CLH

Safety Performance

• Year-to-date total recordable incident rate of 0.46, keeping the company on track to hit its 2026 safety goal and outperforming industry benchmarks, with safety serving as a key competitive differentiator.

Strategic Growth Initiatives

• Won a 10-year, $600 million long-term disposal contract with a U.S. manufacturing customer expanding domestic operations, focused on incineration and complex wastewater treatment. The contract starts in Q4 2026, will generate ~$10 million revenue in 2026, and reach full capacity in 2030 with an 80-100 million annual revenue run rate. The contract validates the company's unique disposal and recycling network scale amid the U.S. reshoring trend.
• Launched an integrated 8-line business solution for the growing data center market, with an initial focus on construction-phase services including mechanical flushing, chemical passivation, and water filtration. The company has already won work on 10 sites and is bidding on 12 more, targeting $200 million in annual data center revenue by end of 2028, with $50 million in capital investments planned over three years. The total addressable market for data center services is estimated at $8-$10 billion by 2030.
• PFAS-related work is tracking ahead of expectations, with 30%+ year-over-year growth, driven by the lifting of the U.S. DOD incineration moratorium and growing demand across military and commercial customers. Growth is also seen in the Canadian PFAS market.

Mergers & Acquisitions

• Announced a definitive agreement to acquire ES&H, a Gulf Coast regional field services and emergency response leader, for $305 million in cash. The acquisition, expected to close in H2 2026, adds 13 service branches across Louisiana and Texas, expands Gulf Coast coverage, and brings the high-margin Forefront emergency response planning business. ES&H is expected to generate ~$90 million in annual revenue and ~$30 million in adjusted EBITDA, with $5 million in annual cost synergies, resulting in a post-synergy acquisition multiple of 8.7x.
• Closed a $30 million acquisition of Western Oil, a New England-based field services and waste oil collection business, which will support the New Hampshire re-refinery and add regional spill response capabilities, and is expected to generate $4-$6 million in annual adjusted EBITDA.

Capital Allocation

• The company maintains a strong balance sheet with net debt to EBITDA of ~2x, allowing it to pursue both acquisitions and internal growth investments, while continuing to repurchase shares to return value to shareholders.

• 2026 full-year adjusted EBITDA guidance is raised to $1.35 billion - $1.41 billion (midpoint $1.38 billion), a $110 million increase from prior guidance, implying 18% adjusted EBITDA growth year-over-year.
• At the guidance midpoint, 2026 ES adjusted EBITDA is expected to grow 6-9% year-over-year, including a $5 million contribution from the closed Terra Nova acquisition, with no contribution from the pending ES&H acquisition (guidance will be updated after close).
• 2026 SKSS adjusted EBITDA guidance is raised to $275 million, double 2025's result and $110 million above prior May guidance, reflecting the extended duration of elevated base oil pricing from global supply disruptions. Management expects Q3 adjusted EBITDA to be slightly above Q2 levels, with pricing trailing lower in Q4 to hit the full-year target.
• Corporate negative adjusted EBITDA is expected to increase 8-10% year-over-year, driven by higher incentive compensation, insurance costs, acquisition impacts, and strategic investments, but will remain flat as a percentage of revenue.
• 2026 net CapEx (excluding $85 million for the SDA unit, $25 million for fleet expansion, and $10 million for data center investments) is guided to $370 - $430 million (midpoint $400 million), a $20 million increase from prior guidance due to new growth opportunities and PFAS-related work.
• 2026 adjusted free cash flow guidance is raised to $520 - $580 million (midpoint $550 million), a $30 million increase from prior guidance, reflecting higher expected adjusted EBITDA.
• SG&A as a percentage of revenue for 2026 is expected to be in the mid-to-high 12% range. 2026 depreciation and amortization is expected to be $475 - $485 million.
• Consolidated third quarter 2026 adjusted EBITDA is expected to grow 24-28% year-over-year.

Environmental Services (ES): Q2 revenue grew more than $100 million year-over-year, with Technical Services revenue up 18% on strong disposal and recycling demand; a $30 million large PFAS-related filtration project contributed to this quarter's results. Safety Clean Environmental Services revenue within ES increased 11%, driven by pricing and core offering growth. Incineration utilization rose to 91% from 86% year-over-year, and landfill volumes increased 7%. Field Services revenue grew 3%, while Industrial Services revenue was flat year-over-year, as growth in specialty services offset reduced refinery turnaround activity. ES adjusted EBITDA grew 8% year-over-year, with adjusted EBITDA margin up 10 bps to 27.9%, marking the 17th straight quarter of year-over-year margin improvement and 19th straight quarter of EBITDA growth.

