By the numbers
Q1 net income: $58.7M
Down 15.9% year over year
Q1 adjusted EBITDA: $234.9M
Up 2.1% year over year
- Financial picture: Clean Harbors outperformed expectations for the quarter as it saw continued strength in its environmental services segment and recorded a better-than-expected quarter in its Safety-Kleen Sustainability Solutions segment. Executives reported a tough start to the year due to extreme weather but month-to-month improvements through March and April. Co-CEO Eric Gerstenberg reported demand for disposal and recycling services were positive in Q1.
- Tariffs and recession: Executives don't anticipate tariffs will have a significantly negative impact on Clean Harbors, nor do they fear a recession could undercut the business. They said reshoring could be a long-term boost to the industrial services segment. To stay ahead of macroeconomic uncertainty, Gerstenberg said the company is also engaging with key customers, particularly in the industrial services and field services segment.
- Environmental services strength: Clean Harbors continued to benefit from growth in its environmental services business, with adjusted earnings before income, taxes, depreciation and amortization up 3.8% year over year. The segment was responsible for two-thirds of the company's overall revenue growth in Q1, CFO Eric Dugas said on the call. The segment is now on its third straight year of margin expansion, and Co-CEO Mike Battles expects that business to be "recession resilient" due to the essential service it provides to the industrial sector. Clean Harbors is also expecting continued growth in its field services business, which grew significantly following the acquisition of Hepaco last year. The company opened 10 new field services branches in Q1.
- SKSS improvements: The Safety-Kleen Sustainability Solutions segment saw adjusted EBITDA decline 4.9% year over year, but outperformed expectations for the quarter. That performance came amid continued softness in the base oil and lubricants market, which has caused problems for Clean Harbors and led the company to idle a re-refinery last year. Volumes increased in the quarter, in part due to the acquisition of Noble Oil and due to competitors following Clean Harbors in the transition to a charge-for-oil model, Battles said. "We think we've turned a corner," he commented, and expects the segment to meet its 2025 guidance.
- PFAS progress: Executives were pleased with an announcement from U.S. EPA Administrator Lee Zeldin on Monday saying the agency would begin updating its destruction and disposal guidance for PFAS annually. The company expects the results of a study it conducted with the federal government to come out in Q2 demonstrating the ability of Clean Harbors' incineration processes to address PFAS-contaminated materials.
- New facilities: Executives said progress continues on time for Clean Harbors' planned Baltimore facility expansion, which will add container manufacturing capacity and other services. The company also expects to record $15 million in costs related to a new facility in Phoenix that will add hazardous waste collection and service capacity.
- Kimball plant: Gerstenberg also said the company has become more efficient at ramping up capacity at its new Kimball, Nebraska, kiln thanks to lessons learned from its previous El Dorado project in Arkansas. Kimball processed 5,000 tons of waste in the first quarter as it ramps up, and Clean Harbors expects to process 28,000 tons or more this year at the facility.
