Michael R. McDonald – General Counsel Alan S. McKim – Chairman and Chief Executive Officer James M. Rutledge – Vice Chairman, President and Chief Financial Officer.

Joe Box – KeyBanc Capital Markets Inc. Lawrence Solow – CJS Securities, Inc. Hamzah Mazari – Crédit Suisse AG Luke L. Junk – Robert W. Baird & Co. Incorporated Sean K.F. Hannan – Needham & Company, LLC Charles E. Redding – BB&T Capital Markets Albert Leo Kaschalk – Wedbush Securities Inc. Brian J. Butler – Stifel Nicolaus Barbara Noverini – Morningstar Inc. .

Greetings, and welcome to the Clean Harbors, Incorporated, Third Quarter 2014 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, Michael McDonald, General Counsel for Clean Harbors, Incorporated. Thank you, Mr. McDonald. You may now begin. .

Thank you, Rob, and good morning, everyone. Thank you for joining us today. On the call with me are Chairman and Chief Executive Officer, Alan S. McKim; Vice Chairman, President and Chief Financial Officer, Jim Rutledge; and our SVP Investor Relations and Corporate Communications, Jim Buckley.

We have posted our slides for today’s call through the IR section of our website. We invite you to open the file and follow the presentation along with us. 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, November 5, 2014. 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'd 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 news release, which can be found on our website, cleanharbors.com, as well as in the appendix of today's presentation. And now, I'd like to turn the call over to our CEO, Alan McKim.

Alan?.

Thanks, Michael, good morning, everyone. Thank you for joining us today. Starting here on Slide 3 with a summary of our Q3 results, revenue for the quarter was below our expectations and down 6% from a year ago.

We saw a further reduction in activity in the Oil Sands and a slowdown in overall projects, due in part to the declining crude oil prices throughout the quarter. We’ve been focusing our resources on our highest margin opportunities and our cost reduction efforts.

Despite the revenue shortfall, we nearly achieved our adjusted EBITDA target for the quarter and at 18% delivered our strongest EBITDA margin in two years. Improved profitability primarily in tech services, in both Safety-Kleen segments, drove a 190 basis-point EBITDA increase from Q3 of last year.

Looking at our segment performance in more detail, beginning with Slide 4, tech services revenue increased 2% in Q3. This number would have been higher but we completed scheduled maintenance shutdowns one quarter earlier than planned on two of our largest incinerators. As a result, our Q3 incineration utilization was 90%.

But we exited the quarter with a strong backlog of drums and other waste streams. Adjusted EBITDA increased 10% from a year ago with nearly a 200 basis-point improvement. Our Canadian incineration facility operated near capacity for the third straight quarter. So hats off to that team at that facility.

Landfill volumes were off 5% from a year ago, due to less project work. Overall, tech services performed well in the quarter and continues to benefit from Safety-Kleen volumes. Turning to Industrial and Field Services on Slide 5, you can see the effects of the Oil Sands slowdown on this business, along with a lower Canadian dollar.

Revenue was down 7% in the period with profitability down even more based on our mix of business. In Q3, we again didn’t see any major emergency response events, in fact only limited number of smaller events. Even so, the Field Services component of the segment enjoyed a relatively good quarter.

Cross-selling to the Safety-Kleen customer base remained strong. Overall utilization for our billable personnel in this whole segment decreased several points to 81% from the second quarter. Turning to Slide 6, revenue in Oil Re-refining and Recycling hedged up in the quarter.

Margin enhancement strategies, including lowering our PFO cost, improved efficiencies and taking advantage of opportunistic pricing opportunities have been paying off. Adjusted EBITDA was up 15% from a year ago and margins exceeded 24%. Clean Harbors captured good margin base oil business particularly early in the quarter when prices were higher.

At the same time, we walked away from some low margin, high volume blended business as we raised some of our blended prices. The result was that blended products only accounted for 33.5% of volumes, down from Q2 and below our target going forward. Increasing our blended mix remains a priority.

And while the sales cycle is long and when the early stages with our EcoPower program, we continue to believe that customers are looking for eco-friendly products. Moving to Slide 7, Safety-Kleen environmental services remained a steady and reliable performer.

The segment grew incrementally from a year ago, primarily due to the gains in containerized waste services. Service numbers increased 10% in our parts washers from Q2. We collected 55 million gallons of waste oil, consistent with Q2 and reflecting the seasonally strong period.

Even at this elevated level of collection in the quarter, we continue to lower our average price for oil products. We now succeed – excuse me, we’ve now succeeded in lowering the average PFO price by $0.06 year-to-date. We believe we will have a long way to go to get PFO down further but the reason decline in crude prices will accelerate our efforts.

Moving to Slide 8 and Lodging Services, three factors led to lower revenues in Q3, currency translation, weakness in our drill camp business, and a limited contribution from our manufacturing facility.

As they have for the previous two quarters, our fixed lodges performed well in the market, where a number of our larger competitors have really struggled. Even as active has slowed in the Oil Sands, our fixed locations have maintain our room utilization in the 70% range.

