Clean Harbors Revenue Increases in Q2 2023 on Environmental Services Segment Growth

Clean Harbors announced solid Q2 2023 results on favorable pricing, growth in service businesses and demand growth for disposal and recycling.

The Massachusetts-based company reported revenue of $1.4 billion, up from $1.36 billion, or 3 percent, year over year. Co-CEO Eric Gerstenberg applauded the second-quarter performance, emphasizing the momentum of the Clean Harbors' Environmental Services (ES) segment.

"Our second quarter performance underscores the strength of our environmental services segment where our adjusted EBITDA margin climbed by 140 basis points from a year ago," Gerstenberg said. "This is a highly-resilient business that is supported by scarce permanent assets, a strong safety record, technical expertise, a highly-trained workforce, customer relationships and effective capital allocation."

The boost in adjusted EBITDA margin in ES was achieved through revenue growth, pricing initiatives and productivity gains, he noted. Adjusted EBITDA for all lines of business reached $287.5 million, down from $309.1 million in Q2 2022. 

Despite the strong performance in the ES segment, the Safety-Kleen Sustainability Solutions (SKSS) segment faced challenges due to base oil market conditions. The SKSS segment reported unfavorable macro supply dynamics and pricing headwinds in the base oil market. 

 “In Q2, we capitalized on a busy spring turnaround season and solid initial contributions from our recent Thompson Industrial acquisition, leading to revenue growth of 11% in Industrial Services," said Gerstenberg. "Revenue in Safety-Kleen Environmental Services grew 16%, while Field Services revenue was up 7%. Within Technical Services, our incineration utilization improved sequentially to 84%, but was down from a year ago due to a higher number of maintenance days. We continued to see a healthy mix of waste volumes as our average incineration price was up 8% in the quarter while our landfill average price per ton increased 21% on strong base business.”

The company also achieved its best second-quarter safety results, registering a Total Recordable Incident Rate (TRIR) of 0.68.

Looking ahead, Clean Harbors remains optimistic about its ES segment. However, challenges are expected to persist in the SKSS segment due to ongoing market conditions. As a result, the company expects Adjusted EBITDA to decrease between 7 percent and 9 percent in the third quarter of 2023 compared to the previous year.

“Within SKSS, we expect challenging market conditions to extend throughout the remainder of the year given that the summer driving season did not stabilize pricing due to global oversupply and destocking efforts by U.S. customers," commented Mike Battles, Co-CEO. " Therefore, we expect base oil and blended pricing to remain under pressure in the back half of 2023. Our near-term focus will continue to be on effectively managing waste oil collection to supply our plants with the lowest cost gallons possible and running our plants efficiently while continuing to grow overall sales volumes. Even though we are lowering our 2023 expectations for the SKSS segment again due to current market factors, we fully expect that reduction to be offset by profitable growth in ES."