Clean Harbors Announces Third-Quarter 2024 Financial Results

  • Posts 12% Q3 Revenue Increase to $1.53 Billion, Led by Strength in Field Services
  • Generates 26% Q3 Net Income Growth to $115.2 Million, or EPS of $2.12
  • Achieves 18% Growth in Q3 Adjusted EBITDA to $301.8 Million with Margin of 19.7%
  • Revises Full-Year 2024 Adjusted EBITDA and Adjusted Free Cash Flow Guidance
  • Commercial Launch of Kimball, Nebraska Incinerator Planned for November

NORWELL, Mass.–(BUSINESS WIRE)–Clean Harbors, Inc. (“Clean Harbors” or the “Company”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the third quarter ended September 30, 2024.

“We delivered profitable growth in both our operating segments while improving our consolidated Adjusted EBITDA margin by 100 basis points from the same period a year ago,” said Mike Battles, Co-Chief Executive Officer. “Underlying demand remained healthy across our Environmental Services (ES) segment. Despite higher Adjusted EBITDA, our Safety-Kleen Sustainability Solutions (SKSS) segment results reflected softer-than-expected demand and pricing of base oil and lubricants throughout the quarter with a more meaningful decline in September. We continue to prioritize safety with industry-leading results, achieving a Total Recordable Incident Rate (TRIR) of 0.69 year-to-date through September.”

Third-Quarter 2024 Results

Revenues grew 12% to $1.53 billion, compared with $1.37 billion in the same period of 2023. Income from operations increased 25% to $192.3 million, compared with $154.4 million in the third quarter of 2023.

Net income was up 26% to $115.2 million, or $2.12 per diluted share, compared with $91.3 million, or $1.68 per diluted share, for the same period in 2023.

Adjusted EBITDA (see description and reconciliation below) grew 18% to $301.8 million, compared with $255.0 million in the same period of 2023.

Third-Quarter 2024 Segment Review

“Our ES segment achieved a 13% increase in revenue and 15% growth in Adjusted EBITDA, which generated a 40-basis point improvement in segment margin. The third quarter marks our tenth consecutive quarter of year-over-year margin improvement in the ES segment,” said Eric Gerstenberg, Co-Chief Executive Officer. “ES growth was led by Field Services, which grew 68%, reflecting the HEPACO acquisition earlier this year and healthy organic growth in our legacy business. Technical Services revenue grew 8% on higher network volumes and pricing. Incineration utilization was 89% for the quarter, up from 86% in the same period a year ago. Average incineration pricing increased 6%. Safety-Kleen Environmental Services posted another consistent performance with 8% revenue growth in the ES segment. Our Industrial Services business experienced a difficult environment in Q3 resulting from weakness in the U.S. refinery space, where we saw work deferred and fall turnarounds scaled back given industry challenges in that vertical.”

“SKSS results improved from the third quarter a year ago. Revenues grew 6%, reflecting the contribution of our Noble Oil acquisition in March, while Adjusted EBITDA increased 32%,” said Battles. “However, current supply overhangs in the base oil market resulted in lower demand and pricing pressure, which caused a weaker-than-anticipated EBITDA performance this quarter.”

Business Outlook and Financial Guidance

“As we enter the final quarter of 2024, the overall demand environment in North America is healthy, and the outlook for our ES segment is positive,” Gerstenberg said. “Favorable market dynamics, including reshoring, infrastructure spending, PFAS, and other regulatory changes should continue to fuel growth opportunities for Clean Harbors. We are meeting these opportunities with new capacity and capabilities. The commercial launch of our new incinerator in Kimball, Nebraska is scheduled for November, providing an essential outlet for additional hazardous waste volumes as it ramps up over the next 12-18 months. On the services side, the addition of HEPACO’s emergency response capabilities creates a foundation for continued growth in Field Services. We also expect our Technical Services and SK Environmental businesses to grow steadily, feeding volumes into Kimball and the other facilities in our network. In Industrial Services, we are taking actions to counter the weakness in fall turnarounds and look to return that business to revenue growth in 2025.”

“Within SKSS, we remain committed to stabilizing our business amidst the current pricing challenges and weak demand for base oil. We are taking decisive actions to reduce production and collection costs while also pursuing growth initiatives in Group III, blended sales, and our partnership with Castrol. These programs have the potential to reduce the carbon footprints of businesses significantly, and we believe they will gain traction as more customers look to Safety-Kleen as their sustainability partner in the coming years,” Battles concluded. “Overall, despite some market obstacles related to base oil and refining customers, we expect to end 2024 with strong momentum across our network of disposal facilities and service offerings giving us a positive trajectory into 2025.”

