Clean Harbors ((CLH)) has held its Q3 earnings call. Read on for the main highlights of the call.
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Clean Harbors’ recent earnings call reflected a generally positive sentiment, despite some challenges. The company reported strong safety performance, revenue growth, and successful initiatives in the PFAS market. However, these positive aspects were tempered by difficulties in the Industrial and Field Services sectors and increased corporate costs. Nevertheless, Clean Harbors’ strategic initiatives and robust cash flow generation suggest a promising outlook for future growth.
Record Safety Performance
Clean Harbors achieved a Total Recordable Incident Rate (TRIR) of 0.49, setting the company on course for another record year in safety performance. This achievement underscores the company’s commitment to maintaining high safety standards across its operations.
Revenue and EBITDA Growth
The company reported a total revenue increase to $1.55 billion, with adjusted EBITDA rising by 6% to $320 million. The Environmental Services (ES) segment saw a 3% revenue increase and a 7% rise in adjusted EBITDA, highlighting strong performance in this area.
PFAS Market Growth
Clean Harbors expects PFAS-related revenue to reach between $100 million and $120 million this year, marking a 20% to 25% increase from the previous year. This growth is indicative of the company’s successful initiatives in the PFAS market.
Successful PFAS Incineration Study
The company completed a successful PFAS incineration study in collaboration with the EPA and DoD, confirming its capability to safely destroy PFAS chemicals. This study is a significant milestone in addressing environmental concerns associated with PFAS.
New SDA Unit Announcement
Clean Harbors announced plans for a new SDA Unit, with an investment of $210 million to $220 million. This unit is expected to generate $30 million to $40 million in annual EBITDA upon its completion in 2028, further strengthening the company’s future earnings potential.
Strong Cash Flow Generation
The company reported a record Q3 adjusted free cash flow of $231 million, an increase of $86 million year-on-year. This strong cash flow generation positions Clean Harbors well for future investments and growth opportunities.
Industrial and Field Services Decline
Revenue from Field Services declined by 11%, and Industrial Services revenue fell by 4%. This decline was attributed to slowness in field and industrial services and deferred maintenance by customers, posing a challenge for the company.
Higher Corporate Costs
The corporate segment experienced increased costs due to higher insurance expenses and healthcare costs, which impacted overall profitability. This rise in costs is a concern that the company needs to address moving forward.
Healthcare Cost Challenges
Higher-than-expected employee healthcare costs affected the company’s financial results, with a $6 million impact across the organization. Managing these costs will be crucial for maintaining profitability.
Forward-Looking Guidance
In its Q3 2025 earnings call, Clean Harbors provided updated guidance, revising its full-year adjusted EBITDA range to $1.155 billion to $1.175 billion, reflecting a $15 million reduction due to challenges in Industrial and Field Services and increased healthcare costs. Despite these challenges, the ES segment reported a 6% year-over-year adjusted EBITDA growth, with a consolidated adjusted EBITDA margin improvement of 100 basis points to 20.7%. The company remains focused on capital allocation, with $50 million repurchased in Q3, and anticipates ending the year with record free cash flows and a strong balance sheet.
In conclusion, Clean Harbors’ earnings call highlighted a mix of positive achievements and challenges. While the company faces hurdles in certain sectors and rising costs, its strong safety record, revenue growth, and strategic initiatives in the PFAS market position it well for future success. Investors and stakeholders can remain optimistic about Clean Harbors’ ability to navigate these challenges and capitalize on growth opportunities.