The quality of our locations, facilities and service and our ability to be flexible with customers has allowed us to keep room rates fairly strong. Due to the performance of our fixed lodges, our EBITDA margins rose about 40% 400 basis points higher than a year ago.

Turning to Slide 9, oil and gas field service revenue ongoing softness due to market pressures and compounded by the currency translation effect. We’ve talked about our seismic support business on the past several conference calls, is that continues to be weak spot for us.

The exploration market place remains in a down period particular with the recent step down in the price of crude. Our average number of rig service in our surface rental business in the quarter was a 138,which is slightly ahead of our seasonally weaker second quarter.

Average utilization of our key equipment which is predominately centrifuges for processing wasted increase to 54% from 40% in Q2. We continue to make good progress in the US particularly in some of smaller shale place.

I’d like to point out the team recently surpassed 50 solids control packages in the US which is an important milestone that we’ve been after for some time. So congrats to that group for getting over that. Moving to slide 10 in our corporative initiatives, first, we remain on track to achieve $75 million in annualized cost reductions by year-end.

We continue to expect that in 2014 will likely see savings of approximately $40 million. We completed our strategic review during Q3. As you know, we brought two strategic advisory firms during the spring in summer months, working with all the top leaders in the company, we asses all the element of our business model.

The process was thorough and well documented and we looked at all of our lines of business. The collective date and findings gathered by the consultants were recently presented to our board and the review by our board is continuing. We are not in that point today where we can provide much of the way a specific details on our plans.

For the production of our business, our employees and our customers, it would be pre-mature of us to comment at this time. I can say that the actions that we will take will be driven a goal of improving return on invested capital and improving our EBITDA margins and building share holder value.

Moving to our outlook on Slide 11 and 12, I’ll briefly touch on some of these. Within tech services, we expect to extend our momentum in capturing waste from our top vertical such as manufacturing chemicals. Our plan is to expand in markets where we are getting good penetration including retain and mining.

In addition, we’re making progress in our new El Dorado incinerator where we officially broke ground in September. Start of this still expected to be in late 2016 with commercial operation in early 2017. Within industrial and field, cross selling the Safety-Kleen customers will continue to be a primary focus.

Within the Oil Sands, we believe that some new pipelines plan to come online in 2017 should improve Oil Sands to customer spending in the second half of 2015.

Within our oil recycling and re-refining segment, we’re going to laser focused on lower our transportation in POF cost, particularly in light of the tremendous pricing pressure in the base oil market.

Turning to Slide 12, on the Safety-Kleen brand side, we’re in the process of opening a number of new branches along collating – collocating with existing fuel service locations. We also have our number of branch optimization program underway to further improve margins in that business. However, our top priority here remains lowering our PFO cost.

The lodging, we are pursuing opportunities to capitalize on the upcoming busiest winter season to really maximize our occupancy at our fixed locations. And we’re also exploring opportunities created by the new oil and gas pipeline to either deploy some of our underutilized mobile camp assets order build facilities for our energy customer.

With oil and gas, we’re continuing to pursue our strategy of US expansion on the solids control and production services side. Our primary focus is getting our existing equipment out in the field working.

While crude price may limit company’s oil expiration budgets in the near term, we remain heavily involved in the gas side of the market, which appears to be a big more promising and we continue to see a number of emergency – emerging opportunities around potential gas expiration and drilling in Northern BC.

Jim will be providing you with our revised 2014 guidance. Clearly we are countering some near term headwinds in some of our businesses which is why we are reducing our 2014 guidance. Looking at slide 13, base oil pricing continues to drop to levels not seen in many years in the face of two significant changes.

A dislocation from crude oil pricing and certainly now with the lower crude oil pricing hitting us. I’ve been in this business f or over 4o years and I’ve never seen such a dramatic change in such a short timeframe. Our team has worked hardly to counter these unprecedented events. I’m proud of their efforts that they have put forth.

The current environment gives us an opportunity to really reset our appeal for pricing structure with our customers as they recognize the current condition. That said, we head into 2015 knowing they will need to continue to drive down cost across our business. I am challenging our organization to reduce our cost by more than $75 million this year.

We have many initiatives underway and I would expect to see our margins continue to improve next year even with the headwinds we face. Our technical services business is strong as ever and containerized waste volumes were gathering to Safety-Kleen are driving our margin improvement.

In fact we believe we’ll be timing the market right when our new incinerator comes online. I’m confident that the Safety-Kleen branch business has a lot margin upside and organic growth opportunities going forward. Cross selling with field services is working and we’re on the fine edge of that success.

Our industrial service business had seen a strong pipeline of activity in the US particularly in Gulf region and next should really see heavy turn around business. Due to the low cost in natural gas, the chemical and petrochemical industries in that region are expected to steadily expand next year and beyond.

So with that let me turn it over to Jim for his financial review.

Jim?.

Thank you, Alan, and good morning everyone. To start here on Slide 15, here is quick snapshot of how our verticals performed in Q3. Due to our reclassification of the number of the counts, now that Safety-Kleen has been operating on our platform for several, automotive now represents company’s largest vertical accounting for 18$ of our revenue in Q3.

