Clean Harbors, Inc. (CLH) Q4 2025 Earnings Call Transcript
Access earnings results, analyst expectations, report, slides, earnings call, and transcript.
Overview
The earnings call highlights strong financial performance, with record operating cash flow and low debt-to-EBITDA ratio. Positive growth in PFAS-related sales and Environmental Services, along with raised free cash flow guidance, indicate strong market momentum. The Q&A session reveals cautious optimism, with conservative guidance and active M&A pipeline. Despite some uncertainties, the overall sentiment is positive, with expectations of growth driven by economic indicators and strategic investments. The lack of specific guidance on certain aspects is a minor concern, but the overall outlook remains positive.
Key Financial Performance
Total Recordable Incident Rate 0.49, which is well below the prior year and industry-leading. This reflects a record year of safety in 2025.
Revenue Exceeded $6 billion for the first time in 2025, representing a year-over-year increase. This growth was driven by profitable growth in both operating segments, disciplined pricing, cost management, workforce productivity, and network efficiency.
Adjusted EBITDA Increased by 5% year-over-year in 2025, reaching approximately $1.17 billion. This was supported by growth in the Environmental Services segment and disciplined pricing initiatives.
Adjusted Free Cash Flow Reached a record $509 million in 2025, representing nearly 44% of adjusted EBITDA. This was driven by strong working capital management and cash flow generation.
Environmental Services Segment Adjusted EBITDA Grew by 6% year-over-year in 2025, with a 60 basis point increase in segment adjusted EBITDA margin. This was due to disciplined pricing, higher volumes, and workforce management initiatives.
Q4 Revenue Increased by 5% year-over-year to $1.5 billion. This growth was driven by strong demand for disposal and recycling services, project volumes, and emergency response work.
Q4 Adjusted EBITDA Increased by 8% year-over-year to $279 million, with a 60 basis point improvement in adjusted EBITDA margin. This was due to disciplined pricing, volume growth, and cost control.
SKSS Segment Adjusted EBITDA Increased by 22% year-over-year in Q4 2025 to $30 million. For the full year, adjusted EBITDA was $137 million, with a 310 basis point improvement in margins. This was driven by oil collection services and pricing management.
Incineration Utilization (excluding Kimball) 89% for the full year 2025, up from 88% in 2024. This reflects strong operational performance.
Landfill Volumes Increased by more than 50% in Q4 2025, largely due to project volumes.
Operating Cash Flow Grew by 17% year-over-year in Q4 2025 to a record $355 million. This was driven by strong collections and cash flow generation.
Net Debt-to-EBITDA Ratio 1.8x at the end of 2025, the lowest leverage in nearly 15 years. This reflects strong cash flow and debt management.
You have reached the limit. Sign up to access full content
Get started
Operating Highlights
Kimball Incinerator: Successful first year ramp-up of the new Kimball incinerator.
Phoenix Hub: Creation of the Phoenix hub.
PFAS Incineration Study: Issued a PFAS incineration study with the EPA.
PFAS Business Growth: 20% growth rate for PFAS business in 2026, consistent with past years.
Pearl Harbor Contract: Secured a 3-year $110 million contract for PFAS water filtration at Pearl Harbor.
Depot Connect International Acquisition: Acquired environmental businesses from Depot Connect International for $130 million, expected to generate $40 million in annual revenue and $11 million in annual adjusted EBITDA.
Safety Record: Achieved a record safety year with a total recordable incident rate of 0.49.
Revenue and EBITDA Growth: Topped $6 billion in revenues for the first time, with adjusted EBITDA growth of 5%.
Adjusted Free Cash Flow: Generated a record $509 million in annual adjusted free cash flow.
Vacuum Truck Fleet Expansion: Announced a $50 million expansion of the vacuum truck fleet, expected to generate $12-14 million incremental adjusted EBITDA by 2028.
Capital Allocation: Executed $133 million in share repurchases in Q4 and expanded authorization by $350 million.
Debt Refinancing: Refinanced a portion of debt at favorable terms with longer maturity.
You have reached the limit. Sign up to access full content
Get started
Risk or Challenges
Base Oil Pricing Environment: The base oil pricing environment continued to weaken in Q4, impacting segment revenue and profitability. This represents a challenge for the SKSS segment as it relies on managing oil collection services and pricing to offset declines.
Economic and Market Conditions: The company experienced stubborn near-term market headwinds in 2025, which could continue to impact demand and growth in key verticals.
Inflationary Pressures: Inflationary pressures across corporate cost categories, including wages, benefits, and insurance costs, are expected to persist, potentially impacting profitability.
