Clean Harbors, Inc. CLH reported better-than-expected second-quarter 2026 results, with both earnings and revenues surpassing the Zacks Consensus Estimate.
The earnings beat failed to impress the market, as the stock has dipped 4.7% since the release of the results on July 29.
CLH posted earnings of $3.22 per share, beating the consensus estimate of $2.74 by 17.5%. Revenues came in at $1.74 billion, exceeding the consensus mark of $1.63 billion by 6.8%.
Earnings increased 36.4% year over year, while revenues rose 12%. The strong results reflected healthy disposal and recycling volumes, remediation and PFAS-related projects, strategic pricing initiatives and favorable market prices for re-refined products.
CLH’s Profitability Improves on Broad-Based Growth
Clean Harbors generated net income of $170.5 million, up 34.3% from $126.9 million in the year-ago quarter.
Income from operations increased 27.9% year over year to $268.9 million. Gross profit rose 17.9% to $608.8 million, while the gross margin expanded to 35.1% from 33.3% a year earlier.
Adjusted EBITDA climbed 21.6% to $409 million. The adjusted EBITDA margin expanded 190 basis points to 23.6%, supported by stronger results across both operating segments. The company also maintained solid safety performance, with a year-to-date Total Recordable Incident Rate of 0.46.
Selling, general and administrative expenses increased to $214.6 million from $186.2 million. Higher incentive compensation, insurance expenses, acquisition-related costs and strategic investments contributed to the increase.
Clean Harbors’ ES Segment Gains From Disposal Demand
Environmental Services generated revenues of $1.46 billion, up 7.7% from the year-ago quarter. Segment adjusted EBITDA increased 8% to $406.1 million, while the adjusted EBITDA margin improved 10 basis points to 27.9%.
Technical Services revenues rose 18%, driven by healthy demand for disposal and recycling services, project activity and acquisitions. A large-scale event contributed approximately $30 million to Technical Services revenues during the quarter.
Incinerator utilization, including the new Kimball facility, increased to 91% from 86% a year earlier. The improvement reflected strength in the base business and project volumes. Landfill volumes jumped 7% on continued project wins.
Safety-Kleen Environmental Services revenues advanced 11%, aided by pricing and higher volumes in containerized waste collection and vacuum services. Field Services revenues rose 3% despite a difficult year-over-year comparison that included major emergency-response projects.
The segment has now delivered year-over-year adjusted EBITDA margin expansion for 17 consecutive quarters.
CLH’s SKSS Business Benefits From Higher Pricing
Safety-Kleen Sustainability Solutions revenues surged 40.8% year over year to $278.4 million. The increase primarily resulted from a sharp rise in market prices for base and blended products amid global supply disruptions, along with higher charge-for-oil revenues.
Segment adjusted EBITDA jumped 142.8% to $93 million, while its margin expanded to 33.4% from 19.4% in the prior-year period. The supply-constrained environment widened the company’s re-refining spread and significantly strengthened profitability.
Clean Harbors collected 61 million gallons of waste oil compared with 64 million gallons a year earlier. Although collection volume declined, the company maintained a charge-for-oil rate that was considerably higher year over year.
Blended products represented 21% of total volumes sold, up from 19% a year ago and 16% in the first quarter. Direct blended sales increased to 11% of total volumes from 9% in the year-ago quarter, reflecting new customer wins and closed-loop arrangements.
The result significantly exceeded management’s expectations from the first-quarter earnings call, when it anticipated SKSS’ second-quarter growth to exceed 10% because of improving base oil prices.
Clean Harbors’ Cash Flow Remains Healthy
Cash provided by operating activities was $239.2 million, up from $208 million in the prior-year quarter. Adjusted free cash flow increased to $135.7 million from $133.2 million.
Capital expenditures, net of asset-sale proceeds, were $124 million compared with $87.3 million a year ago. Clean Harbors also repurchased $27.1 million of shares during the quarter, up from $12 million in the year-ago period.
The company ended June with $408.4 million in cash and cash equivalents and $108.4 million in short-term marketable securities. Its current and long-term debt totaled approximately $2.77 billion.
CLH Raises 2026 Guidance
For the third quarter of 2026, Clean Harbors expects adjusted EBITDA to increase 24-28% year over year. Management anticipates continued strength across both operating segments, supported by emergency-response work, PFAS opportunities, reshoring activity and favorable demand for re-refined products.
Following the strong first-half performance, the company raised the midpoint of its full-year adjusted EBITDA guidance by $110 million. Clean Harbors now expects adjusted EBITDA of $1.35-$1.41 billion, with a midpoint of $1.38 billion.
The company also increased the midpoint of its adjusted free cash flow outlook by $30 million. Adjusted free cash flow is now projected between $520 million and $580 million, with a midpoint of $550 million.
The outlook includes anticipated GAAP net income of $481-$531 million and net cash from operating activities of $890 million to $1.01 billion.
Clean Harbors carries a Zacks Rank #3 (Hold) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Earnings Snapshot
Waste Connections, Inc. WCN reported second-quarter 2026 adjusted earnings of $1.50 per share, beating the Zacks Consensus Estimate of $1.35 by 11.1%. Earnings increased 16.3% from $1.29 in the year-ago quarter.
Revenues of $2.56 billion surpassed the consensus estimate of $2.53 billion by 1.1% and rose 6.4% year over year.
Equifax Inc. EFX reported second-quarter 2026 adjusted earnings of $2.25 per share, up 12.5% year over year. The figure beat the Zacks Consensus Estimate of $2.21 by 1.8%.
Revenues increased 10.6% year over year to $1.7 billion and surpassed the consensus mark by a slight margin.
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Waste Connections, Inc. (WCN): Free Stock Analysis ReportThis article originally published on Zacks Investment Research (zacks.com).
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