Core Viewpoint - Clean Harbors experienced a significant stock sell-off of over 11% following the release of its third-quarter results, which underperformed market expectations [1]. Financial Performance - The company reported third-quarter revenue of $1.55 billion, reflecting a year-over-year growth of just over 1% [2]. - Net income for the quarter was $118.8 million, or $2.21 per share, which was only slightly above the previous year's profit of $115.2 million [2]. - Both revenue and net income figures fell short of analyst expectations, which were $1.57 billion for revenue and $2.40 per share for net income [3]. Guidance Revision - Clean Harbors revised its full-year 2025 guidance, lowering its forecast for non-GAAP adjusted EBITDA to a range of just under $1.16 billion to almost $1.18 billion, down from a previous estimate of $1.16 billion to $1.2 billion [4]. - On a positive note, the company anticipates an increase in adjusted free cash flow, now projected to be between $455 million and $495 million, up from the earlier forecast of $430 million to $490 million [5].

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Financial Performance - Total revenues for the three months ended September 30, 2025, were $1,549,337,000, a slight increase from $1,529,422,000 in the same period of 2024, representing a growth of 1.8%[12] - Net income for the nine months ended September 30, 2025, was $304,384,000, compared to $318,325,000 for the same period in 2024, reflecting a decrease of 4.4%[14] - The company reported a net income of $118,799,000 for the three months ended September 30, 2025, compared to $115,213,000 in 2024, reflecting a growth of 2.2%[14] - Earnings per share (diluted) for the nine months ended September 30, 2025, were $5.65, down from $5.87 in the same period of 2024, a decline of 3.8%[12] - Basic earnings per share for the three months ended September 30, 2025, was $2.22, an increase from $2.14 in the same period of 2024[78] - Comprehensive income for the three months ended September 30, 2025, was $106,228, compared to $107,667 in 2024, a decrease of 1.3%[14] Revenue Breakdown - The company reported service revenues of $1,321,865,000 for the three months ended September 30, 2025, compared to $1,278,955,000 in the same period of 2024, indicating an increase of 3.4%[12] - Total third-party revenues for the three months ended September 30, 2025, reached $1,549.3 million, a 1.3% increase from $1,529.4 million in the same period of 2024[36][37] - Environmental Services segment generated $1,318.6 million in revenues, with significant contributions from Technical Services ($490.8 million) and Industrial Services ($332.1 million)[36] - Safety-Kleen Environmental Services contributed $340.0 million in revenues, with $263.4 million from waste handling and disposal services[36] - Safety-Kleen Oil segment generated $154.2 million in revenues from bulk sales of lubricating oils and recycled fuel oil[36] Assets and Liabilities - Cash and cash equivalents increased to $759,197,000 as of September 30, 2025, up from $687,192,000 at the end of 2024, marking a growth of 10.5%[10] - Total current assets rose to $2,608,261,000 as of September 30, 2025, compared to $2,433,796,000 at the end of 2024, an increase of 7.2%[10] - The company’s total liabilities decreased slightly to $4,764,459,000 as of September 30, 2025, from $4,774,749,000 at the end of 2024, a reduction of 0.2%[10] - The total stockholders' equity increased to $2,775,840,000 as of September 30, 2025, from $2,573,529,000 at the end of 2024, reflecting a growth of 7.8%[10] - The company’s receivables increased to $1,104.8 million as of September 30, 2025, compared to $1,015.4 million at the end of 2024[38] Cash Flow and Expenses - Cash flows from operating activities for the nine months ended September 30, 2025, were $511,632,000, compared to $473,833,000 for the same period in 2024, an increase of 8.0%[16] - The company incurred total costs of revenues of $1,048,490,000 for the three months ended September 30, 2025, compared to $1,055,599,000 in the same period of 2024, a decrease of 0.7%[12] - Selling, General and Administrative Expenses for the three months ended September 30, 2025, amounted to $121,139, up from $110,064 in the same quarter of 2024, reflecting increased administrative costs[104] - The cost of revenues for the nine months ended September 30, 2025, was $3,068,850, which is an increase from $3,037,458 in the prior year, highlighting rising operational costs[106] Acquisitions and Investments - The acquisition of HEPACO on March 22, 2024, was completed for $392.2 million, enhancing the Environmental Services segment's Field Services business[39] - The Company acquired Noble Oil Services, Inc. for an all-cash purchase price of $68.7 million, enhancing its oil collection operations in the southeastern U.S.