Regulatory and Compliance Risks: The company is exposed to regulatory risks, particularly in the PFAS segment, where new rules and frameworks are being developed by the EPA and state governments. Delays or unfavorable regulations could impact growth opportunities.
Supply Chain Constraints: Limited availability of specialized assets, such as vacuum trucks, could delay the company's fleet expansion plans and impact operational efficiency.
Acquisition Integration Risks: The acquisition of environmental businesses from Depot Connect International poses integration risks, including aligning operations and achieving expected synergies.
You have reached the limit. Sign up to access full content
Get started
Guidance & Outlook
PFAS Business Growth: The guidance assumes a 20% growth rate for the PFAS business in 2026, consistent with past years. Developments such as regulatory frameworks, state rules, and take-back programs are expected to create sizable growth opportunities.
SKSS Segment Outlook: For 2026, the SKSS segment will focus on managing re-refining spreads, expanding direct blended sales, increasing Group III production, and pursuing partnerships. Adjusted EBITDA for this segment is expected to remain similar to 2025 at approximately $135 million.
Capital Allocation and Investments: The company plans a $50 million expansion of its vacuum truck fleet over 2026-2027, expected to generate $12-$14 million in incremental adjusted EBITDA by 2028. Additionally, $500 million of internal investments are planned to accelerate growth.
Acquisition Plans: The company announced the acquisition of environmental businesses from Depot Connect International for $130 million, expected to generate $40 million in annual revenue and $11 million in annual adjusted EBITDA. The acquisition is expected to close in the first half of 2026.
2026 Adjusted EBITDA Guidance: The company is guiding to an adjusted EBITDA range of $1.20 billion to $1.26 billion, implying a 5% growth at the midpoint compared to 2025. Environmental Services segment adjusted EBITDA is expected to grow just over 5%.
Adjusted Free Cash Flow: For 2026, adjusted free cash flow is expected to range between $480 million and $540 million, with a midpoint of $510 million, representing a free cash flow conversion of approximately 41% of expected adjusted EBITDA.
You have reached the limit. Sign up to access full content
Get started
Shareholder Return Plan
Share Repurchase Program: We also continue to view share repurchases as an attractive way to generate strong shareholder returns as evidenced by our $133 million of repurchases executed in Q4. We bought back a record number of shares this year, and we recently received Board approval to expand our existing authorization by $350 million, providing a total of $600 million of remaining capacity and giving management significant flexibility to return capital to shareholders going forward.
You have reached the limit. Sign up to access full content
Get started
Key Q&A
Q:Can you update us on the captive market and incineration pricing trends into 2026 and 2027?
A:The captive market remains active, with ongoing discussions with key customers. There are about 40 sites with captive incinerators that are also customers. While some captive closures are anticipated, the timing is uncertain. Incineration pricing is expected to outpace inflation, with price improvements in the mid- to upper single digits across the network.
Q:What gives you confidence in the Industrial Services outlook for 2026?
A:The outlook is conservative, with modest expectations. Positive economic indicators like ISM and PMI are noted, and there is momentum in specialty lines of business. Over 400 customers are being assessed for turnaround needs, and there are positive signs from face-to-face calls. However, the overall guidance remains cautious.
Q:Can you elaborate on the VAC truck and field investments?
A:The VAC services business has been growing at 8%-14%. Investments are being made to add more trucks, reduce subcontracting, and support growth across Safety-Kleen environmental VAC, field service VAC, and industrial VAC. The balance sheet allows for both M&A and capital additions, with decisions based on ROI and market conditions.
Q:What is the status of the M&A pipeline for 2026?
A:The M&A pipeline is active, with opportunities primarily in the Environmental Services business. While 2025 was less successful, there are promising opportunities similar to the DCI acquisition, which includes permanent facilities.
Q:What are the drivers of Safety-Kleen EBITDA improvement in 2026?
A:Q1 is expected to be the low point due to base oil pricing challenges. Improvements are anticipated throughout the year, driven by oil collection pricing modifications. Base oil pricing is expected to decline slightly over the year.
Q:Can you quantify the emergency response (ER) work and its impact on Field Services?
A:In Q4, $30 million in large-scale ER work was completed. Over 22,000 ER events were handled in 2025, up 5% from the previous year. ER work is a core part of the business, with mid-single-digit growth expected in 2026.
Q:What is the impact of weather on Q1 2026 guidance?
A:Weather impacts are expected to be flat year-over-year. The Environmental Services business is still growing 5%-7% year-over-year, despite some delays but no plant upsets.
Q:What is the corporate expense growth rate for 2026?
A:Corporate expenses are expected to grow by 2%-4% in 2026, with Q1 being slightly heavier due to incentive compensation timing.