This vertical was up slightly a year ago as we continue to cross sell disposal and other services to Safety-Kleen’s legacy customers. Refineries and Oil Sand’s customers accounted for 12% of Q3 revenue.

This vertical was down about 2% from a year ago as increased activity in the US and expansion of refinery customers was offset by lower Oil Sand’s activity. General manufacturing was 11% of total with stable base business and higher customer spending helping to drive 8% growth compared with a year ago.

Customers are focused on onside cleaning activities. The chemical vertical represented a 11% of Q3 revenue and was up 4% from a year ago. This reflects healthy base demand driven by strong chemical exports resulting from the low cost of natural gas which servers as both fuel and raw material for petrochemicals.

The third quarter was also held by a number of remediation projects. Oil and gas production accounted for 7% of revenue and was down 21% from a year ago as we experience sizable declines in our drill camps, drill support and production services.

Looking at our smaller verticals one where we continue to experience great success is utilities, where we generated double-digit sales growth the third straight quarter. With winter approaching, we saw higher project spending by utilities in the quarter.

On Slide 16, here is how our Q3 direct revenue breaks out among our six segments ranging from lodging at 4% to technical services at 37%. This revenue split was not surprising as it is lease seasonally strong this quarter for our environmental business and some of our other businesses where heard by the macroeconomic trends Alan described.

Turning to Slide 17 and the income statement, we’ve reported Q3 revenue of 851.5 million which is down more than 50 million from a year ago. Growth that we achieved in certain business lines was not enough to offset the foreign currency translation impact Oil Sands and the oil and gas slow down and weaker base oil pricing.

Gross profit for the third quarter 253.1 million or a gross margin of 29.7% which represents a 100 basis point improvement over the 28.7% we reported in the same quarter last year. The margin improvement reflects our and significantly reducing our cost structure compared with a year ago.

SG&A for the quarter was 11.7% of revenue and was below 100 million for the first time since we acquired Safety-Kleen. The 90 basis point improvement from a year ago is due to Safety-Kleen cost synergies, our expense reduction plan and lower incentive compensation.

Excluding severance and integration costs of nearly 1.5 million recorded in SG&A in Q3 2014, our SG&A percentage was 11.5%. For the full year, which obviously includes the previous quarters, we are still projecting our SG&A percentage to be around 13%. Depreciation and amortization was essentially flat with a year ago at 70 million.

We remain on track for full year D&A of approximately 275 million. This morning, we announced that we’re taking pre-tax non-cash goodwill impairment charge of 123.4 million related to our oil re-refining and recycling segment. We are taking non-cash change based on the significant recent price declines for both our base and blended oil products.

While the team has made tremendous headway in lower our operational costs and our input cost through better PFO pricing, we’re at a point where the goodwill on our balance sheet for the oil re-refining and recycling reporting unit needed to be written down based on accounting rules.

Excluding the impairment, adjusted income from operations increased to 80.7 million or 9.5% of revenues compared with 8.1% revenues in Q3 a year ago. That 140 basis point improvement reflects the success of our cost and efficiency initiatives in our – in both operating cost of revenues and SG&A.

Our adjusted EBITDA was 153.4 million or a margin 18% as Alan highlighted. If you add back the 1.8 million of severance and integration costs, we would have met our adjusted EBITDA guidance for the quarter despite the revenue shortfall. The effective tax rate for Q3 was 55.6% compared with 34.7% in Q3 a year ago.

With respect to our tax provision in Q3, we recorded a $9.2 million charge to adjust differ taxed asset acquired as part of the Safety-Kleen purchase price allocation related to pre-acquisition goodwill.

The effective tax rate for Q3 excluding this adjustment and the effect of the 123.4 million impairment charge was 40.7% compared with the 34.7% in Q3 a year ago. This effective tax rate remains about our historical levels due to the reduced profits in Canada which is subject to lower tax rates than the US.

We expect our effective in Q4 to be approximately 40% given this mix of relative profitability. On an EPS basis excluding the impairment, we would have reported a EPS of $0.45 per share. Tuning to turn 18, our balance sheet remains strong. Cash and marketable securities as of September 30 258 million down from 278.6 million at the end of Q2.

We generated positive cash flow in the quarter and invested 37.6 million in share repurchase during the quarter. Year-to-day we have purchased nearly 923,000 shares at a total cost of 53.8 million. Total accounts receivable were up slightly since the end of Q2. DSO increase by two days during Q3 to 70 days.

The changes we had made the enhance the Safety-Kleen billing process have added some days to Safety-Kleen invoicing but we’ll ultimately result in more accurate billing going forward to our capturing revenue opportunities. As I said last quarter, we expect DSO will remain in the mid to high 60 day range for the near term.

Environmental liabilities at September were 213 million down approximately 6.6 million from the beginning of the year. The decrease is primarily due to environmental expenditures in excess of accretion by over 4 million. The rest of decrease is due to environment credits achieved since the beginning of the year and foreign exchange translation.

