Good morning, ladies and gentlemen, and welcome to the Heritage-Crystal Clean, Inc. second quarter 2022 earnings conference call. Today's call is being recorded. At this time, all callers' microphones are muted, and you will have an opportunity at the end of the presentation to ask questions. Instructions will be provided at that time for you to queue up your question. We ask that all callers limit themselves to one or two questions. Some of the comments we will make today are forward-looking. Generally, the words aim, anticipate, believe, could, estimate, expect, intend, may, plan, project, should, will be, will continue, will likely result, would, and similar expressions identify forward-looking statements. These statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. These risks and uncertainties include a variety of factors, some of which are beyond our control. These forward-looking statements speak as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. Please refer to our SEC filings, including our annual report on Form 10-K, as well as our earnings release posted on our website for a more detailed description of the risk factors that may affect our results. Copies of these documents may be obtained from the SEC or by visiting the investor relations section of our website. Also, please note that certain financial measures we may use on this call, such as earnings before interest, taxes, depreciation, and amortization, EBITDA, and adjusted EBITDA, are non-GAAP measures. Please see our website for reconciliations of these non-GAAP financial measures to GAAP. For more information about our company, please visit our website at www.crystal-clean.com. With us today from the company are the President and Chief Executive Officer, Mr. Brian Recatto, and the Chief Financial Officer, Mr. Mark DeVita. At this time, I would like to turn it over to Brian Recatto. Please go. Thank you. Good morning, everyone, and thank you for joining us today. On behalf of the entire Crystal Clean team, we're very happy to report our record second quarter earnings yesterday. We're focused on taking steps to fight the unrelenting inflation we and many in our industry continue to experience. On a total company basis, we performed well during the quarter, exceeding our budget from a revenue, net income, and EBITDA standpoint. Mark will provide additional detail, but total second quarter revenue exceeded expectations at $156.6 million, which helped produce record second quarter EBITDA of $35.9 million, which was up 37% compared to EBITDA in the second quarter of 2021. Now I would like to discuss the results in both of our reporting segments. Let's start with the Oil Business segment. During the second quarter of fiscal 2022, Oil Business revenue was a record high for a 12-week quarter at $64.8 million, an increase of $20.2 million or 45.3% compared to $44.6 million in the second quarter of fiscal 2021. The increase in revenue was mainly due to an increase in our base oil netback of $1.51 per gallon compared to the second quarter of 2021. Oil Business segment operating margin increased sharply to 41.4% in the second quarter of fiscal 2022 compared to 34.2% in the second quarter of fiscal 2021. The higher operating margin compared to the second quarter of 2021 was mainly due to an increase in the spread between the netback on our base oil sales and the price paid or charged to our customers for the removal of their used motor oil. From an operations perspective, our re-refinery team continued to execute well during the second quarter. We produced 11.8 million gallons of base oil, which was slightly higher than the year ago quarter. I would also like to highlight that our re-refinery team has operated the location for seven consecutive years without a recordable injury driven by continually improving operating culture. Let's now move on to the Environmental Services segment. In the Environmental Services segment, revenue for the second quarter of 2022 was $91.9 million compared to $72.7 million for the same quarter of 2021. This represents a record high for a 12-week quarter and an increase of $19.2 million or 26.4%. The increase in revenue was mainly due to the increase in demand for our services compared to the prior-year quarter, and to a lesser extent, by revenue from acquisitions made during the second half of 2021. We experienced revenue increases across all service lines in the segment when compared to the second quarter of 2021. Environmental Services profit before corporate selling, general, and administrative expenses was $19.8 million or 21.5% of revenue compared to $19.2 million or 26.4% of revenue in the year-ago quarter. The decline in operating margin percentage was mainly due to higher disposal and transportation expenses caused by extraordinarily high inflation. The end disposal markets remain in an oversupplied position, and we expect the condition will not improve for the balance of 2022. Now we'd like to look forward and discuss our outlook for the future. In our Environmental Services segment, the second quarter produced a great result from a revenue perspective. We generated double-digit revenue growth on a year-over-year basis for the fifth straight quarter. Assuming the overall U.S. economy remains steady, we expect to continue to achieve double-digit revenue growth during the second half of 2022. From an operating margin percentage standpoint, we continue to deal with inflationary pressure from many inputs to our service compared to the prior years, such as third-party waste disposal, transportation, fuel, containers, and other items. Given that we do not own and operate disposal assets in certain parts of the country or for certain types of wastes, we continue to experience increased costs and surcharges from many of our disposal vendors. We are working hard to counteract the negative impacts of these by internalizing more industrial non-haz waste processing. From a pricing standpoint, we implemented increases toward the end of the second quarter. Customer acceptance of the price increases we've implemented over