Q:What are the key drivers of Environmental Services' 5% growth guide for 2026?
A:Key drivers include the second year of the Kimball incinerator ramp-up, a 20% increase in PFAS opportunities, continued field services growth, and strong pricing and volume strategies. Growth is expected to be consistent across quarters.
Q:What is the outlook for PFAS-related revenue growth?
A:PFAS revenue is expected to grow by 20% in 2026, supported by regulatory momentum and customer discipline. A three-year contract contributes significantly to this growth.
Q:What is the long-term EBITDA margin target?
A:The company aims to achieve 30% EBITDA margins by 2030-2032, driven by efficiency improvements, pricing strategies, and leveraging the disposal network.
Q:What is the status of Safety-Kleen's charge-for-oil initiative and refinery utilization?
A:The charge-for-oil initiative has been successful, with pricing above $0.50 per gallon. Refinery utilization is stable, with no plans for additional closures. Direct blended sales growth is a key focus.
Q:What is the potential impact of the Veolia acquisition of Clean Earth?
A:No significant impact is expected on volumes or EBITDA in 2026 due to the Veolia acquisition of Clean Earth.
Q:What would a good industrial economy mean for growth?
A:A good industrial economy could lead to double-digit growth in Environmental Services revenue, benefiting all four business lines: TS, FS, IS, and SK Branch.
Q:What regulatory developments could catalyze PFAS growth?
A:The establishment of clear regulatory thresholds for PFAS contamination in industrial waters, soils, and solids would significantly accelerate growth.
Q:Review of Unclear Management Responses
A:Management avoided providing specific timelines for captive closures, details on the M&A pipeline outcomes, and precise base oil pricing figures. Additionally, they were cautious about projecting the impact of a good industrial economy and regulatory developments on PFAS growth.
You have reached the limit. Sign up to access full content
Get started
Earnings Word Cloud
The most frequently occurring keywords in this quarter's earning call
Act language
CFO gallon
CFO rate
Committee Environmental
Congress day
Connect International
DCI facility
DCI waste
Department War
Depot Connect
Dugas
EPA Department
EPA framework
Gerstenberg
III production
PFAS incineration
Slide
base oil
cleaning
collection service
core
disposal recycling
element capital
emergency response
filtration
incineration study
industry
margin basis
pricing CFO
pricing volume
repurchase
rule
safety record
segment margin
service pricing
study EPA
truck
vacuum
water
workforce
CLH Transcript
Clean Harbors, Inc. (CLH) Q4 2025 Earnings Call Transcript
Positive2-18
The earnings call highlights strong financial performance, with record operating cash flow and low debt-to-EBITDA ratio. Positive growth in PFAS-related sales and Environmental Services, along with raised free cash flow guidance, indicate strong market momentum. The Q&A session reveals cautious optimism, with conservative guidance and active M&A pipeline. Despite some uncertainties, the overall sentiment is positive, with expectations of growth driven by economic indicators and strategic investments. The lack of specific guidance on certain aspects is a minor concern, but the overall outlook remains positive.
Clean Harbors, Inc. (CLH) Presents at CJS Securities 26th Annual "New Ideas for the New Year" Investor Conference Transcript
Neutral1-14
Clean Harbors, Inc. (CLH) Presents at 28th Annual Needham Growth Conference Transcript
Neutral1-13
Clean Harbors, Inc. (CLH) Presents at Goldman Sachs Industrials and Materials Conference 2025 Transcript
Neutral12-4
CLH Report
Frequently Asked Questions
Where does this earnings call transcript come from?
All transcripts are sourced directly from the official live webcast or the company’s official investor relations website. We use the exact words spoken during the call with no paraphrasing of the core discussion.
How soon is the transcript available after the earnings call ends?
Full verbatim transcripts are typically published within 4–12 hours after the call ends. Same-day availability is guaranteed for all S&P 500 and most mid-cap companies.
Is the transcript edited or altered in any way?
No material content is ever changed or summarized in the “Full Transcript” section. We only correct obvious spoken typos (e.g., “um”, “ah”, repeated 10 times”, or clear misspoken ticker symbols) and add speaker names/titles for readability. Every substantive sentence remains 100% as spoken.
Why do some answers appear as “Unclear” or “Inaudible”?
When audio quality is poor or multiple speakers talk over each other, we mark the section instead of guessing. This ensures complete accuracy rather than introducing potential errors.
Who creates the AI Summary and Key Q&A highlights shown above the transcript?
They are generated by a specialized financial-language model trained exclusively on 15+ years of earnings transcripts. The model extracts financial figures, guidance, and tone with 97%+ accuracy and is regularly validated against human analysts. The full raw transcript always remains available for verification.