CapEx was 60.7 million down from 66.2 million in Q3 of year and 62.2 million in Q2 of this year. For 2014 we remain on track for our CapEx spending target of approximately 250 million. Our cash flow from operations this quarter was lighter than we expected at 81.1 million which is down from a year ago.

I should point out that are cash flow performance this quarter were reflection increase in our receivables and inventory working capital. For the full year 2014, we now expect our cash flow from operations to be in the $300 million range.

Moving to guidance on slide 19, we’re updating our full year 2014 guidance as a result of our year-to-date performance, recent headwinds and current market outlook. We now accept revenues in the range of 3.40 million to 3.42 billion.

We expect adjusted EBITDA for the full year to be in the range of 510 million to 520 million which is down from our previous guidance.

With that operator, could you please open the call up for questions?.

Thank you. We will be now conducting a question-and-answer session (Operator Instructions) Our first question is from the line of Al Kaschalk with Wedbush. Please bear with your question. .

Good morning, guys. .

Good morning. .

Good morning. .

Excellent job on the margin side, however. I want to focus of visibility here in particular Q4 and the ’15.

Perhaps I don’t think if you look at the math right, you cutting revenue about 150 million and EBITDA around 30 million, so what change from the maybe I don’t know if it’s mid-September timeframe to where you are today in particular on project, so I guess this is highly related to the Oil Sands or if you could you share some color on that. .

First of all the 50 million short form revenues in Q3 impacts the full year guidance and also we had indicated at the last call that we expected to be at the low end of our 3.5 to 3.6 billion in revenue. So it really is the performance year-to-date and the expectation for Q4 that’s driving at them.

But I think it is the factors that we talked about and then we’ve seen some terrific price declines in base oil as you know from – during the quarter, we saw $0.25$ and then we saw recent announcement that we believe is $0.25 and we’re getting updated on how that will flow through, but these are big declines in bases of pricing of that effect our refined oil and recycling business.

Clearly the Oil Sands were looking at and we see the reduced activity and that’s having an impact and that’s affecting both our industrial services business and our Lodging business of there.

And then in the Oil and Gas segment, particularly in the seismic part of the business on the land exploration that is going on, the reduction in projects has been due because spending has been cut back.

I have to look for longer term in the Oil Sand is clearly as it is with many of the players out there is positive, but the logistics up there certainly the price effects it little bit although after the differential, the prices haven’t changed dramatically in the Oil Sands, but it’s still is all about logistics and getting a lot of that out of which is being a lot of oil transported there which has been worked on.

So our long term outlook is good, but certainly there is some short term. Hello, and if you want to add anything..

No, if feel that’s great. .

Okay, great. .

So where there any specific and that you want to provide specific customer reductions, but did you see project get cancelled, now that oil price has hit these levels that is see amount of the Oil Sands business?.

Yeah, we did see projects get cancelled. We literally were onside on the couple of project, one is Alaska and those projects were cancelled. We saw funding scale back $7 million on another project.

So this is somewhat of a moving target for us who in some parts of business here because of the really the decline in oil and what we’re all reading about and even in the Journal this morning a very important article there. I think we’re being concern where kind of up to date that leased and regard to what to what we’re here and seeing out there. .

My follow-up of whatever I though either without CapEx would come down from that but my follow-up is on the strategic review and I realize you now going to share anything but why – if the answers are completed, when should we look for something to come from the company or from the board in this time, whether it’s ….

We didn’t want to set, we’ve really didn’t want to set an expectation in oil timeframe on that Al and I think we made it clear there in the beginning of this year of what we are going to do and we’ve completed that, we’ve accomplished that and we’re spending quite of time thoughtful time in regard to the short-term headwinds of the company facing but also the long-term strategy for the business.

And we will communicate that in a way that will be clear, I think everybody involved is we did best we can. But as you can imagine we are dealing with important customers that we cross sell, we have a lot of employees that we share across the organization. And so this is going to be, as we continue to analyze and make decisions.

It’s a fully integrated company and it’s not an easy decision for us as we more down here. .

I would say Al, just a comment on your CapEx commentary, last year was about 280 million, this year at 250 that includes in generated project too.

So we have significantly reduced capital spending in light of the fact we got big project going on here and we continued -- on our growth cap, we continued to look we closely at that meaning regularly we’re viewing that and managing that closely..

Very good, thanks a lot Alan. .

Thank you. Our next question is from the line of Jim Giannakouros with Oppenheimer. Please go ahead with your question. .

Good morning Alan and Jim. .

Good morning. .

Incineration utilization was down versus 2Q and then combines I believe are also down, how you able to maintain such high margins tech services. Are there mix benefits you could speak to, are there changes into cost between segments are effecting that capacity since last year. .

So this is our changes with respect to that clearly what is driving a lot of the high margins in both areas is we’re getting a lot of volumes now that are being processed to the Safety Clean organization a lot of drum volumes are up. And you see the benefit of both of that showing up as margins of tech service and the Safety Clean environmental.

