Clean Harbors, Inc. (CLH) - Q1 2026 10-Q Summary
Business Context and Reporting Period
Clean Harbors, Inc. is a leading provider of environmental and industrial services in North America, operating through two primary segments: Environmental Services and Safety-Kleen Sustainability Solutions (SKSS). This report covers the quarterly period ended March 31, 2026. The company serves over 350,000 customers, including the majority of Fortune 500 companies, offering hazardous waste management, emergency response, industrial cleaning, and recycling services.
Key Financial Metrics
| Metric | Q1 2026 | Q1 2025 |
|---|---|---|
| Total Revenues | $1,459.5 million | $1,432.0 million |
| Net Income | $63.2 million | $58.7 million |
| Diluted EPS | $1.19 | $1.09 |
| Adjusted EBITDA | $247.9 million | $234.9 million |
| Operating Cash Flow | $6.3 million | $1.6 million |
| Adjusted Free Cash Flow | ($75.8 million) | ($115.7 million) |
| Total Debt (Carrying Value) | $2.77 billion | $2.76 billion |
| Cash & Marketable Securities | $669.0 million | $687.2 million (Q4 2025) |
Material Changes vs. Prior Period
- Revenue Growth: Total revenues increased 1.9% year-over-year. The Environmental Services segment grew 3.6% driven by Technical Services and Field/Emergency Response, while SKSS revenues declined 7.1% due to lower oil product pricing.
- Profitability: Net income rose 7.7% to $63.2 million. Adjusted EBITDA increased 5.5% to $247.9 million, with margins expanding 60 basis points company-wide.
- Acquisition Activity: On March 20, 2026, the company acquired certain environmental businesses of Depot Connect International for $131.8 million, adding two permitted waste treatment facilities and expanding Technical and Field Services.
- Cost Management: Cost of revenues decreased 0.8% overall. SKSS cost of revenues dropped 12.9% due to lower feedstock acquisition costs and strategic headcount reductions.
- Capital Allocation: Capital expenditures were $98.4 million. The company repurchased $25.0 million of common stock, a reduction from $55.0 million in the prior year period.
Outlook, Risks, and Management Commentary
- Guidance: Management anticipates 2026 capital spending, net of disposals, to range between $460.0 million and $520.0 million. This includes significant strategic investments in a Solvent De-Asphalting (SDA) unit ($85 million expected in 2026) and a vacuum truck fleet expansion ($25 million expected in 2026).
- Interest Rates: Net interest expense decreased 6.2% due to lower variable rates and refinancing transactions in October 2025. The effective interest rate on debt was 5.2% as of March 31, 2026.
- Risks: Key risks include environmental and product liability litigation (specifically Safety-Kleen product liability cases and Superfund proceedings), regulatory changes regarding PFAS and waste disposal, and volatility in oil prices affecting the SKSS segment.
- Liquidity: The company maintains a $600.0 million revolving credit facility with $454.7 million available as of March 31, 2026. Management believes operating cash flows will be sufficient to fund operations and capital needs.
Investor Verification Checklist
- Acquisition Integration: Verify the preliminary purchase price allocation for the Depot Connect International acquisition and the timeline for finalizing goodwill and intangible asset valuations.
- SKSS Margin Volatility: Monitor the impact of global oil commodity pricing on SKSS margins, as revenue declines were driven by lower product pricing despite higher volumes in some areas.
- Capital Expenditure Execution: Track progress and spending on the SDA unit and fleet expansion projects, which are excluded from Adjusted Free Cash Flow calculations but represent significant cash outflows.
- Legal Reserves: Review the $16.0 million reserve for legal and administrative proceedings, specifically the status of Safety-Kleen product liability cases and Superfund site liabilities.
- Working Capital Trends: Analyze the increase in accounts receivable and unbilled receivables, which contributed to a reduction in operating cash flow despite higher net income.