Clean Harbors (NYSE:CLH) FY Conference Transcript

Clean Harbors Conference Call Summary Company Overview - Company: Clean Harbors - Event: 28th Annual Needham Growth Conference - Presenters: Co-CEO Mike Battles, SVP Jim Buckley Key Points Industry and Business Segments - Clean Harbors operates primarily in the environmental services and oil business sectors, with total revenue exceeding $6 billion in 2025, of which approximately $1 billion is from the oil business and $5 billion from environmental services [3][8]. Oil Business Performance - The oil business has seen a significant decline from $300 million to approximately $140 million due to falling oil prices and market challenges [4]. - The company shifted focus to collecting high-value used motor oil (UMO) instead of volume, leading to improved profitability despite lower collection volumes [5][6]. - The goal for 2026 is to stabilize the oil business and make it less volatile [6]. Environmental Services Business - The environmental services segment is performing well, with a 12% revenue growth in Q3 and 7% growth over the first nine months of 2025, driven by price increases and volume [9]. - The technical services (TS) business, which includes PFAS remediation, is expected to continue its growth trajectory, with pricing discipline being a key factor [10][25]. - The Safety-Kleen branch, focusing on small quantity hazardous waste, has also shown consistent growth of 7% over the past several years [11]. Industrial Services Challenges - The industrial services segment, valued at approximately $1.3 billion, has faced challenges with negative revenue growth of 5% due to delayed turnarounds in large plants [12][13]. - Leadership changes are anticipated to improve performance in this segment, with hopes of stabilizing revenue in 2026 [14]. PFAS Remediation - PFAS-related services are projected to grow at 20% annually, with Clean Harbors positioned as a leader in high-temperature incineration for PFAS disposal [27][30]. - Recent engagements with regulatory bodies and successful projects, such as the one in Hawaii, are expected to enhance growth in this area [36][37]. Pricing Strategy - Clean Harbors maintains a disciplined pricing strategy, with annual contract renewals allowing for price adjustments based on inflation and market conditions [55][57]. - The company has successfully navigated price negotiations, achieving mid-single-digit price increases [57]. M&A and Growth Strategy - Clean Harbors has a strong cash position with $1 billion available and plans for share buybacks, indicating a focus on shareholder value rather than aggressive M&A [58]. - The company is exploring smaller acquisitions in the environmental services space, particularly targeting privately owned businesses [62][63]. Internal Investments - Significant investments are being made in infrastructure, including the Kimball incinerator, which is expected to generate $20-$30 million in EBITDA in 2026 [40][41]. - The company is also developing mega hubs to enhance operational efficiency and margin improvement [71][73]. Future Outlook - Clean Harbors is optimistic about stabilizing its industrial services segment and continuing growth in environmental services and PFAS remediation [14][27]. - The company aims to leverage its strong market position and operational efficiencies to drive future profitability [25][66]. Additional Insights - The leadership emphasizes the importance of maintaining high margins and operational efficiency across all business segments [26][72]. - The company is cautious about the timing of potential captive incinerator closures, recognizing the long-term commitment involved [48][50]. This summary encapsulates the key insights and strategic directions discussed during the Clean Harbors conference call, highlighting both challenges and growth opportunities within the company and its industry.