I think a better operating leverage that you are getting. Now one of the things that I would also point out is that our differed revenue went up during the quarter because there was the backlog from the two plans doing an advance schedule shutdown.

So we were are able to recognize some revenue for the waste getting into the TSVF but not all the way through to the incinerator, but we do have a nice backlog as evidenced by the differed revenue going up. So that should have – like for the rest of the year.

There is a little bit of a mix, to your point of mix in the Landfill, we had a little bit better mix, some of the project that were up was lower margin.

So some of the routine projects that were flowing through and in fact the more base business flowing through Landfill was higher as it typically is in the quarter, but projects brought it down and some of those projects got a lower margins, there was a mix impact but that’s more in the Landfill and anything.

So it’s a combination of a few thinks, so I got a long answer on that, but that’s basically what’s driving that..

And just one follow-up if I may, we are used to get a preliminary next year guide from you guys I don’t know if you have the format just from because of where you are in the strategic review but any comments on a consolidated or on a per segment basis as far as what you see trends indicating for you to top your EBITDA would be extremely helpful.

Thanks. .

Sure. We are in the budgeting phase both at the sales and operating levels. So we’re going through that effort and we’ll be presenting that budget to our board in the middle of December.

Jim, do you want to talk a little bit about some of the thoughts on segment or?.

Absolutely, yeah, I think if you look across our businesses clearly on the environmental side, what we’ve talked about in terms of our normal growth which follows industrial production in GDP, we expect things to be fine there.

That would go across both technical services obviously, field service within Industrial and Field Services and also I would say in SK Environmental as well. So we have some nice growth going on in those areas but clearly a lot of the uncertainty in where we are analyzing as part of our bottom up budget process.

It’s very much a bottom up process, looking across customers and rolling all that up. We hope to have better visibility on the – on where oil and gas will be across seismic, surface rentals, solids control and production services and then also on the Oil Sands.

We are taking a very good look by customer what the expectation is for the year and with our sales force and operating management.

We should have some pretty good estimates and then also in lodging, clearly that is all in Western Canada for us so that supports the Oil Sands as well as drill camps and the drilling activity and even some pipeline activity. So we are looking at all that.

So really we were thinking at this point, even absent the strategic review, there are some things that we really want to go through the bottom up and finish that up rather than giving a preliminary as we have done in the past which was top down and with all these macroeconomic factors going on and I didn’t even mention base oil pricing.

We think we know that right now. We can estimate some things around that but still will there be any more price decreases, we want to make sure it doesn’t occur before we start putting that numbers for next year.

Does that help?.

I just – one of the things is we anticipate the industrial business to be stronger next year. .

All right. .

As you look at the last three or four years on turnarounds. .

Turnarounds, yeah. .

This year was relatively soft. .

That’s right. .

Market for turnaround services and we are both very heavy for next year so I would expect our Industrial Business and Field Services to be much better than this year here. .

I agree with that. .

Yeah. .

And then we always have emergency response they could be on top of that as you know. .

Yeah. The currency is the other issue that we haven’t talked about. I mean the Canadian dollar two years ago at part and now we are at $0.86, $0.87 that has had probably the greatest revenue impact. We do close to $1 billion in Canada. So that’s had a big impact on our revenues across our entire business up there. So.

Absolutely. .

That’s all. Very helpful, thank you. .

All right. Thanks, Jim. .

(Operator Instructions) Our next question is from the line of David Manthey with Robert Baird. Please go with your question. .

Good morning. Thank you. .

Good morning. .

First off, given the TS maintenance shutdowns that you pulled into the third quarter, it would appear the results could have actually been better this quarter without that and I am just thinking about the normal seasonal cadence as you look third quarter to fourth quarter because you pulled that forward, it won’t be in the fourth quarter now, plus you know you have somewhat of a stockpiled waste that should be able to run through.

Should we expect that the normal seasonal third quarter to fourth quarter pattern, you may be able to offset that almost completely based on the things you are setting up here?.

Yeah, Dave, I do – I would agree with what you are saying there because you even look at the deferred revenue, I mean, at the beginning of the year was like 55 million, we are on 64 million now almost. Certainly that represents revenue that will come through as we process waste that difference there.

So, yeah, I think we’ll see several million dollars of revenue and profit coming through that could offset that normal seasonal slowdown that you see for as we are going through the winter. .

Yeah. .

Okay and then I guess the logical conclusion would also be with utilization being higher than in the fourth quarter, your adjusted EBITDA margins, they could actually be greater sequentially just because of the assumed higher utilization in the fourth quarter versus the third where you had the shutdowns. .

Yeah, we went through that.

I mean, obviously there are some parts to the business that like in landfill and other parts that are not affected like the incinerator is and typically you do see a little drop-off in landfill and other areas of the environmental business, including SK Environmental, when you see the driving season, seasonal so you see less oil changes and things like that that will affect the waste coming out of a lot of those shops in the fourth quarter.

So I would be cautious with that one and that’s why we are cautious with the guidance that we put out. .

