CLH Q1 Earnings Call: Clean Harbors Delivers In-Line Revenue and Margin Pressures Amid Segment Shifts

Environmental and industrial services company Clean Harbors (NYSE: CLH) met Wall Street’s revenue expectations in Q1 CY2025, with sales up 4% year on year to $1.43 billion. Its non-GAAP profit of $1.09 per share was 3.3% above analysts’ consensus estimates.

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StockStory’s Take

Clean Harbors’ first quarter results reflected stable demand in its core Environmental Services segment and deliberate pricing strategies in its Safety-Kleen Sustainability Solutions business. Management attributed performance to strong incineration utilization and pricing, ongoing contributions from recent acquisitions, and outperformance in used oil collection, despite weather-related disruptions and continued headwinds in industrial services. Co-CEO Eric Gerstenberg stated, “Our ES segment began the year with an encouraging first quarter that included a strong contribution in March after a period of unfavorable weather in January.”

Looking ahead, Clean Harbors maintained its full-year adjusted EBITDA guidance, emphasizing steady demand in disposal services, continued ramp-up of the Kimball incinerator, and an expanding pipeline in PFAS remediation. Management remains cautious on industrial services but cited reshoring trends, regulatory momentum, and proactive cost controls as factors supporting the outlook. CFO Eric Dugas reiterated, “We continue to expect demand environment and our pricing initiatives to support our anticipated profitable growth this year.”

Key Insights from Management’s Remarks

Management’s remarks during the earnings call centered on segment-level drivers, pricing actions, and operational investments that shaped quarterly results. The company addressed weather-related headwinds, segment performance divergence, and updates on capacity expansion and regulatory dynamics.

• Incineration Utilization and Pricing: Clean Harbors achieved an 88% incineration utilization rate, excluding the new Kimball facility, and implemented mid-single-digit price increases. Management credited this to robust demand, capacity investments, and the successful ramp-up of the Kimball incinerator, which processed 5,000 tons in its first quarter of operation.
• Safety-Kleen Pricing Shift: In Safety-Kleen Sustainability Solutions (SKSS), the company doubled its average charge for used oil collection since year-end by shifting to a charge-for-oil (CFO) model. This offset continued weakness in base oil prices and helped maintain volumes despite challenging market conditions.
• PFAS Pipeline Momentum: Management highlighted a growing pipeline for PFAS (per- and polyfluoroalkyl substances) remediation, supported by recent EPA policy updates and ongoing regulatory developments. The company expects its incineration study results, relevant to PFAS disposal, to be published in the coming quarter.
• Industrial Services Weakness: Revenue in industrial services declined 10% year over year, attributed to refinery customers deferring maintenance and spending. Management noted that while some weather effects were temporary, broader refinery cost pressures persisted.
• Acquisition and Network Expansion: The HEPACO acquisition and the opening of new field service branches contributed to growth in field services, with 32% growth in this area. The company is also developing new processing hubs, such as the recently acquired Phoenix site, to further expand capacity.

Drivers of Future Performance

Clean Harbors’ outlook for the remainder of the year is driven by expected growth in disposal and recycling services, continued ramp-up of new capacity, and evolving regulatory and market trends, with management balancing optimism about secular growth drivers against caution in more cyclical segments.

• Kimball Incinerator Ramp-Up: The Kimball facility is expected to process over 28,000 tons this year, contributing to higher network utilization and enabling growth in technical services and PFAS disposal.
• Regulatory Tailwinds and PFAS: Anticipated EPA and Department of Defense guidance on PFAS destruction is expected to boost demand for Clean Harbors’ hazardous waste solutions, particularly as environmental standards tighten.
• Industrial Services Recovery Uncertainty: Management remains cautious on the timing of an industrial services rebound, with recovery hinging on refinery maintenance cycles and broader economic conditions. The segment is expected to lag the rest of the business in the near term.

Top Analyst Questions

• Tyler Brown (Raymond James): Asked about the extent of weather-related volume loss and whether it could be recovered in future quarters; management said some revenue is likely lost forever, though March and April showed improvement.
• Noah Kaye (Oppenheimer): Inquired about the PFAS remediation pipeline and the impact of new EPA guidance; management expects continued double-digit growth in PFAS-related revenue and views regulatory momentum as a long-term opportunity.
• James Schumm (TD Cowen): Pressed on base oil pricing weakness and SKSS inventory management; management explained aggressive pricing actions in used oil collection are offsetting lower base oil prices, and inventory costs are lower entering Q2.
• Larry Solow (CJS Securities): Questioned the resilience of Clean Harbors’ business in a potential economic slowdown; management described most segments as “recession resistant” due to the essential nature of environmental services.
• Adam Bubes (Goldman Sachs): Asked about organic growth cadence in Environmental Services and the impact of new field service branches; management expects organic growth to accelerate as weather normalizes and new capacity comes online.

Catalysts in Upcoming Quarters

In the coming quarters, the StockStory team will be monitoring (1) the scaling of the Kimball incinerator and whether it meets or exceeds planned throughput targets, (2) regulatory and customer activity around PFAS remediation following anticipated publication of Clean Harbors’ incineration study, and (3) signs of stabilization or recovery in industrial services as refinery maintenance cycles evolve. Expansion of new processing hubs and field services branches will also be tracked as potential drivers of incremental growth.

Clean Harbors currently trades at a forward P/E ratio of 28.8×. Is the company at an inflection point that warrants a buy or sell? Find out in our free research report.

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