the past nine months has been relatively high, and we expect we will experience a similar level of acceptance as we continue to roll out the Q2 price increases. As a result, we expect stable to slightly improving operating margin performance during the third quarter. From an Oil Business segment perspective, we expect base oil supply will continue to be tight to balance for most of the remainder of the year. As a result, base oil prices will continue to remain relatively high throughout the third quarter and early fourth quarter until normal seasonal headwinds arrive toward the end of the year. On the used oil feedstock side of the business, as expected, we saw our cost increase with the bullish move upward in crude oil pricing during the second quarter. With crude prices moderating more recently, we expect our pay-for-oil to begin to flatten during the third quarter. From a broad perspective, we expect to continue to acquire used oil feedstock at a much lower cost relative to crude oil price than we have in years past due to the structural improvements which occurred in the industry as a result of the IMO 2020 regulation. We also expect our operating costs at our re-refinery to remain elevated on a year-over-year basis due to the higher cost of items such as natural gas and hydrogen. From a profitability perspective, we expect operating margins in the Oil Business segment to be in the mid-30% range for the third quarter and the high-20% range for the fourth quarter. This outlook assumes we will take the annual extended shutdown at our re-refinery during the fourth quarter. The outlook I just provided assumes inflation does not worsen in the near term and that general economic conditions are relatively stable. It also assumes we receive at least some minor relief from the supply chain disruptions which have hampered various parts of our business on and off for the past nine months. Should these assumptions not hold true, this could negatively impact our outlook. Now I want to discuss an exciting new opportunity for Heritage-Crystal Clean. At the end of June, we announced our entrance into a definitive agreement to acquire Patriot Environmental Services. Patriot is a leading provider of Environmental Services across the Western United States, specializing in a wide variety of waste services, including emergency response, industrial services, and on-road spill response. Patriot provides full-service environmental solutions to a wide variety of end markets, serving customers within manufacturing, agriculture, construction, healthcare, mining, oil and gas, transportation, and utility markets. From custom on-site services to industrial waste disposal, as well as wastewater treatment, Patriot operates at 18 locations, primarily in the Western United States. This acquisition should provide us several positives. First, it will increase our presence in the Western U.S., which has been a goal of ours since I became CEO over five years ago. Second, it helps us further our initiative to vertically integrate our business from a non-haz waste standpoint with the addition of Patriot's two wastewater treatment facilities and one non-hazardous solids processing site. Along with a tuck-in acquisition we made over 11 months ago, we now have several waste processing sites in the Western U.S., which should help us grow revenue in this geography as well as lower our overall cost to process non-hazardous waste collected in the area. Lastly, the acquisition will provide us an industrial services platform in the Western U.S. Having this platform should help us build out an industrial service platform in the remainder of our service areas in the years to come. We expect to close the Patriot Environmental acquisition this quarter. On the governance front, I'm thrilled to report we have entered into an agreement to have Mary Pat Thompson join our Board of Directors and serve on our Audit Committee. Mary Pat comes to Crystal Clean with over 30 years experience in accounting and advisory leadership roles. She currently serves as a Director on both public and private company boards and will be an asset to the company as we push forward with our growth and ESG strategy. We will issue a separate press release with more details on Mary Pat's background. Before I turn the call over to Mark, I would like to provide an update on our PFAS strategy. As we disclosed earlier this year, we are partnering with Battelle to be their sole service provider for commercial applications of their technology to treat and destroy PFAS in wastewater. Battelle's approach adapts supercritical water oxidation technology to destroy PFAS at the molecular level. They call this technology the PFAS Annihilator. I'm happy to report we are on schedule to complete and take ownership of the first commercial version of the PFAS Annihilator by the end of this year. We expect to deploy this first unit in our Grand Rapids, Michigan area wastewater treatment facility to support commercial processing of spent firefighting foam and concentrated PFAS contaminated solutions. With that, Mark will take us through our second quarter financial results. Thank you, Brian. I wanna wish everyone a great morning. It's a pleasure to be with you today. In the second quarter of 2022, we generated $156.6 million in revenue compared to $117.3 million in the same quarter of 2021, an increase of $39.4 million or 33.6%. This increase in revenue was mainly driven by higher base oil selling prices and higher demand for our products and services, and to a lesser extent, by revenue from acquisitions made during the second half of 2021. Net income was a record $21.1 million or $0.89 per diluted share for the second quarter of 2022. This compares to net income of $15.1 million or $0.64 per diluted share in the year earlier quarter, which represents a diluted earnings per share increase of 39% compared to the second quarter of 2021. I'd like to begin our segment results discussion with our Oil Business segment. Oil Business segment second quarter revenues of $64.8 million were a record for a 12-week quarter