Clean Harbors (CLH) Q2 FY26 earnings call: guidance and Q&A

Can you provide more detail on the components driving the ES guide increase, especially regarding Industrial Services?

The ES guide increase is driven by the Terra Nova acquisition ($10M), strong Q2 momentum (volume, pricing), and the new long-term contract. Industrial Services is expected to be flattish for the back half, with potential upside from refinery turnarounds. Field Services is performing well.

“The remaining pieces there, certainly, the good momentum we're seeing exiting June and into the second quarter has been strong, both on the volume and continued pricing side. The new contract that we talked about will kick in, in the fourth quarter. We've got some upside from that.”

asked by Patrick Brown · answered by Eric Dugas

How do you view Industrial Services over the next few years, considering deferred maintenance and recent incidents?

Management is bullish on Industrial Services long-term, expecting to be well-positioned for turnarounds when they occur. Specialty lines of business are up 14-16% year-over-year, and the base business is up 2-4%. Data centers are a key growth area to offset any refinery/chemical decline.

“Our growth in our specialty lines of business within Industrial Services is up about 14% to 16% year-over-year. So we feel pretty good about that trend and we focused on putting more branches around our customers to grow our specialty business in the technology that we're deploying there, which is really just nice efforts by the team.”

asked by Patrick Brown · answered by Eric Gerstenberg

What is your competitive edge in the data center market, especially with liquid cooling, and how does the $50 million CapEx support this?

Clean Harbors is leveraging its existing expertise in flushing and passivation from chemical and refinery work, adapting these services for data centers. The $50 million CapEx will build out scale and a structured sales team. The company's industry-leading safety, compliance record, and national footprint are key differentiators.

“So what we're really doing is adapting those services, same thing, same technology into data centers and adding in the chemical passivation that we're doing. So connecting a system, flushing the data center after they built it, removing all the residuals and put protective coatings on to be able to make sure that those cooling systems meet the demand.”

asked by Noah Kaye · answered by Unknown Executive

Can you provide the expected sequential EBITDA cadence for SKSS in Q3 and Q4 to reach the $275 million annual guidance?

Q3 SKSS EBITDA is expected to be slightly better than Q2, assuming elevated pricing conditions persist. Q4 is then expected to trend downwards as base oil prices are assumed to decline, leading to the $275 million full-year target.

“I think pretty similar to what you just mentioned, when we move into Q3, assuming kind of pricing remains at an elevated point kind of similar to where we are today, and then begins to kind of trail back down kind of in Q4. So we see -- what I would tell you is kind of we see Q3 here maybe a little bit better than Q2, just have some differences around some turnaround timing that we had early in Q2, and then Q3 kind of trending down for the balance to arrive at that $275 million.”

asked by James Schumm · answered by Eric Dugas

What strategies are being employed to reduce the cyclicality of the SKSS business, especially regarding long-term contracts?

The company is focusing on increasing Group III product production and driving direct blended programs with closed-loop customer relationships. The goal is to maintain a 'charge for oil' (CFO) model regardless of market price fluctuations, never returning to 'pay for oil' (PFO).

“Yes, Jerry, one of the -- two of the big things obviously that we've talked about. Number one, to reduce the cyclicality is number one around that Group III producing more of that. And number two, utilizing that, our other Group II plus to drive a direct blended program that leads to that closed-loop relationship with key customers.”

asked by Jerry Revich · answered by Eric Gerstenberg

Can you confirm the breakdown of the $110 million EBITDA guidance increase, specifically the contributions from ES and the impact of Corporate?

The analyst's calculation was confirmed: a $15 million increase in ES, offset by a $15 million negative impact from Corporate, contributing to the overall $30 million increase from the initial FY26 guidance.

“Yes, Dave, I think you're spot on there, kind of an increase of $15 million in the ES kind of offset by corporate as you implied. I mean I'd also point out that for the full year, we're up $30 million where we thought we would be kind of back in February when we first entered this year.”

asked by David Manthey · answered by Eric Dugas

What is the free cash flow outlook for FY27/28, and is FY26 likely the peak for growth CapEx initiatives?

The company targets approximately 40% adjusted free cash flow conversion. While strategic CapEx will continue, all investments undergo rigorous screening for high returns. CapEx growth is driven by increasing opportunities, and current investments are aimed at long-term value creation.

“But I would think about it as from an adjusted perspective, roughly 40% this year is how it works out. We're going to continue to drive that number up. I hesitate to put a long-term goal on it at this point, but just know that when we put out some long-range plans here internally, it's growing that 40% basis.”

asked by Nandita Nayar · answered by Eric Dugas