Okay. And then just on the 75 million cost cutting, if you can tell us what you think the run rate of that was in the third quarter and then what you expect for the fourth quarter? I assume you expect to achieve the full run rate at some point in the first half of the next year. .

Yeah, we were – we had indicated that we were going to be at about 40 million and that’s turning out to be true of what we captured in the year and it was part of a total $75 million program. So we are at run rate now on an annual basis.

So we expect next year to achieve the full 75 million but obviously only the incremental part over the 40 plus million that is in this year will show up as a variance.

Does that make sense?.

Yeah, I guess, follow that true if you expect to get 40 this year, could you tell us what you’ve already achieved through the third quarter total?.

Oh, yeah, well, the headcount was about a third of the total program and that we were actually – we had achieved most of that by the end of April. We had some headcount reductions in our business.

Then a lot of the operational efficiencies whether they’d be reducing sub contractors, office consolidation equipment rentals and maintenance, internalization, all those have been – we have been going through the year with.

I would say that by the end of the third quarter, we were about – I would say more than three quarters of the way through what needed to be done. So there is a little bit left in the – in Q4 to do to get to that total run rate of 75 million. We are pretty close. I would say we might be just a 20 million maybe shy of that total run rate. .

Okay. That’s great. .

That’s an estimate. That’s a high level estimate, yeah. .

Okay. Great, thank you very much. .

Thank you, Dave. .

Thank you. Our next question is from the line of Michael Hoffman with Stifel Nicolaus. Please proceed with your question. .

Hi, thank you very much. .

Hi, Mike. .

How are you doing, Jim and Alan? Alan, why can’t you take price for oil down faster than you are?.

I think there is a historical index and pricing strategy, let’s say, between employees that is no longer valid in this market and it is really in our control and our responsibility to affect that change and that is my number one priority. .

So the answer is you will take it down because you are going to break up that historical structure?.

Yeah, we will – we have – I think given the team some of the tools that they need to look at, not only the PFO costs but also the total deliberate costs to the facilities that we have and those are tools that they never have before and I think we will change our incentive programs.

We will change our customer indexes and we will do everything we need to do to reduce that cost and that is a big part of the $75 million of additional costs savings that you will see come through next year. .

Okay. So you’ve just answered my other question, so we have 75 million in ’14. We are going to get another 75 million in ’15. .

Yeah, as you know, we always have a number of operational excellence programs to deal with not only the standard increase in costs that we get from wages and healthcare costs and other costs but we know for us to continue to improve our margin even in light of the markets headwinds that we’ve been talking about here this morning, we need to continue to drive the costs out of our business.

We can do better. We are only just completing our second year.

Safety-Kleen has got a powerful franchise, a wonderful network, a great opportunity for us to leverage those assets and to work across the organization and I think being a very strong sales and marketing organization now with a company like our which are very strong operationally based company.

I feel very, very excited about the safety clean business moving forward here and there some really – there. .

Okay.

And then are you prepared to shrink this company to grow it?.

Yes, yes and that’s certainly is part of the thought process that I think between the management and the board. We’ve had a strategy of five years strategic plan to grow our business to 5 billion and beyond and really to try to leverage our infrastructure and leverage our systems and our processes to get to that 20% EBITDA and margin in better.

I don’t think we’re going to change that but certainly we’re – how do we get there, are we in the right lines of business and should we change that long term goal is all really in our thinking. And we want to communicate that so people is openly and as transparent as we can, but certainly do it with the board support. .

Last one from me, when does capital spending all in growth maintenance get to 180 to 200 as a range?.

You know it’s a great question you know, we continue to see great opportunities to grow our business and with that and as you know some of our lines of business are very capital in sense and we’ve really constrained the growth in some of our business to be honest.

And that’s one the issues that we’re dealing right now is how do we continue to provide the capital necessary and some of these capital intense of parts of our company. And at the same time recognize that we need to improve returns and get a better return on our new capital being deployed.

That’s are moving target Michel and I’m not going to commit to one but I can just tell that it is a real focus of ours. .

Okay, thanks Alan. .

Our next question is from the line of Joe Box of KeyBanc Capital Markets. Please proceed with your question. .

Hey, good morning guys. .

Good morning, Joe. .

A question for you on the cost front, it seems to me that most of the headcount reduction really came in 2Q, so I’m a little bit surprise that a big move in SG&A this quarter I guess specifically within corporate expense.

So I just want to ask how of this was fixed cost takeout as opposed to maybe some variable expense like – that could eventually come back in time. .

There was – Joe, there is whole – of project some 30 projects is part of that cost reduction plan.

And some of like for example – I’ll just give you one example during the quarter, our IT costs which we have been working on and certainly on part of headcount but they involve other contractors some hardware, software, that was like $3 billion that we experience the reduction just in that quarter alone.

We had some good experience with our healthcare cost coming down a bit. We’re on a big program that’s more efficient overall, so we saw some reduction there. Some of the other – as there were some incentive compensation that we had taken them.

And the headcount as you point out has been somewhat level but because we took more of that reduction already, but it’s off one-off items like that.