and represent an increase of $20.2 million or 45.3% compared to the second quarter of fiscal 2021. As Brian mentioned, the increase in netback, which is our sales price net of freight charges, was a catalyst for higher revenues. On a sequential basis, our base oil netback increased by $0.82 per gallon compared to the first quarter of 2022. Our volume of base oil sold was flat compared to the second quarter of 2021 at 11.5 million gallons. From a used oil collection perspective, our raw truck loading efficiency increased by 1.5% in the second quarter of 2022 compared to the second quarter of 2021. This increase was achieved in spite of the fact that we increased the number of used oil sales and service representatives by approximately 7% during the quarter compared to the second quarter of 2021. The increased efficiency combined with more reps led to an 11% increase in internally collected used oil volume during the quarter compared to the second quarter of last year. As you might expect, the cost of third-party used oil feedstock also increased during the quarter. The cost of this feedstock increased by $0.53 per gallon from the second quarter of 2021 to the second quarter of 2022. The increase may have been more had we not decreased the volume of our third-party feedstock purchases by 18% compared to the second quarter of fiscal 2021. This decrease was made possible by the increase in internal used oil collection volume I mentioned earlier. The increase between our net paid for oil during the second quarter of fiscal 2021 to the net paid for oil during the second quarter of fiscal 2022 was $0.34 per gallon. Sequentially, our paid for oil increased by $0.11 per gallon from the first quarter of 2022 to the second quarter of 2022. As Brian mentioned, our re-refinery continues to run well. During the second quarter, we produced base oil at a rate of 102.4% of our nameplate capacity. While our production volume was up slightly, operating costs per gallon of base oil produced increased by approximately 18%. This increase was driven in part by higher natural gas and hydrogen pricing from our suppliers. From a profitability standpoint, Oil Business segment profit before corporate SG&A expense increased by $11.6 million or 75.8% to $26.8 million, which represents an all-time record. The operating margin was 41.4% in the second quarter of 2022 compared to 34.2% in the second quarter of fiscal 2021. The operating margin compared to the second quarter of 2021 was mainly due to the increase in the spread between our netback and our base oil sales price, and the price paid or charged for our customers for the removal of the used oil. This spread was up by $1.17 per gallon compared to the second quarter of 2021, and up by $0.71 per gallon compared to the first quarter of 2022. Now let's discuss the Environmental Services segment. The Environmental Services segment reported revenue of $91.9 million, an increase of $19.2 million or 26.4% compared to the year-ago quarter. The 26.4% increase in revenue was mainly due to an increase in demand for our services compared to the prior year quarter, and to a lesser extent, by revenue from acquisitions made during the second half of 2021. Revenue from acquisitions closed during the second half of fiscal 2021 accounted for 8.3% of the year-over-year growth during the second quarter of fiscal 2022. We experienced volume as well as price increases across all service lines in the segment when compared to the second quarter of 2021. A majority of the revenue growth was volume-driven, led by our containerized waste and wastewater vacuum businesses. Environmental Services profit before corporate selling, general and administrative expenses was a 12-week quarter record of $19.8 million, or 21.5% of revenue, compared to $19.2 million, or 26.4% of revenue in the year-ago quarter. In addition to the factors Brian mentioned earlier, the decrease in operating margin was also negatively impacted by higher container costs and equipment rental expenses, partially offset by improved labor efficiency. As a result of these factors and the inflationary impacts Brian mentioned earlier in both segments, our total company operating costs increased $26.4 million, or 33.7% during the second quarter of 2022 compared to the second quarter of fiscal 2021. Our overall corporate SG&A expense of $16.5 million represents an increase of $2 million or 15.2% compared to the year-ago quarter, driven by an increase in salaries and benefits as well as depreciation and amortization. As a percentage of revenue, corporate SG&A expense during the second quarter decreased to 10.5% compared to 12% during the second quarter last year. If you remove the cost incurred related to our pending acquisition of Patriot Environmental, our corporate SG&A expenses would have been $14.2 million, which would have represented an increase of only 8.9% compared to the second quarter of 2021. EBITDA of $35.9 million was an all-time record and up 37% compared to $26.2 million in the year-ago quarter. Our adjusted EBITDA of $39.9 million in the second quarter was also a record. The company's effective income tax rate for the second quarter of fiscal 2022 was 27%, compared to 26.1% in the second quarter of fiscal 2021. The rate increase is principally attributable to the increased impact of certain adjustments to the federal income tax or federal taxable income, excuse me, as compared to the first half of fiscal 2021. Looking at the balance sheet, we had an increase of $2.7 million in cash during the second quarter of fiscal 2022, which resulted in a balance of $73.8 million of cash on hand at the end of the quarter. Our primary sources of liquidity for the quarter were cash flows from operations and funds available to borrow under our revolving bank credit facility. We generated $14.6 million in cash flow from operations during the quarter. We also generated free cash flow of $7.8 million during the second quarter of 2022, compared to $19.6 million during the second quarter of 2021. As Brian mentioned, we hope to close on our acquisition of