NORWELL, Mass.–(BUSINESS WIRE)–Clean Harbors, Inc. (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the first quarter ended March 31, 2024.
“Strong demand for our services resulted in a better-than-expected performance in the first quarter,” said Mike Battles, Co-Chief Executive Officer. “We delivered record Q1 Adjusted EBITDA, driving year-over-year margin improvement. Our Environmental Services (ES) segment once again led the way. ES continues to benefit from a growing interest in our broad array of services, high-value disposal and recycling waste streams, pricing execution and an expanding project pipeline, fueled by customer demand. Although the Safety-Kleen Sustainability Solutions (SKSS) segment started slowly in Q1, recent improvements in base oil pricing and ongoing initiatives are encouraging. As always, safety is our first priority. We achieved a good start to the year with a first-quarter Total Recordable Incident Rate (TRIR) of 0.69.”
First-Quarter Results
Revenues grew 5% to $1.38 billion compared with $1.31 billion in the same period of 2023. Income from operations increased to $125.5 million compared with $121.0 million in the first quarter of 2023.
Net income was $69.8 million, or $1.29 per diluted share compared with $72.4 million, or $1.33 per diluted share, for the same period in 2023, and $74.1 million, or $1.36 per diluted share on an adjusted basis in the prior year period. (See reconciliation tables below).
Adjusted EBITDA (see description below) grew 7% to $230.1 million compared with $215.1 million in the same period of 2023.
Q1 2024 Segment Review
“Our ES segment delivered a 16% increase in Adjusted EBITDA and a 130-basis point margin improvement year-over-year on 10% revenue growth,” said Eric Gerstenberg, Co-Chief Executive Officer. “All of our ES businesses grew revenue from a year ago, led by Technical Services with growth of 11%. While incineration utilization came in as expected at 79%, average incineration price was up 6% reflecting pricing actions and higher-value waste streams into our network. Although landfill tonnage was down modestly from a year ago due to weather-related impacts on the West Coast, average price per ton increased 16% on healthy drum volumes and base business. Safety-Kleen Environmental Services continued its strong performance with revenue growth of 9%. On a mix of organic growth and contributions from acquisitions, our Industrial Services and Field Services grew 7% and 10%, respectively, as demand remained robust.”
“In SKSS, the year began with a challenging demand and pricing environment for both base oil and lubricants, particularly for non-contracted volumes,” said Battles. “Demand recovered late in Q1 and prices began an upward trajectory as we exited the quarter. Additionally, we continued to work hard to reduce our waste oil collection costs to help offset pricing weakness. In Q1, we collected 55 million gallons of waste oil – averaging a net charge-for-oil compared with a net pay-for-oil in the prior-year period. We also increased our blended sales volumes by 36% in the quarter as we continue to shift toward more value-added products. Along those lines, we recently partnered with Castrol on its nationwide MoreCircular program, a lower carbon footprint offering. MoreCircular, which uses our re-refined base oils, will also rely on Safety-Kleen to collect their customers’ waste oil.”
Business Outlook and Financial Guidance
“Underlying market conditions, such as reshoring and the regulatory environment, are driving favorable demand for our services, which should allow us to build on our ES momentum in the coming quarters,” Gerstenberg said. “Our disposal and recycling network continues to see strong volumes and a healthy backlog, particularly within incineration. Our Kimball, Nebraska incinerator is quickly approaching commercial launch later this year, adding much-anticipated capacity. The pipeline of potential remediation projects is expanding, particularly in light of emerging PFAS regulations and newly released infrastructure funds.
“The Safety-Kleen Environmental Services business is expected to deliver another year of solid profitable growth in 2024,” Gerstenberg continued. “Within Industrial Services, we are seeing a strong start to the Spring turnaround season as we intensify our focus on margin enhancement through a variety of initiatives. The addition of HEPACO to Field Services provides a strategic platform for growth. We anticipate significant cross-selling and synergy savings from this transaction, especially as we leverage our network of branch offices to internalize work generated by HEPACO’s national call center.”
“Within SKSS, we are encouraged by the recent improvement of the base oil pricing environment as the industry prepares for the start of the summer driving season. Looking ahead, we are actively pursuing our strategy of stabilizing the performance of this business while growing its profitability. Full-time Group III production at one of our re-refineries began in Q1. Our investments in expanding our value-added products, such as blended lubricants, are also beginning to yield results. And the recent partnership agreement with Castrol on a closed loop offering will further that stabilization strategy,” Battles concluded. “Overall, with the completion of the HEPACO acquisition and the trends we are seeing in organic growth, we are confident in our ability to achieve our 2024 growth goals in both operating segments as we work toward realizing our Vision 2027 strategy.”
In the second quarter of 2024, Clean Harbors expects Adjusted EBITDA to grow 7% to 8% from the second quarter of 2023. For full-year 2024, Clean Harbors expects:
- Adjusted EBITDA in the range of $1.1 billion to $1.15 billion or a midpoint of $1.125 billion, which represents 11% growth year-over-year. This Adjusted EBITDA range is based on anticipated GAAP net income in the range of $376 million to $419 million.
- Adjusted free cash flow in the range of $340 million to $400 million, or a midpoint of $370 million, which includes approximately $65 million of spending related to the Kimball incinerator and $20 million for its Baltimore expansion. This range is based on anticipated net cash from operating activities in the range of $740 million to $830 million.
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.