Based on its third-quarter performance and current forecast, Clean Harbors revised its full-year 2024 guidance and now expects:

  • Adjusted EBITDA in the range of $1.10 billion to $1.12 billion, or a midpoint of $1.11 billion, which represents 10% growth year-over-year. This Adjusted EBITDA range is based on anticipated GAAP net income in the range of $375 million to $395 million.
  • Adjusted free cash flow in the range of $280 million to $320 million, or a midpoint of $300 million, which includes spending related to the Kimball incinerator and the Company’s Baltimore expansion. The Company is revising this range due to its new Adjusted EBITDA guidance and increased short-term working capital levels. This new range is based on anticipated net cash from operating activities in the range of $680 million to $750 million.

Non-GAAP Results

Clean Harbors reports Adjusted EBITDA, which is a non-GAAP financial measure and should not be considered an alternative to net income or other measurements under generally accepted accounting principles (GAAP) but viewed only as a supplement to those measurements. Adjusted EBITDA is not calculated identically by all companies, and therefore the Company’s measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Clean Harbors believes that Adjusted EBITDA provides additional useful information to investors because the Company’s management routinely evaluates the performance of its businesses based upon levels of Adjusted EBITDA, which excludes certain expenses relating to transactions not reflective of our core operations, and because the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved. The Company defines Adjusted EBITDA consistent with its existing revolving credit agreement, as described in the following reconciliation showing the differences between reported GAAP net income and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages):

Three Months Ended

Nine Months Ended

September 30,

2024

September 30,

2023

September 30,

2024

September 30,

2023

Net income

$

115,213

$

91,340

$

318,325

$

279,507

Accretion of environmental liabilities

3,618

3,388

10,139

10,281

Stock-based compensation

5,837

4,291

20,690

14,809

Depreciation and amortization

100,063

92,970

295,632

267,425

Other expense (income), net

1,123

(334

)

2,431

833

Loss on early extinguishment of debt

2,362

Interest expense, net of interest income

35,779

29,696

100,767

80,400

Provision for income taxes

40,181

33,666

111,741

102,044

Adjusted EBITDA

$

301,814

$

255,017

$

859,725

$

757,661

Adjusted EBITDA Margin

19.7

%

18.7

%

19.3

%

18.6

%

Adjusted Free Cash Flow Reconciliation

Clean Harbors reports adjusted free cash flow, which is a non-GAAP financial measure that should not be considered an alternative to net cash from operating activities or other measurements under GAAP. The Company considers adjusted free cash flow to be a measurement of liquidity that provides useful information to investors about its ability to generate cash. The Company defines adjusted free cash flow as net cash from operating activities excluding cash impacts of items derived from non-operating activities, less additions to property, plant and equipment plus proceeds from sale and disposal of fixed assets. Adjusted free cash flow is not calculated identically by all companies, and therefore the Company’s measurement of adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

An itemized reconciliation between reported GAAP net cash from operating activities and adjusted free cash flow is as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands):

Three Months Ended

Nine Months Ended

September 30,

2024

September 30,

2023

September 30,

2024

September 30,

2023

Adjusted free cash flow

Net cash from operating activities

$

239,239

$

220,119

$

473,833

$

455,692

Additions to property, plant and equipment

(96,803

)

(107,608

)

(369,826

)

(311,906

)

Proceeds from sale and disposal of fixed assets

2,058

2,185

6,353

5,129

Adjusted free cash flow

$

144,494

$

114,696

$

110,360

$

148,915

Adjusted EBITDA Guidance Reconciliation

An itemized reconciliation between projected GAAP net income and projected Adjusted EBITDA is as follows (in millions):

For the Year Ending

December 31, 2024

Projected net income

$375

to

$395

Adjustments:

Accretion of environmental liabilities

15

to

14

Stock-based compensation

27

to

30

Depreciation and amortization

405

to

395

Interest expense, net

145

to

140

Provision for income taxes

133

to

146

Projected Adjusted EBITDA

$1,100

to

$1,120

Adjusted Free Cash Flow Guidance Reconciliation

An itemized reconciliation between projected GAAP net cash from operating activities and projected adjusted free cash flow is as follows (in millions):

For the Year Ending

December 31, 2024

Projected net cash from operating activities

$680

to

$750

Additions to property, plant and equipment

(410)

to

(440)

Proceeds from sale and disposal of fixed assets

10

to

10

Projected adjusted free cash flow

$280

to

$320

Conference Call Information

Clean Harbors will conduct a conference call for investors today at 9:00 a.m. (ET) to discuss the information contained in this press release. During the call, management will discuss Clean Harbors’ financial results, business outlook and growth strategy. Investors who wish to listen to the webcast and view the accompanying slides should visit the Investor Relations section of the Company’s website at www.cleanharbors.com. The live call also can be accessed by dialing 877.709.8155 or 201.689.8881 prior to the start time. If you are unable to listen to the live conference call, the webcast will be archived on the Company’s website.