Patriot Environmental in early August. Our $156 million purchase price represents a multiple of approximately 5.5x 2021 EBITDA, which included a portion of a large spill cleanup project. If you adjust the results for this larger than normal project on a pro forma pre-synergy basis, the purchase price represents a multiple of approximately 9x the trailing 12-month EBITDA. We expect to generate approximately $7 million in cost synergies on an annualized basis from the acquisition. We anticipate most, if not all, of these synergies will be generated during the first 12 months post-acquisition. To recap, we're excited with the strong top line growth we're experiencing in our Environmental Services segment, and we're working hard to combat the negative impacts inflation is having on our business in order to restore our margins in this segment. We continue to be pleased with the execution in the Oil Business segment and our ability to capitalize on the structural changes in the used oil collection industry, which are allowing us to improve upon historical economics of that business. This concludes our prepared remarks. I'll now turn control of the call over to the operator to take your questions. At this time, I would like to remind everyone in order to ask a question, press star then one on your telephone keypad. We'll pause for just a moment to compile Q&A roster. Comes from the line of David Manthey. Your line is open. Hey, David. The line appears to be cutting out. Hopefully, we can hear you. David? Operator? Operator, can you hear us? Is my line open? Yeah. Yeah, I can hear you now. Oh, okay. Great. Good morning, guys. Morning. How are you? I was wondering, first off, if you could discuss the $3 million investment in the battery recycling partner, Retriev. What's the nature of that investment, and how do you see that playing out? Yeah, David, we're very interested in being a collecting partner for that group of assets. It's a company that's owned by the Heritage Group, and they currently have multiple locations that are processing spent batteries, including lithium batteries. We think our best role in that JV is the help on the collection front using our, you know, 130 locations, branches, and operating locations will help retrieve, gather up batteries from our core client base, which would be the smaller manufacturing customers. We elected to go that route versus developing our own processing because we're focusing on other processing technologies, and we thought our best fit in that JV would be to be the collecting partner, and we thought an investment made sense. We're very bullish on the long-term potential of the battery business, as you well know. A couple of questions on oil. I believe that some of your more formal used oil sourcing contracts have some kind of an index in them, whether it's No. 6 oil or diesel. You know, given the changes that have happened since IMO 2020, are you making any changes to how you're approaching those contracts? It would seem like you'd be in line to command more favorable terms given the situation these days. Yeah. I think we've commented on previous conference calls that relative to the price of crude oil, we are paying less for used motor oil feedstock from all of our suppliers than we would in an environment that involved a $100 crude prior to IMO 2020. You're absolutely correct in that summary, and we obviously changed the index because of that. We're not indexing off of crude anymore. We have ample supply, and as Mark said, we've reduced. We still value tremendously our third-party suppliers, but you know, over the last five years, we've certainly built up our retail business. We have our One Drive Automotive Program, so we've focused more on automotive the last few years to begin building up our internal volume because it's important for us to increase route density and lower our cost to deliver the used motor oil to the re-refinery. We've certainly been able to acquire at a lower price, and the structural changes are real. Yeah, that's, I mean, a quick way of saying some of those changes are already built in. We've done that, and I'm sure in those few instances where we're still using crude, we just change that percentage down. Whether the metric itself stays the same or that percentage changes, the effect, I mean, you're seeing it in the results. Okay. Correct. Finally on the back end of that operation, I can't remember if you've told us that you're marketing your base oils as green now. Are you receiving a premium over traditional refined Group II oils? No, I wouldn't say, David, that we're receiving a premium, but we're certainly not discounting to the levels that we discounted before. There's certainly tremendous interest in our base oil. We only produce 50 million gallons of base oil. Tremendous interest in our base oil driven by the fact that it is much greener than a base oil produced from virgin crude. You know, most studies suggest 50%-60% less energy to produce our base oil versus virgin base oil. Lots of interest, and we're not discounting it like we were, and that's all helped to improve our spread. I think as you look forward, 'cause a lot of people would look at our results and say, "Well, this is hitting on all cylinders." I think operationally and collections wise, you know, operations at the plant collection wise, I think we're doing a great job. There still is another leg to the story because it's still. If you look at spot prices, we're still not on par yet. As the things Brian mentioned and our VP of base oil or our VP of oil are working on, we do more with some of the majors and super majors. We expect that to be a tailwind to the business in the future. It's just, you know, those are proverbial large ships to turn. We're on board. We haven't quite grabbed the wheel yet, to continue the analogy. Got it. All right. Sounds like things are moving in the right direction. Thank you. Best of luck. Thank you very much. Thank you. Your next question comes from the line of Michael Hoffman of Stifel. Please go ahead. Hi, Michael. Hey, Brian, Mark. Morning, Michael. Catch