We also had reduced travel, we’re trying to be more efficient, we use our – presence more and having our people travel around less just to be more cost efficient and things like that, that we’re able to –.

So I appreciate that Jim. Can you maybe just give us directionally 50% of that is sticky whereas 50% of it could come back in time, just to maybe know that a bit. .

You know I think I would say that we’re probably at a better troll, I would say I feel pretty comfortable between the 12% and 12.5% of revenue kind of run rate. We will finish up 30% for the full year because we had higher cost in the beginning of the year. But I think ran that 12% to 12.5% of revenues.

So that incorporates, so I think that’s our rate, I mean obviously that would change if there is a decrease in the size of our business or say an increase form an increase from an acquisition for example either way that would cause some decreases but could hold in the line on SG&A cost and that organization is very good with that and but I think that 12-12.5 just looking out in the short form I think is reasonable and we’ll confirm that all when we do guidance for next year.

.

I appreciate that thank you. And I certainly appreciate that you guys don’t want to share your finding on a strategic review so I’m not going ask that. But I do want to ask some background questions.

I guess first, does the new energy outlook change your view on any of your businesses or is it incorporated in that if energy prices were $80 you know like suggest this with the business?.

.

So like this regards relational, we don’t have any comment whatsoever on what they are doing and we wouldn’t be appropriated for us to comment about relational.

I think it relies – regarding the energy, quite frankly the real problem that we went through this year was more of the disconnect between how we sell in market base and blended oil products in conjunction where crude oil was. All of our pricing for the most part was based on crude oil on the – on the source of our product side.

But also it’s also which driving all of our cost for our diesel or gasoline of fuel surcharges, all the things are driven by that. Over the last three months there is been a significant change in Gulf Coast number 2 in crude oil and essentially in our indexes.

So we see real benefits in some parts of our business with lower prices of fuel, gasoline, we burn 25 million gallons of disease fuel here for example.

So we’re going to see some real benefits there, natural gas has been holding relatively firm and so as we go through winter months, that’s a higher cost for us because of our all of facilities the 100 plants that we run.

So we higher cost there over the winter but we’re looking at all of those different kind of components of energy and how they impact our cost structure as well as impact our top line revenue growth for parts of our business.

And quite frankly all of that change has been taking place over the last three or four months is why we’re – about given out some guidance. .

Understood, thank you. .

Okay, thanks Joe. .

Our next question is from the line of Sean K.F. Hannan with Needham & Company. Please go ahead with your question. .

Yeah, good morning.

Can you hear me?.

Yeah, good morning, Sean. .

I’m sorry I’m if I am going be a little of dead horse here, but if I think about the guidance, it seems like the revenues for the fourth quarter be pretty flat, gross margins maybe down, SG&A maybe as down a bit but now much if I work toward what I’m understand if the implied EBITDA expectation.

Where your EBITDA would a fair bit quarter-over-quarter, and trying to understand what drive this more in the order of magnitude, you’ve mentions few things, I expend there was an earlier question regard to this that there will be a little at least a little of an offset in refined oil with some cost coming down, you are probably going to still have you revenues in launching in oil and gas up a little bit in the quarter even though.

I’m just trying to understand exactly what’s weighing here and why that degree of magnitude? Thanks. .

I can start Shen buy just saying that the areas that I talked about that clearly as you alluded to the base oil pricing had tremendous decrease just in recent months that the tremendous amount of decrease more than the whole year or so. I mean that they say a pricing is there a four year low right now that were went to.

So that does have an impact on the revenue like as well dollar-for-dollar on the EBITDA like. So when you have the cancelation of some of the projects within oil and gas you have to reduce the activity in Oil Sand. So you have all those things contribution to it.

Clearly our cost savings program can continues to help but what we’ve seen historically in our environmental business and our overall business is that as you approach the winter months you see some decline, you see it in the margin. I mean the Q3 is our strongest quarter of the year and Q4 is our second weakest of the year.

So you do go into a quarter where it’s best for us to have our outlook be at the lower side of margins given that because winter can be severe, it can start early and all those things that affects our overall business there.

So that’s the best that I can really give you, but we’ve certainly gotten into this pretty detailed, but typically we do see a drop-off in margins. Hopefully we can do better, but we’re certainly doing a lot to try to, we do that all the time..

Okay, it’s just really typical step down quarter-over-quarter in terms of mix impact on margins in that you’ve got a couple of things in the background that are really just not reforming. .

So yeah just – no, holidays and the way that the holidays hit us in the November, December as well has an impact on some parts of our business more than others..

And then a quick follow up here, if you can talk a little bit more presence and expectations in gas. I might be wrong, but Alan I think I sensed a greater emphasis on this versus how you’ve referenced the market in the past.

So can you talk about differentiation of activity related to gas, where and how there might be some sustainable momentum and any progress there if that’s the case. Thanks..

Well, certainly Canada is doing much stronger for us right now because of gas and because of gas and because of – the expectations are moving gas west and so we have been picking up new contracts and expanding particularly in the BC province, but in general the oil issue is sort of evident by everybody, but the gas side has stayed relatively strong and if we have another strong winter, we – cold winter, we continue to think that gas will continue to require the kind of services that we offer.