Safety Clean Sustainability Solutions (SKSS): Q2 revenue grew over 40% year-over-year, and adjusted EBITDA jumped 143% due to elevated market pricing from global base oil supply shortages. The segment collected 61 million gallons of waste oil, with growing adoption of its closed-loop offering, where waste oil is collected and re-refined lubricants are sold back to customers. Blended direct gallons sold accounted for 11% of total volume this quarter, and strategic initiatives including Group 3 base oil production drove growth.

• There is substantial uncertainty around the duration of elevated base oil market pricing and how long supply constraints will impact SKSS results.
• Refinery turnaround activity remains depressed year-over-year as refineries run at full capacity, which weighs on Industrial Services revenue in the near term. If turnarounds do not materialize as expected, there will be no upside to current ES guidance.
• SKSS sells a commodity product, so its results remain inherently cyclical, with earnings fluctuating based on global base oil prices regardless of recent strategic initiatives to reduce volatility.

Q: Can you break down the changes to the Environmental Services full-year guidance, and what is the outlook for industrial services as deferred maintenance builds up? / A: Full-year ES guidance was raised by $30 million total, with $10 million from the Terra Nova acquisition and the remainder from strong exiting momentum in volume and pricing, plus small upside from the newly won 10-year manufacturing contract starting in Q4. Industrial services is expected to be flattish year-over-year in the back half, with upside if refinery turnaround activity increases. Specialty lines within industrial services are already growing 14-16% year-over-year, and on-site personnel revenue is up 2-4%. The new data center initiative is expected to more than offset any ongoing refinery turnaround weakness, and refinery turnaround work now makes up a smaller share of the overall industrial business. Management is well-positioned to capture any upcoming turnaround activity.

Q: What is Clean Harbors' competitive differentiation in the data center market, and what will the $50 million in CapEx fund? / A: Clean Harbors has decades of experience providing the core required services (large-scale system flushing, chemical passivation, filtration) to chemical and refinery clients, and is simply adapting these proven capabilities to data center requirements. The $50 million investment will fund additional specialty equipment, tankage, vehicles, and a dedicated sales team focused on hyperscalers and general contractors. The company's industry-leading safety and compliance record and national footprint further strengthen its competitive position, with planned growth remaining modest with significant upside potential.

Q: What is driving the strong 11% growth in Safety Clean Environmental Services, split between pricing and volume? / A: Growth is roughly 60% pricing and 40% volume, with fuel recovery charges contributing to higher pricing contributions. The business is also taking market share, as seen in growing volume trends, and has strong employee retention, with long-tenured local drivers building deep customer relationships that drive retention and growth. All business lines within the segment (box services, containerized waste, parts washer) are growing, and ongoing capital investments in vacuum truck expansion support further growth. The segment has maintained high single-digit growth for many years, with a stable, attractive business model.

Q: What steps is Clean Harbors taking to reduce SKSS cyclicality amid current strong pricing? / A: Two key strategic initiatives are already being deployed to reduce cyclicality: expanding production of higher-value Group 3 base oil, and growing the direct blended product closed-loop model that builds long-term relationships with large customers. Approximately 70-80% of Group 2+ and Group 3 production is already sold to large refiners under more stable relationships. Because SKSS sells a commodity product, some cyclicality is unavoidable, but over a 5-year horizon earnings average out to stable levels, and the strategic initiatives will improve long-term stability.

Q: What capabilities does the ES&H acquisition add, and why expand in the Gulf Coast now? / A: ES&H is not primarily a maritime play, but a complementary field services and emergency response business that expands Clean Harbors' currently light footprint in Louisiana and Texas. It adds 13 new branches, aligning with the company's target of 15-20 new field service branches per year across North America. Its Forefront emergency response planning and training sub-business has built significant regional scale that Clean Harbors can leverage for a national rollout of the offering. ES&H has a small overweight to higher-margin emergency response work, with overall margins similar to Clean Harbors' existing field services business, making it a highly complementary fit.