up. Thanks for taking the Q's. I wanna focus a little bit on Environmental Services first. I recognize the world's facing lots of inflation. You do—you too. Yeah. You've initiated pricing. There's sort of couple angles on this. Do you think the worst of that pressure is behind you and now you just have to keep working steadily through your pricing and your own productivity to recover margin? Or are we still seeing some upward pressure on the inflation, and so you're still chasing that up? I think it's a little bit of both, Michael, based on waste streams. We're certainly gonna have to keep. You know what's happened to the incineration market. It's very oversupplied and underserved, which makes it difficult for us to move incinerables along with a lot of our other competitors. We think we're gonna feel inflationary pressure continuing through the balance of the year for certain waste streams. We're seeing easing in the landfill markets. We're seeing stability in the fuel blending markets. Not gonna be chasing ourselves on those waste streams, but certainly incinerables. We're gonna have to keep watching the price, and we're gonna have to also continue to look at target price increases for specific waste streams. I think it's gonna be a battle for the balance of the year, but we're equipped to handle it. On that end, yes, the incineration story is broadly known, but that big player has been pushing a lot of price too to direct volume. The disposal market, the generator market's seeing price increases. Why can't you work that through faster? What's preventing that from happening? I wouldn't say anything. We've done three price increases in 11 months. We've been pushing the price increases out, and we'll do it again as needed. But there are other costs that are causing problems. I mean, just logistics costs, Michael, which you're well aware of. Fuel, chemicals, containers, all of that's starting to ease, which should help make it a bit easier for us as we look into the balance of the year. We wanna be careful. We're not the lowest cost provider out there. We've been able to capture some market share. We're already, because we deal with a smaller client base, considered to be an expensive provider in our space. We wanna be careful that we're not predatory with our customers in the face of a potential recession. We know the market's gonna begin to slow down. In my view, I can't get too aggressive and force them to go out and look for other opportunities to find cheaper vendors, and we lose market share. We're balancing all that out. We are prepared to do additional price increases. We're gonna continue to push to get our margins back into the mid-20% range by the end of this year. Yeah, I mean, we still have to let some of this stuff, and I think Brian covered it in his earlier remarks, the work we did, the price actions we took at the end of the quarter, end of Q2, let those work through. You know, there's some customers that haven't even seen that yet. We don't get to everyone in four weeks. So, you know, that. We'll see how that plays out, and then if there's more action needed, as Brian said, we'll take it. You know, given your 12-12-12-16 quarterly cycle, are we looking at 3Q in ES about the same on the top line, but slightly better on the profit line, and then 4Q, you know, do that 12-week thing divided by 12, multiplied by 16, and improve the margin? That's the way to think about it in ES? Yeah. That's the way we're thinking about it. Okay. What period or how, if at all in 3Q, or is it all in 4Q to add Patriot, and how much do I add? Well, we think we're. We can get into the details on any follow-up, but we hope, we think this transaction is gonna close early August, maybe as soon as next week. Obviously, it's somewhat out of our hands. We gotta hear back from DOJ, but we don't expect any problems, as we said, I think when we announced the deal. I think you can tell from kind of the metrics I mentioned that. Well, I guess I should clarify. At least for now, we're gonna have all the full Patriot results will be in the Environmental Services segment. We think the margins are roughly the same as what we've been printing. You know, the revenue, it's in that. I think we talked about this. You know, your industry intelligence on that kind of $120-ish million annual revenue figure is right. Hopefully that gives you enough. Yeah, normalizing out the large spills. Yeah. Is there any particular seasonality to their book of business that we need to factor in when we're thinking about modeling? I think it's similar to what our ES business is. If you know, your first quarter is gonna be your slower one. Okay. No, that. Okay. Absent any large spills or anything occurring, of course. Right. You know, but you now have a business that you can respond to that, but that's not the real reason to own it, isn't it? Right. I think the three reasons. Right. Those three facilities, two in California and one in Oregon, just change your relative position in wastewater and sludges. Yeah, they do. We're also excited about the PFAS opportunities in California, and probably why we wanted to have the additional wastewater treatment plants. We love the operating employee base for Patriot. We want to expand our field services and industrial services business across the United States. This is gonna be the platform that will help us do that. Certainly, other organic opportunities are gonna pop up in that marketplace. We now have quite a few operating locations that are gonna allow us to internalize a lot of the waste that we've been shipping back to our core group of facilities in the South and Midwest, and that's expensive and doesn't work in today's market. We wanted the ability to control more of our own waste streams in the western half of the U.S. You know, we don't even have a truly Vac business out there. We will now because we own wastewater treatment plants. We're gonna begin adding those assets out there. We'll start chasing more industrial waste streams to feed those plants. Got it. Okay, great. On used oil, you know, what