[42] - The company completed the acquisition of three additional privately-owned businesses for a total cash consideration of $17.1 million, consolidating their operations into existing segments[45] Stock and Compensation - The company repurchased 208 shares of common stock for a total of $50,000,000 during the quarter ending September 30, 2025[18] - Stock-based compensation for the quarter ending June 30, 2025, amounted to $8,922,000[18] - Total stock-based compensation cost for Q3 2025 was $8.9 million, up from $5.8 million in Q3 2024, representing a 53.4% increase[14][81] Legal and Regulatory Matters - The company recorded reserves of $19.4 million for legal and administrative proceedings as of September 30, 2025, down from $29.8 million at the end of 2024[89] - The Company is involved in approximately 85 product liability cases related to Safety-Kleen, with claims alleging personal injury from the use of its cleaning products[92] - The Company has been identified as a potentially responsible party for cleanup at 132 Superfund sites, with potential liabilities exceeding $1.0 million at three of these sites[96][97] Debt and Financing - The company maintains a $600.0 million revolving credit facility with no outstanding loan balance as of September 30, 2025, and $473.3 million available to borrow[62] - On October 9, 2025, the company issued $745.0 million in unsecured senior notes due 2033, with an interest rate of 5.750% per annum[63] - The company utilized $1,260.0 million in borrowings under the Amended Credit Agreement to refinance approximately $1,457.3 million of secured senior term loans[67]

Core Insights - Clean Harbors reported revenue of $1.55 billion for the quarter ended September 2025, reflecting a year-over-year increase of 1.3% and an EPS of $2.21 compared to $2.12 a year ago [1] - The reported revenue fell short of the Zacks Consensus Estimate of $1.58 billion, resulting in a surprise of -1.72%, while the EPS also missed the consensus estimate of $2.37 by -6.75% [1] Revenue Breakdown - Direct Revenues from Safety-Kleen Sustainability Solutions amounted to $218.04 million, below the three-analyst average estimate of $229.75 million, representing a year-over-year decline of -6.1% [4] - Direct Revenues from Environmental Services reached $1.33 billion, slightly below the three-analyst average estimate of $1.35 billion, with a year-over-year increase of +2.6% [4] EBITDA Performance - Adjusted EBITDA for Environmental Services was reported at $357.23 million, compared to the average estimate of $374.51 million from three analysts [4] - Adjusted EBITDA for Corporate Items was -$78.01 million, better than the average estimate of -$81.65 million [4] - Adjusted EBITDA for Safety-Kleen Sustainability Solutions was $40.94 million, exceeding the average estimate of $39.83 million from three analysts [4] Stock Performance - Clean Harbors shares have returned +6% over the past month, outperforming the Zacks S&P 500 composite's +3.8% change [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating potential underperformance relative to the broader market in the near term [3]

Financial Data and Key Metrics Changes - Total revenue for Q3 increased to $1.55 billion, reflecting growth in environmental services and a diversified customer base [20][21] - Adjusted EBITDA rose 6% to $320 million, with a consolidated Adjusted EBITDA margin expanding to 20.7%, driven by pricing initiatives and cost reduction efforts [20][21] - Net income grew modestly year over year, delivering earnings per share of $2.21 [22] Business Line Data and Key Metrics Changes - Environmental Services (ES) segment revenue increased by 3%, with Adjusted EBITDA margin growing for the 14th consecutive quarter [6][7] - Technical services within ES saw a 12% revenue growth, while landfill volumes increased by 40% year over year [7][8] - Safety-Kleen Sustainable Solutions (SKSS) segment delivered over $40 million in EBITDA, marking its strongest quarter in a year despite pricing headwinds [13][21] Market Data and Key Metrics Changes - Incineration utilization was high at 92%, with demand remaining strong due to diverse end markets [7] - Field services revenue declined by 11% due to the absence of medium to large response projects, while industrial services revenue decreased by 4% [8][9] - PFAS-related sales are expected to generate $100 million-$120 million in revenue this year, up 20%-25% from the previous year [10][11] Company Strategy and Development Direction - The company is focused on margin growth through pricing gains, productivity improvements, and cost-saving strategies [4][5] - Plans to construct a new processing plant (SDA unit) with an expected total spend of $210 million-$220 million, anticipated to generate annual EBITDA of $30 million-$40 million [15][16] - The company is actively evaluating M&A opportunities while maintaining a disciplined approach to capital allocation [16][82] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future growth despite current macroeconomic challenges, anticipating a recovery in industrial services and field services as economic conditions improve [18][28] - The project pipeline remains substantial, with growing PFAS opportunities expected to contribute meaningfully to future activity [18][28] - Management expects to achieve profitability targets for SKSS in 2025, indicating stabilization in that segment [19][27] Other Important Information - The company reported record cash flows in Q3, ending with cash and short-term marketable securities of $850 million, providing substantial flexibility for capital allocation [22][23] - SG&A expenses as a percentage of revenue increased to 12.2%, reflecting higher healthcare costs and professional fees [21] Q&A Session Summary Question: What were the main factors behind the $15 million guidance reduction? - The reduction was primarily due to shortfalls in industrial services ($7 million) and field services ($4 million), along with elevated healthcare costs impacting the entire company [34][35] Question: What is the outlook for EBITDA growth in 2026? - Management targets a 5% EBITDA growth for next year, driven by cost-cutting initiatives and volume growth in waste businesses [39] Question: What is the company's M&A outlook? - The company is considering both larger and smaller deals, remaining prudent and disciplined in its approach to M&A [40][42] Question: Can you clarify the expected performance of the SKSS segment? - Management is confident in achieving the $140 million EBITDA target for SKSS, with a few million on either side as a potential range [73][74] Question: What is the current state of the incinerator pricing? - Incineration pricing is expected to grow at mid-single digits, consistent with prior quarters, while technical services saw double-digit growth [77][78]

Financial Data and Key Metrics Changes - Total revenue for Q3 increased to $1.55 billion, with adjusted EBITDA rising 6% to $320 million, reflecting the company's ability to drive profitable growth despite macroeconomic challenges [20][21][22] - Consolidated adjusted EBITDA margin expanded to 20.7%, with a 120 basis point improvement in environmental services [20][21] - Net income grew modestly year over year, delivering earnings per share of $2.21 [22] Business Line Data and Key Metrics Changes - Environmental Services (ES) segment revenue grew 3%, with adjusted EBITDA margin increasing for the 14th consecutive quarter [6][7] - Technical services within ES led with 12% growth, while Safety-Kleen Environmental services rose 8% [7][8] - Field services revenue declined 11% due to the absence of medium to large response projects, while industrial services saw a 4% revenue decrease [9][20] Market Data and Key Metrics Changes - Incineration utilization was high at 92%, with landfill volumes up 40% year over year [7] - PFAS-related sales are expected to generate $100 to $120 million in revenue for the year, up 20% to 25% from the previous year [10][11] Company Strategy and Development Direction - The company is focused on margin growth through pricing initiatives, cost reduction, and productivity gains [4][21] - Plans to construct a new processing plant (SDA unit) with an expected total spend of $210 million to $220 million, anticipated to generate annual EBITDA of $30 million to $40 million [15][17] - The company is evaluating both bolt-on transactions and larger acquisitions to enhance market position [16][80] Management's Comments on Operating Environment and