Clean Harbors(US:CLH)2025-10-29 14:02Financial 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]