an unbelievable period, huh? Who could ever have figured we'd still be at this wide of a spread? What is your industry experience telling you when at least the supply-demand side comes back into some balance? Is there any visibility on that part of it, of the equation? Yeah, I mean, we certainly are more focused, Michael, on the used motor oil end of it because we can better control that. The base oil price is going to be the base oil price when supply demand balances out a little bit better. We think with the structural changes from IMO 2020, we're gonna be able to move the used motor oil price quicker in the event base oil pricing comes down. So we're bullish that we can make money in any environment. We prefer a more stable crude environment, so it's not so volatile, and I think we're gonna get our wish, you know, just understanding the crude markets the way we do. I think we're gonna be range bound, you know, 80-110, 75-110, which will be good for us. It'll create stability on feedstock costs for the virgin refineries. They're gonna have stable pricing. If you look at the oil change market, I mean, they're up 10%. I mean, they've had a pretty good year so far, so people are out and, you know, vehicle miles traveled up. We're overall bullish on the whole macro in the oil segment. We love the green properties of our base oil versus virgin base oil. Lots of people have made outreach to try to term up our supply because they like the properties of it. All in all, we're bullish. Yes, we know at some point, base oil is gonna come down in price. We're convinced that we can move the used motor oil quickly to recover some or all of that spread. Given your experience, how much of the base oil price increase that's in the market is the supply demand imbalance versus the crude oil price move? Oh, I think it's both, Michael. I mean, they're paying for the feedstock. VGO costs are high. Crude oil prices are high. They've got to charge a lot for it. Well, yeah, I get it. I get crude's driven it there too, but we're still out of balance. Yeah. I mean, that alone has helped pop it. I'm just curious, once it comes back into balance, I mean, you know, my gut is the crude oil price is a bigger piece, and if you're right, we're range bound at $80-$100, then there's less downside risk. There's some for the supply rebalancing. No doubt. We're expecting that. I mean, we expect to begin to see that in the fourth quarter as we begin to hit the seasonal slowdowns. There's no doubt. We think we can move used motor oil, and the rest of the industry can as well. Not a lot of outlets for used motor oil compared to the old days. Right. That's your point is you think you can flex from the PFO back to a charge-for-oil or a lot less PFO than you are real time. Yeah. relative to the base oil price coming in. Yeah, that's our thought. Yeah. We probably got to let someone else get a question in, Michael. Yep. Sorry. Go ahead. Thank you very much. Okay. Yep. Thank you. Your next question comes from the line of Jim Ricchiuti of Needham & Company. Please go ahead. Hi, Jim. Yeah, hi. A couple of questions. Congratulations, by the way, on the quarter. Thank you. On Patriot, will you continue to be active on the acquisition front, or is Patriot the piece that you were really hoping to secure, and you'll just look to integrate that? Yeah, I think we're gonna focus primarily on integrating Patriot. I'm not gonna suggest that if an asset comes along that we truly like that we're gonna pass on it. It will have to be a strategic physical asset that allows us to treat more waste. I mean, we have limited bandwidth. It's a big acquisition for us. We wanna focus our time and energy on, you know, spending time with our new employees, integrating the assets we just acquired, you know, making sure that we expand on the organic opportunities that are gonna develop as a result of the, you know, the ability to cross-sell to their customers and vice versa. That's gonna be our focus near term. If something comes along and we truly like and it's a physical plant that gives us some capabilities in the marketplace, we'll consider it. When you do the math, Jim, you know, while obviously what Brian went through is most important and somewhat of if there is a limiting factor, the factors that we'd look at first when we think of another material transaction. Financially, we're gonna have less than one turn of leverage, even I don't know if we're officially now in a recession or whatever it is, but even if, you know, our EBITDA would, and I don't think this is gonna happen, but take a significant turn down, you're still not gonna have much leverage. It would have to get really bad to even get us above 1.5 x. We're gonna have the capacity, and the quicker we're able to recognize those synergies I mentioned and get everyone hitting on all cylinders from a Patriot and Legacy business standpoint, that's just gonna give us more dry powder to get the next bigger deal done. Got it. The follow-up question I have, it ties a little bit, Mark, into the comment about a recessionary environment. Let's say it's a, who knows, you know, a mild recession. Just given your customer base, how quickly do you begin to see some impact from those customers, which obviously tend to be smaller? Yeah, it really depends not just on timing or duration, but it also, you know, at least in some of our businesses, and it does vary, it really depends on how deep. Because if you have a more shallow recession as far as magnitude, then historically anyway. Those recessions don't really have much impact on our businesses, especially ones like parts cleaning. If it's something used in a maintenance function, in fact, if it's shallow and shorter, you actually do more maintenance sometimes as a manufacturer because especially in this market the last year plus, you've been going full throttle and you haven't had time to maintain anything. If you're doing more maintenance, then you're probably cleaning more things. In fact, even on the waste side, you might be generating more waste. Now, on the containerized waste