About Clean Harbors

Clean Harbors (NYSE: CLH) is North America’s leading provider of environmental and industrial services. The Company serves a diverse customer base, including a majority of Fortune 500 companies. Its customer base spans a number of industries, including chemical, manufacturing and refining, as well as numerous government agencies. These customers rely on Clean Harbors to deliver a broad range of services such as end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services. Through its Safety-Kleen subsidiary, Clean Harbors also is a leading provider of parts washers and environmental services to commercial, industrial and automotive customers, as well as North America’s largest re-refiner and recycler of used oil. Founded in 1980 and based in Massachusetts, Clean Harbors operates in the United States, Canada, Mexico, Puerto Rico and India. For more information, visit www.cleanharbors.com.

Safe Harbor Statement

Any statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “seeks,” “should,” “estimates,” “projects,” “may,” “likely,” “potential” or similar expressions. Such statements may include, but are not limited to, statements about the Company’s future financial and operating results, plans, strategy, objectives and goals, cost management initiatives, contingent liabilities, liquidity, business and market conditions, customer demand, acquisitions, growth opportunities, expectations, and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors’ management as of the date of this press release only and are subject to certain risks and uncertainties that could cause actual results to differ materially, including, without limitation, those items identified as “Risk Factors” in Clean Harbors’ most recently filed reports on Form 10-K and Form 10-Q. Forward-looking statements are neither historical facts nor assurances of future performance. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. Clean Harbors undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements other than through its filings with the Securities and Exchange Commission, which may be viewed in the “Investors” section of Clean Harbors’ website at www.cleanharbors.com.

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

Three Months Ended

Nine Months Ended

September 30,

September 30,

2024

2023

2024

2023

Revenues

$

1,529,422

$

1,365,696

$

4,458,836

$

4,070,983

Cost of revenues (exclusive of items shown separately below)

1,055,599

943,951

3,062,211

2,822,977

Selling, general and administrative expenses

177,846

171,019

557,590

505,154

Accretion of environmental liabilities

3,618

3,388

10,139

10,281

Depreciation and amortization

100,063

92,970

295,632

267,425

Income from operations

192,296

154,368

533,264

465,146

Other (expense) income, net

(1,123

)

334

(2,431

)

(833

)

Loss on early extinguishment of debt

(2,362

)

Interest expense, net

(35,779

)

(29,696

)

(100,767

)

(80,400

)

Income before provision for income taxes

155,394

125,006

430,066

381,551

Provision for income taxes

40,181

33,666

111,741

102,044

Net income

$

115,213

$

91,340

$

318,325

$

279,507

Earnings per share:

Basic

$

2.14

$

1.69

$

5.90

$

5.17

Diluted

$

2.12

$

1.68

$

5.87

$

5.14

Shares used to compute earnings per share – Basic

53,951

54,122

53,936

54,097

Shares used to compute earnings per share – Diluted

54,229

54,419

54,229

54,411

CLEAN HARBORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

September 30, 2024

December 31, 2023

Current assets:

(unaudited)

Cash and cash equivalents

$

512,371

$

444,698

Short-term marketable securities

82,371

106,101

Accounts receivable, net

1,100,660

983,111

Unbilled accounts receivable

204,308

107,859

Inventories and supplies

376,564

327,511

Prepaid expenses and other current assets

78,204

82,939

Total current assets

2,354,478

2,052,219

Property, plant and equipment, net

2,452,312

2,193,318

Other assets:

Operating lease right-of-use assets

246,061

187,060

Goodwill

1,485,065

1,287,736

Permits and other intangibles, net

708,935

602,797

Other long-term assets

59,159

59,739

Total other assets

2,499,220

2,137,332

Total assets

$

7,306,010

$

6,382,869

Current liabilities:

Current portion of long-term debt

$

15,102

$

10,000

Accounts payable

504,206

451,806

Deferred revenue

103,291

95,230

Accrued expenses and other current liabilities

398,236

397,157

Current portion of closure, post-closure and remedial liabilities

30,477

26,914

Current portion of operating lease liabilities

70,539

56,430

Total current liabilities

1,121,851

1,037,537

Other liabilities:

Closure and post-closure liabilities, less current portion

105,375

105,044

Remedial liabilities, less current portion

94,384

97,885

Long-term debt, less current portion

2,773,659

2,291,717

Operating lease liabilities, less current portion

179,040

131,743

Deferred tax liabilities

356,150

353,107

Other long-term liabilities

147,241

118,330

Total other liabilities

3,655,849

3,097,826

Total stockholders’ equity, net

2,528,310

2,247,506

Total liabilities and stockholders’ equity

$

7,306,010

$

6,382,869

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

Nine Months Ended

September 30, 2024

September 30, 2023

Cash flows from operating activities:

