What Clean Harbors (CLH) Said on Its Q3 Earnings Call

Clean Harbors NYSE: CLH reported record third-quarter revenue and adjusted EBITDA, raising its full-year outlook as strong emergency-response activity, continued demand for environmental services and favorable base-oil market conditions lifted both operating segments.

The company also announced a leadership transition. Co-Chief Executive Officer Eric Gerstenberg will become sole CEO on Jan. 1, while Co-CEO Mike Battles will retire from his executive role and board seat at the end of 2026. Gerstenberg, who has spent 37 years at the company, said Clean Harbors intends to remain on the growth path it has pursued over the past decade.

Record quarterly results and higher outlook

Total third-quarter revenue rose 21% year over year to $1.87 billion, while adjusted EBITDA increased 42% to $456 million, according to Chief Financial Officer Eric Dugas. Consolidated adjusted EBITDA margin reached 24.4%, up 370 basis points from the prior-year quarter and the highest quarterly margin in company history.

Third-quarter operating income increased 65% from a year earlier to $318 million. Net income increased 75%, and earnings per share were $3.93.

Clean Harbors raised its full-year 2026 adjusted EBITDA guidance to a range of $1.44 billion to $1.48 billion, lifting the midpoint by $80 million from its July outlook. At the new midpoint of $1.46 billion, the company expects approximately 25% adjusted EBITDA growth over fiscal 2025. The company also raised its adjusted free cash flow outlook to $600 million to $660 million, with a midpoint of $630 million.

Dugas said fourth-quarter guidance assumes no large-scale emergency-response events, despite such work contributing substantially to results earlier in the year.

Environmental Services supported by emergency response and collection volumes

Environmental Services revenue increased by $220 million from the prior-year period, with field services leading the growth. Field-services revenue climbed more than 70% year over year, reflecting several significant emergency-response assignments.

Gerstenberg said one large emergency-response project generated about $120 million of revenue during the quarter. During the question-and-answer session, he said the project involved a fire at a food-transfer and distribution warehouse in the Los Angeles area. Clean Harbors removed more than 75,000 tons of frozen food waste from the site.

The Environmental Services segment generated 19% adjusted EBITDA growth, and its margin expanded 60 basis points to 27.4%. The company said acquisitions completed this year reduced segment margin by about 20 basis points during the quarter.

Safety-Kleen Environmental Services revenue grew 11%, led by containerized waste collection and vacuum services. Technical services revenue rose 3%, as PFAS-related work and other activity offset lower project revenue compared with the year-earlier quarter. Industrial services revenue increased modestly, supported by growth in Canada and initial data-center engagements, though North American refinery turnaround activity remained soft.

Incineration utilization was 87%, compared with 88% a year earlier. Management said the decline partly reflected the timing of maintenance outages shifted into the third quarter. The company expects full-year utilization in the mid-to-high 80% range.

Clean Harbors said deferred revenue increased 20% as waste collections remained strong. Gerstenberg cited demand across several end markets, including semiconductor manufacturing, retail and pharmaceuticals, while noting chemical-sector activity had improved only slightly.

Safety-Kleen segment benefits from tight refined-product supply

The Safety-Kleen Sustainability Solutions, or SKSS, segment delivered its highest quarterly adjusted EBITDA on record. Revenue grew 46% year over year, while adjusted EBITDA more than tripled to $126 million.

Battles attributed the performance to tight global supplies of base oil and lubricants, along with what he described as effective management of collection costs and re-refining spreads. The company collected 62 million gallons of waste oil during the quarter while maintaining a charge-for-oil position, even as base-oil prices reached record levels.

Production of higher-value Group III base oil increased approximately 20% from a year earlier. Blended direct gallons sold represented 12% of total volume sold, compared with 9% in the prior-year period.

While management expects normal seasonal moderation in the fourth quarter, Battles said supply constraints had not shown signs of easing. The company’s full-year outlook assumes SKSS adjusted EBITDA of approximately $340 million, though Dugas said the company remains conservative because the duration of elevated base-oil and lubricant pricing is uncertain.

Investment plans, acquisitions and growth initiatives

Clean Harbors said integration is underway for its recent acquisitions of ES&H and EnviroServe. The company expects the acquisitions to contribute a combined $10 million to 2026 Environmental Services EBITDA and said it sees a healthy pipeline of additional acquisition opportunities.

The company recently acquired a $55 million property in Los Angeles to establish a major West Coast hub. Management said the site will consolidate several operations that had reached capacity and provide room to expand wastewater treatment, e-waste and waste-consolidation capabilities. Clean Harbors expects $5 million to $7 million in annual lease-consolidation savings alone.

The company also increased planned spending on data-center-related opportunities. It now expects to invest $15 million this year toward a $70 million dedicated data-center capital target, up from a previously outlined $50 million, two-year program. Gerstenberg said the company had roughly 12 active data-center projects in its pipeline and was providing services including chemical passivation and line flushing.

In addition, Clean Harbors continues construction of its solvent deasphalting unit, or SDA unit, and expects it to begin operations near the end of 2028. Management said the project’s spending schedule had shifted but the targeted startup date had not changed.

Cash from operations reached a record $419 million in the third quarter, up nearly 40% year over year. The company spent $168 million on capital expenditures, net of disposals, and repurchased approximately 82,000 shares for $25 million at an average price of $306 per share. As of Sept. 30, Clean Harbors had just under $525 million remaining under its share repurchase authorization.

Clean Harbors ended the quarter with $517 million in cash and short-term marketable securities. Dugas said a $600 million note offering completed Oct. 1 funded the EnviroServe and ES&H acquisitions, and the company expects year-end net leverage in the low-2x range.

About Clean Harbors (NYSE:CLH)

Clean Harbors, Inc provides environmental, energy and industrial services to customers across North America. The company serves a broad range of industries, including manufacturing, government, utilities, energy and transportation, helping customers manage hazardous and non-hazardous materials, maintain industrial facilities and respond to environmental emergencies.

Its services include hazardous waste collection, transportation, treatment and disposal; incineration; recycling and waste-to-fuel programs; wastewater treatment; and used-oil collection and re-refining.

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