side, the other part of that business, if it's production waste and you're producing less, that gets hit a little quicker. It really varies based on the business. You know, I'm no economist. I don't know for sure what the next coming quarters will have. I think usually we're not the canary in the coal mine, that's for sure. It will usually be a quarter or two impact, a delay for us and our businesses overall than the general economy. Right. Got it. Thank you. Thank you. Thanks. Your next question comes from the line of Kevin Steinke of Barrington Research. Please go ahead. Hey, Kevin. Morning, Kevin. Hey. Hey, good morning, Brian and Mark. I wanted to just dig into the Environmental Services growth a little bit more, you know, up 26.4% year-over-year. I'm sorry if I missed it, Mark, but did you give the contribution from tuck-in acquisitions in the quarter? Just trying to get to, you know, kind of the organic growth number there. Yeah. Yeah, it was 8.3% in ES for the Environmental Services side. Okay. Got it. It's, you know, it's not meaningless, but and we're, you know, we think we can get a lot more out of those acquisitions, to be honest. They're not hitting on all cylinders yet. That's not only does that tell you, hey, the legacy business obviously performed well if you're doing 26%+ growth, but there's more in the tank, so to speak, for those businesses. The issue that Mark's referring to, one is primarily a broker of industrial waste, and obviously the third-party facilities are backed up. It's difficult to even move waste directly into some of these end disposal sites. Obviously, we're working on alternative facilities, alternative plans, repackaging waste so we can get it into another disposal site. It is a bit tricky. That'll improve. Okay. Yeah. Right. Nonetheless, I mean, you had, you know, what, 18% organic growth in the quarter then in Environmental Services. You know, is there any way to kind of parse that out in terms of price versus volume? And, you know, what do you think is driving the increased demand? I mean, market share gains? Is there still recovery from the pandemic going on? Or, you know, any other factors, you know, behind the organic growth? I think it is a potpourri, as you alluded to, of avenues that we're walking to get there. There's certainly some overall still increase in demand, and that part of the story, just from a market standpoint, if we're getting into a softer overall macroeconomic environment, that might soften. There definitely has been a continual story for probably at least six quarters, [that] is other providers not being able to provide. We get calls, and again, this is anecdotal, so I can't give you a percentage, but certainly some of it is market share gains because other companies are having problems with labor, getting basically problems servicing their customers. That's been a piece of it. It's probably about 25%-30% is price as well. As far as the, h ow you break that volume piece up into the first two categories? I don't have that data for you. That's not something we track. It's certainly both market share gain, and it's my gut would tell you it's more market share gain than just overall recovery. You know, maybe three, four quarters ago, it was more of the latter, but I think it's more the market share gains now from what's driving the volume piece. No, yeah, that's helpful commentary. That adds a lot of, you know, kind of detail around what I was getting at there. You know, just housekeeping here, you said 9x trailing 12 months EBITDA, excluding cost synergies, is what you paid for Patriot. Is that for the trailing 12 months end of June 30th? No, I think it's spring. I think it's more like maybe a shot of that. Yeah. Okay. All right. You touched there a little bit on the cross-selling opportunities, you know, I guess, to bring some of your services to the Patriot branches, right? I mean, as I understand it, they don't really do much in the way of parts cleaning. I mean, can you maybe- I think it's gonna be more of them delivering their services to our client base because we're gonna have the opportunity to do more, you know, general industrial maintenance within our client base. It's gonna be more them selling to our well, it's us together, but we'll be selling to our customers their services. As you know, we've been expanding our field services and industrial services business over the last few years, and we're gonna continue that with the Patriot acquisition. That will be. We will, yeah. They don't do parts cleaning. We will look for opportunities within their client base, but I think the bigger opportunity is gonna be for them to service our core customers. Got it. Okay. Yeah, I mean, they have a pretty significant field services piece, I guess. If you look at your investor presentations, you know, that's field services represent, what, 62% of the $8 billion market. You know, I guess, is that an area you really wanna be pushing into more significantly going forward? Yeah. I've been in the business. I like the business. That's probably why we went after Patriot. I think, you know, given some of the industry consolidations, it's gonna create an opportunity for us. We have 90,000 customers that need those types of services. We can provide them at a margin that's better than calling on some of the larger, you know, industrial opportunities. I'm pretty excited about expanding that business. Great. I mean, I guess, you know, conceptually, that could maybe lead to a little more lumpiness, but, you know, certainly, you know, more revenue and margin dollars flowing through your financials as well. So. Yeah, I agree. I mean. Not overly CapEx heavy either. Yeah. You don't have to buy rolling stock or lease rolling stock, but. Yeah, that's about it. It's a good P&L business that generates good free cash flow. Okay, great. Well, yeah, that's all I had. Appreciate you taking the questions. Thanks, Kevin. Thank you. Thank you. Appreciate it. Your next question comes from the line of Gerry Sweeney with Roth Capital Partners. Please go ahead. Hey, good morning. Thanks