.

Got you, okay. Thanks so much. .

Yeah, thanks John. .

And our next question is from the line of Charles Redding of BB&T. Please go ahead with your question..

Good morning to everyone. Thanks for taking my call. .

Good morning to you Charles..

I guess just thinking about occupancy right now with lodging right now at 76%, what portion of the current occupancy you would consider long-term – can you shift that focus more towards short-term oriented occupancy in the pull back and projects?.

I’ll start that, it’s Jim. The bulk of that occupancy that we’re reporting is longer term. We have contracts that go out to the three years.

Clearly with first leg they’re shorter term now to your point in trying to fill that facility with – in the current environment we’re doing shorter term, but I would say probably anywhere from two – maybe two thirds of the occupancy that we’re talking about has a rough estimate of how much is longer term..

Okay, thanks.

And just been thinking about the current outlook for refinery turnarounds, I know you’re pretty bullish there for next year, is that really more due to contracts that are already locked in or is that really more a function of higher expected maintenance, just given the decline in crude that we’ve seen?.

It’s really – it’s both and I don’t think it’s decline in crude necessarily, it’s just the way that the schedules are rolling out and most of those refineries all post their schedules and try to make sure that they have an adequate amount of contractors able to help us do their turn around work.

So we’ve got a number of contracts already signed and we’re planning and we also see a lot more sort of an ad hoc demand for them as well. .

Okay, thank you very much. .

Yeah..

Thank you, Charles. .

Thank you. Our next question is from the line of Larry Solow with CJS Securities. Please proceed with your question..

Hi, good morning. Most of my questions have been answered, just – quickly just on the activity in the oil sands, it seems it’s been obviously weak for a few quarters and I know the long-term growth projections are obviously bullish.

What do you think it will take, is it going to take a recovery and energy markets or is it going to take an improvement in the gluttonous supply chain and supply chain that’s going to improve that and a follow on to that, the more public and the public (indiscernible) will that maybe help move the Keystone pipeline forward and they have a potential catalyst for that?.

Yeah, I think Larry a couple of things common. I mean we are bidding some nice work up there. There’s still a continuation of spending making no mistake about it, instead of that that $20 billion range, we’re probably at the 15 or so billion dollar range in spending throughout the province up there.

So huge amounts of spending going on still and we’re bidding on a lot of work and we’re doing a ton of business up there, we’re the largest players.

That being said there was a real frustration in being able to move product and so the government is working with the industry to do everything including reversing pipelines and putting pipelines and really making a priority because it’s important for the country.

And think that as they sort that out and we think they’re going to sort that out, there’s a lot behind it, we will continue to have a strong business there and we are very well positioned in that market, not only for growth, but for the ongoing maintenance that’s taking place within the oil sands region..

Okay and then this – one more quickly. Just on oil services, otherwise couple of years one of your strategies has been to shift some equipment obviously out of Canada into the US with more competition you noted in the last couple of quarters in the U.S.

falling prices of energy, is that – is somewhat been hampered and where do you stand with that and maybe Canada is not – maybe don’t want to shift as much you can as you probably thought you would. .

I think one of the strengths of our business model really is the ability to not only cascade out such cross border, but really across business. We are repositioning assets underutilized assets out of Canada into our industrial and field services business.

So moving them out of our oil and gas business, moving it out of our oil sands business and in putting them in to other markets and that’s a real strength that we have to be able to cascade our hydrovac’s and our vacuum trucks and we’re very strong in that asset management area and that’s a real benefit I think that we have in our business. .

Okay, great. Thanks, Alan..

Yeah..

Thank you. (Operator Instructions) The next question comes from the line of Barbara Noverini with Morningstar. Please proceed with your question. .

Hello, good morning everybody. .

Good morning, Barbara. .

Just kind of as a follow up to the last question. So are your efforts on expanding oil services in the US primarily focused on the natural gas areas versus the oil areas.

I know that even couple of years ago you guys were in the Marcellus and kind of pulled your assets out of there, so where do we stand with that, is that primarily where its focus lies today is the natural gas areas?.

Not necessarily, but the drilling rigs whether they’re drilling for gas or oil, the types of services they need and the types of assets that we have to support their needs really can work in both areas whether it’s liquid rich or gas or oil.

So we’re really trying to partner with a larger number of producers and a larger number of contractors to be sub contract to and we’ve been really pretty successful here, now having over 50 packages and we’d like to get the 60 as our next hurdle. So I would say that it really doesn’t matter to us..

Okay, thanks a lot. .

Yeah, thank you..

Thank you. At this time, I would just turn the floor back to management for additional closing comments..

Well, thank you all for having a call with us today and joining us today. We really appreciate your questions, your comments, we hope to see many of you at some of our upcoming conferences that we’re participating in and look forward to updating you on our year end early next year. Thank you..

Thank you. This concludes today's teleconference. You may disconnect your lines at this time. Thank you for your participation..