Future Outlook - Management remains optimistic about future growth despite current macroeconomic challenges, anticipating a recovery in industrial services and field services spending [18][28] - The project pipeline remains substantial, with growing PFAS opportunities expected to contribute meaningfully to future activity [18][28] Other Important Information - The company reported record cash flows in Q3, with cash and short-term marketable securities totaling $850 million [22][23] - Share repurchases totaled $50 million in Q3, with approximately $380 million remaining under authorization [24] Q&A Session Summary Question: Impact of industrial malaise on guidance - Management indicated that the $15 million reduction in guidance was primarily due to shortfalls in industrial and field services, with healthcare costs also contributing [34][35] Question: Expectations for EBITDA growth in 2026 - Management expects to continue growing EBITDA across waste collection and service businesses, targeting 5% growth despite anticipated industrial service challenges [39][40] Question: Capital allocation and M&A outlook - Management is actively evaluating both larger and smaller M&A opportunities while remaining disciplined in capital allocation [40][42] Question: Clarification on SKSS guidance - Management expressed high confidence in achieving the $140 million EBITDA target for SKSS, with a potential range of a few million on either side [72][73] Question: Incinerator pricing and growth rates - Incineration pricing is expected to grow in the mid-single digits, with technical services showing double-digit growth [76][77]

Financial Data and Key Metrics Changes - Total revenue for Q3 increased to $1.55 billion, reflecting growth in environmental services and a diversified customer base [20][21] - Adjusted EBITDA rose 6% to $320 million, with a consolidated adjusted EBITDA margin expanding to 20.7%, driven by pricing initiatives and cost reduction efforts [20][21] - Net income grew modestly year over year, delivering earnings per share of $2.21 [23] Business Line Data and Key Metrics Changes - Environmental Services (ES) segment revenue increased by 3%, with adjusted EBITDA margin growing for the 14th consecutive quarter [5][6] - Technical services within ES saw a 12% revenue growth, while Safety-Kleen Environmental services rose 8% [8][20] - Field services revenue declined by 11% due to the absence of medium to large response projects [8][9] Market Data and Key Metrics Changes - Incineration utilization was high at 92%, with landfill volumes up 40% from a year ago [7][20] - PFAS-related sales are expected to generate $100 to $120 million in revenue this year, up 20% to 25% from the previous year [10][11] - The company anticipates that spending constraints in industrial services will loosen as economic conditions improve [18] Company Strategy and Development Direction - The company is focused on margin growth and productivity enhancements, with plans for significant internal investments exceeding $500 million over the next several years [16][17] - A new state-of-the-art processing plant (SDA unit) is planned, expected to generate annual EBITDA of $30 million to $40 million upon completion [15] - The company remains active in evaluating M&A opportunities while maintaining a disciplined approach to capital allocation [16][80] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism about future growth, citing strong momentum in waste collection and disposal assets despite current macroeconomic challenges [5][18] - The company expects to navigate current economic turbulence and anticipates a recovery in industrial services and field services in the coming quarters [29] - Management highlighted the importance of ongoing cost management and operational efficiency to mitigate rising healthcare costs [33][40] Other Important Information - The company reported a record level of free cash flow in Q3, with cash and short-term marketable securities totaling $850 million [24][25] - SG&A expenses as a percentage of revenue increased to 12.2%, reflecting higher healthcare costs and professional fees [22] - The company has raised its full-year adjusted free cash flow guidance to a midpoint of $475 million, representing over 30% growth from 2024 [28] Q&A Session Summary Question: What were the main factors behind the $15 million guidance reduction? - The reduction was primarily due to shortfalls in industrial services ($7 million) and field services ($4 million), along with elevated healthcare costs impacting the overall company by about $6 million [33][34] Question: What is the outlook for EBITDA growth in 2026? - Management expects to target a 5% EBITDA growth based on cost-cutting initiatives and volume growth in waste businesses, despite not anticipating a rebound in industrial turnarounds until spring [41][42] Question: What is the company's M&A outlook? - The company is actively looking at both larger and smaller deals, maintaining a disciplined approach to ensure good returns on shareholder investments [44][80] Question: What is the expected range for SKSS EBITDA this year? - Management expressed high confidence in achieving the $140 million EBITDA mark for SKSS, with a potential range of a few million on either side [72][73] Question: How does the SDA unit investment relate to M&A strategy? - The SDA unit investment does not reflect a change in M&A appetite; it has been a planned investment for years, and the company remains open to various capital allocation opportunities [79][80]

Core Viewpoint - Clean Harbors reported quarterly earnings of $2.21 per share, missing the Zacks Consensus Estimate of $2.37 per share, representing an earnings surprise of -6.75% [1][2] Financial Performance - The company posted revenues of $1.55 billion for the quarter ended September 2025, missing the Zacks Consensus Estimate by 1.72%, compared to revenues of $1.53 billion a year ago [2] - Over the last four quarters, Clean Harbors has surpassed consensus EPS estimates three times and topped consensus revenue estimates two times [2] Stock Performance - Clean Harbors shares have increased by approximately 7% since the beginning of the year, while the S&P 500 has gained 17.2% [3] - The stock currently holds a Zacks Rank 4 (Sell), indicating expectations of underperformance in the near future [6] Earnings Outlook - The current consensus EPS estimate for the upcoming quarter is $1.63 on revenues of $1.49 billion, and for the current fiscal year, it is $7.44 on revenues of $6.04 billion [7] - The trend of estimate revisions for Clean Harbors was unfavorable prior to the earnings release, which may impact future stock movements [6][5] Industry Context - The Waste Removal Services industry, to which Clean Harbors belongs, is currently ranked in the bottom 35% of over 250 Zacks industries, suggesting potential challenges ahead [8]

Q3 2025 Performance Highlights - Revenue reached $1.55 billion, driven by growth in the Environmental Services (ES) segment[8] - Net income was $118.8 million, resulting in earnings per share (EPS) of $2.21[8] - Adjusted EBITDA was $320.2 million, with an adjusted EBITDA margin increase of 100 basis points to 20.7%[8] - Adjusted free cash flow reached a record $230.6 million[8] Environmental Services (ES) Segment - ES segment revenue increased to $1.3313 billion in Q3 2025, a 3% increase compared to $1.2972 billion in Q3 2024[10] - ES adjusted EBITDA increased to $357.2 million in Q3 2025, a 7% increase compared to $332.5 million in Q3 2024[10] - Adjusted EBITDA margin for ES increased by 120 bps due to pricing, network efficiency, and productivity gains[13] - SK Environmental Services revenue grew by 8% due to pricing and volume growth[13] Safety-Kleen Sustainability Solutions (SKSS) Segment - SKSS revenue decreased by 6% to $218.0 million in Q3 2025 from $232.1 million in Q3 2024, reflecting market pricing and lower volumes[18] - SKSS adjusted EBITDA was relatively flat at $40.9 million in Q3 2025 compared to $41.2 million in Q3 2024, but the margin increased by 100 bps[18, 21] - The company gathered 64 million gallons of waste oil, compared to 69 million gallons in Q3 2024[21] Capital Allocation and Future Investments - The company plans to build a Solvent De-Asphalting (SDA) Unit with a total project spend of $210 million to $220 million[24] - The SDA unit is expected to contribute $30 million to $40 million in annual EBITDA[24] - $12 million has been spent YTD on the SDA unit, with an anticipated total of $30 million in 2025[24] Full-Year 2025 Guidance - The company projects net income between $379 million and $400 million[35] - Adjusted EBITDA is projected to be between $1.155 billion and $1.175 billion[35] - Net cash from operating activities is expected to range from $795 million to $865 million[35] - Adjusted free cash flow is projected to be between $455 million and $495 million[35]