for taking my call. Hey, Gerry. How are you? Good. I know this is getting a little long, so, one sort of bigger picture question, and Brian, I think you've touched upon it a little bit. Just with internalization of waste, obviously, it sounds like Patriot brings some assets. Just curious as to. It's a multifaceted question. It's, you know, what is sort of the opportunity and timeline, you know, and how is it gonna impact some savings over the next. How does this sort of roll out over the next couple of quarters? You have Patriot, I think they have some services. Maybe you can roll that through your system, but it also sounds as though you're trying to build out some internalization, you know, throughout your footprint. How do we look at that, and what is the opportunity? Yeah. I'll talk to the macro of the opportunity, and Mark may have to put some numbers to it after the call. The macro aspect of it is we're gonna touch 275,000 waste containers this year, not counting any of our bulk volumes of waste. 70% of that approximately are waste streams that we can internalize if we build out our capabilities. That'll keep us, Gerry, from having to rely on third parties, which are already backed up and creating some issues for us. That's the macro focus for us is building out these wastewater treatment plants to broaden their capabilities with various subcategories, the ability to handle containers, the ability to do some automated processing so we can speed up production and shove as many of those 275,000 drums into our own network. That's the macro of what we're pursuing. Obviously, the work that we're doing out west will help us take some of the pressure off of our other facilities. We can begin to feed drums into those Patriot assets. We're expanding our Seattle plant, which will have drum capabilities. Those are all the things that we're working on from a macro standpoint. Gerry, it takes time for that to result in improved EBITDA performance because with any fixed facility, you have to base load the fixed facility and cover the fixed cost. Yep. We've got to continue to generate the business, feed the facilities. It's gonna take time. It's a bit of a transition moving from third parties to our own network, but we think in the long run, it's the best opportunity for our shareholders. On the long run front, obviously, the market dynamics have changed a lot over the last couple of years. If we were to go back in time, would this opportunity still be something you would pursue if the pricing environment was similar to a couple of years ago? Yes. We've been pursuing. Yeah. We've been talking to Patriot for a couple of years. Yeah. Okay. I like this business. I love field services and industrial services. Got it. Just wanted to. Yeah. We really, Gerry, wanna be a full service environmental company, and you have to have those capabilities if you're gonna play that role. Right now we're using third parties, and that's not the way we wanna go. Got it. You're looking at the portfolio, not just minimizing cost. Yes, correct. One or two other quick ones. You mentioned UMO internal collections. How much of that would you target to collect internally as opposed to third party? Obviously, I don't think you wanna get to 100% because you want some flex there, but, you know, how much are you targeting, and how close are you to that target? Well, we wanna control the risk there. I mean, it's a flex capability with third party stuff. You always wanna have them 'cause you never know. Yeah. You know, we could go higher. I think it was 21.8% of what we or our third party purchases represented in Q2, about 21.8% of what we fed. Now, again, there's inventory and other things, so it's not a straight translation. You know, it really is about getting, in many cases, that generator as a customer, right? We can- Mm-hmm. We can get those other, you know, business service lines sold. I mean, we're at a rate, if you would, you know, run rate over the last 12 months anyway or 13 periods in our case, we're collecting about 70 million gallons, which even might be a record. I think it probably is. And then obviously two twos are usually two and three are higher. You know, we talked about our efficiency growing and growing the last several periods. It's almost, you know, at a 77 million dollar or million gallon, excuse me, run rate, which depending on the quality of oil, you know, that in theory might even be if it was really dry, everything we get. Not that everything is, but if it was, you know, you're collecting all that you need. We're getting close to where we wanna be. Yeah. You know, we have our third-party providers that supplement on a minor basis, but we're in control of our destiny. Yeah. Ideally for me, probably 10%-15% third parties. You know, some of this oil is just dislocated. I mean, it's not overly economic, and all the logistics are very difficult to get into our re-refinery. We really need our third-party supplier partners. Sure. Got that. Did you say you're still final question, still targeting, we'll say, mid-20% Environmental Services margins by year-end? Yeah, we said that earlier. Okay. You know, obviously, Gerry, inflation's a- Sure. A struggle will continue to be a struggle. We know we can move price. We will move price, but we also wanna be careful as we hit the back end of the year knowing that a recession's coming. I don't want the pressure of our customers feeling they need to go out. I mean, we care about our customers, and service is important, and not being predatory with our customers headed into a recession. I'm more concerned about the long term than the short term. Got it. Take a holistic approach too. Absolutely. Got it. No, that makes sense. I'm not concerned about a quarter-to-quarter performance. I'm concerned about long-term stability and keeping our client base. Okay. Fair. I appreciate it. I'll talk to you guys later this afternoon. Thank you. Yeah, thank you. Thanks, Gerry. Thank you. There are no further questions at this time. This concludes today's conference call. You may now disconnect your line.