Clean Harbors, Inc. (CLH) Earnings & Analysis

Latest quarter

Clean Harbors reported second-quarter revenue of $1.7 billion, above the $1.6 billion consensus. Adjusted earnings per share of $3.22 also exceeded the consensus of $2.74.

Revenue rose 11.9% from $1.5 billion a year earlier, and diluted earnings per share increased to $3.22 from $2.36. Co-CEO Eric Gerstenberg said technical services revenue grew 18% as customers sought disposal and recycling services, including a PFAS filtration project that generated more than $30 million in quarterly revenue. He said Safety-Kleen Environmental Services revenue increased 11%, helped by pricing and demand for core services.

Co-CEO Mike Battles attributed the increase in Safety-Kleen Sustainability Solutions revenue and adjusted EBITDA to elevated market pricing amid shortages of base and blended oil products. Clean Harbors reported gross margin of 35.1%, compared with 33.3% a year earlier, and operating margin of 15.5%, compared with 13.6%. Free cash flow was $114.3 million, down from $120.2 million.

Adjusted EPS is the figure the consensus estimates, not the GAAP EPS above.

What management said on the call

On the July second-quarter call, Eric Gerstenberg said demand for disposal assets and the collection network reflected limited industry capacity. He reported incineration utilization of 91% in Q2, up from 86% a year earlier, and said landfill volumes rose 7%.

Mike Battles said supply disruptions in the Middle East and Asia created domestic scarcity and drove price increases for re-refined products. He expected supply constraints to extend into the third quarter. CFO Eric Dugas cautioned that the duration of those conditions was uncertain; in the Q&A, he said the company’s outlook assumed elevated pricing in Q3 before a decline in Q4.

Asked about volumes and competition, Gerstenberg said Clean Harbors was embedding staff and systems with customers to manage more of their waste needs. He said the company believed this approach was helping it gain share. Dugas said higher volumes, fleet utilization and cost controls contributed to the quarter’s adjusted EBITDA margin.

Gerstenberg also discussed a 10-year disposal agreement with a manufacturing customer, which he said had an estimated value of $600 million and would begin in the fourth quarter. He said Clean Harbors was introducing an integrated data center service, initially focused on construction, and was targeting $200 million in annual revenue by the end of 2028.

Analysts asked about refinery turnaround demand and data centers. Gerstenberg said the year-to-date turnaround count was down about a third year over year, while specialty industrial services growth had helped offset reduced refinery work. He said the company was adapting existing flushing and chemical-treatment capabilities for data centers. In response to another question, Battles said the oil products business was cyclical because commodity prices move with multiple factors.

Guidance

In its October outlook, Clean Harbors said it expects 2026 adjusted EBITDA of $1.44 billion to $1.48 billion, compared with the $1.35 billion to $1.41 billion range given on the July call.

The company also expects 2026 adjusted free cash flow of $600 million to $660 million, compared with its July range of $520 to $580 million.