分層資本支出。所以我們在 22 年賺了 4500 萬美元。原本，我們今年要做 9000 萬美元，所以我們是 8500 萬美元，但你把開業日期提前了。那我們明年應該投入 5500 萬美元嗎？

I think it's closer to $45 million, Michael.

我認為接近 4500 萬美元，邁克爾。

$45 million. Okay. And then the last question on corporate overhead. I mean, is the other way to think about it is it's somewhere between 4.8% and 5% of revenues, is sort of where your corporate overhead is going to land on a sort of recurring basis.

4500萬美元。好的。然後是關於公司管理費用的最後一個問題。我的意思是，換個角度思考它，它佔收入的 4.8% 到 5% 之間，這就是你的公司管理費用將在某種經常性基礎上發生的地方。

Yes. Yes. Our goal will be below 5%. Our goal will be below 5% as we kind of -- and we're trying to work to that answer.

是的。是的。我們的目標將低於 5%。我們的目標將低於 5%，我們正在努力實現這一目標。

We've reached the end of the question-and-answer session. Mr. Gerstenberg, I would now like to turn the floor back over to you for closing comments.

我們的問答環節已經結束了。格斯坦伯格先生，我現在想請您發表結束語。

Thanks all of you for joining us today. Management will be participating in several IR events this quarter, starting with the Baird Industrial Conference next week in Chicago, and we very much look forward to seeing some of you at those events.

感謝大家今天加入我們。管理層將參加本季的幾場投資者關係活動，首先是下週在芝加哥舉行的貝爾德工業會議，我們非常期待在這些活動中見到你們。

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

謝謝。女士們、先生們，今天的電話會議到此結束。此時您可以斷開線路。感謝您的參與，祝您有美好的一天。