Net income

$

318,325

$

279,507

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

295,632

267,425

Allowance for doubtful accounts

5,674

2,620

Amortization of deferred financing costs and debt discount

4,623

4,036

Accretion of environmental liabilities

10,139

10,281

Changes in environmental liability estimates

4,347

3,258

Deferred income taxes

(418

)

(356

)

Other expense, net

2,431

833

Stock-based compensation

20,690

14,809

Loss on early extinguishment of debt

2,362

Environmental expenditures

(19,679

)

(24,064

)

Changes in assets and liabilities, net of acquisitions:

Accounts receivable and unbilled accounts receivable

(145,647

)

(46,445

)

Inventories and supplies

(39,673

)

12,691

Other current and long-term assets

(47,826

)

(18,190

)

Accounts payable

30,004

(40,013

)

Other current and long-term liabilities

35,211

(13,062

)

Net cash from operating activities

473,833

455,692

Cash flows used in investing activities:

Additions to property, plant and equipment

(369,826

)

(311,906

)

Proceeds from sale and disposal of fixed assets

6,353

5,129

Acquisitions, net of cash acquired

(474,011

)

(119,596

)

Proceeds from sale of business

750

750

Additions to intangible assets including costs to obtain or renew permits

(2,545

)

(1,507

)

Purchases of available-for-sale securities

(73,682

)

(104,329

)

Proceeds from sale of available-for-sale securities

100,021

84,390

Net cash used in investing activities

(812,940

)

(447,069

)

Cash flows from (used in) financing activities:

Change in uncashed checks

(5,852

)

3,004

Tax payments related to withholdings on vested restricted stock

(11,514

)

(10,886

)

Repurchases of common stock

(30,215

)

(18,000

)

Deferred financing costs paid

(8,316

)

(6,371

)

Payments on finance leases

(23,596

)

(11,594

)

Principal payments on debt

(11,327

)

(621,475

)

Proceeds from issuance of debt, net of discount

499,375

500,000

Borrowing from revolving credit facility

114,000

Payment on revolving credit facility

(114,000

)

Net cash from (used in) financing activities

408,555

(165,322

)

Effect of exchange rate change on cash

(1,775

)

61

Increase (decrease) in cash and cash equivalents

67,673

(156,638

)

Cash and cash equivalents, beginning of period

444,698

492,603

Cash and cash equivalents, end of period

$

512,371

$

335,965

Supplemental information:

Cash payments for interest and income taxes:

Interest paid

$

134,177

$

100,813

Income taxes paid, net of refunds

100,752

107,328

Non-cash investing activities:

Property, plant and equipment accrued

43,604

29,127

ROU assets obtained in exchange for operating lease liabilities

98,927

61,741

ROU assets obtained in exchange for finance lease liabilities

53,391

26,317

Supplemental Segment Data (in thousands)

Three Months Ended

Revenue

September 30, 2024

September 30, 2023

Third-Party Revenues

Intersegment Revenues (Expenses), net

Direct Revenues

Third-Party Revenues

Intersegment Revenues (Expenses), net

Direct Revenues

Environmental Services

$

1,287,650

$

9,537

$

1,297,187

$

1,135,279

$

11,084

$

1,146,363

Safety-Kleen Sustainability Solutions

241,676

(9,537

)

232,139

230,305

(11,084

)

219,221

Corporate Items

96

96

112

112

Total

$

1,529,422

$

$

1,529,422

$

1,365,696

$

$

1,365,696

Nine Months Ended

Revenue

September 30, 2024

September 30, 2023

Third-Party Revenues

Intersegment Revenues (Expenses), net

Direct Revenues

Third-Party Revenues

Intersegment Revenues (Expenses), net

Direct Revenues

Environmental Services

$

3,746,227

$

32,853

$

3,779,080

$

3,357,743

$

31,397

$

3,389,140

Safety-Kleen Sustainability Solutions

712,312

(32,853

)

679,459

712,905

(31,397

)

681,508

Corporate Items

297

297

335

335

Total

$

4,458,836

$

$

4,458,836

$

4,070,983

$

$

4,070,983

Three Months Ended

Nine Months Ended

Adjusted EBITDA

September 30, 2024

September 30, 2023

September 30, 2024

September 30, 2023

Environmental Services

$

332,502

$

288,982

$

956,892

$

822,949

Safety-Kleen Sustainability Solutions

41,226

31,146

122,402

126,024

Corporate Items

(71,914

)

(65,111

)

(219,569

)

(191,312

)

Total

$

301,814

$

255,017

$

859,725

$

757,661

Contacts

Eric J. Dugas

EVP and Chief Financial Officer

Clean Harbors, Inc.

781.792.5100

InvestorRelations@cleanharbors.com

Jim Buckley

SVP Investor Relations

Clean Harbors, Inc.

781.792.5100

Buckley.James@cleanharbors.com