CLH Q2 Deep Dive: Steady Margins Amid Flat Growth, Focus Turns to Pipeline and PFAS

August 12, 2025 at 01:03 AM EDT

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Environmental and industrial services company Clean Harbors (NYSE: CLH) missed Wall Street’s revenue expectations in Q2 CY2025, with sales flat year on year at $1.55 billion. Its non-GAAP profit of $2.36 per share was 1.2% below analysts’ consensus estimates.

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Clean Harbors (CLH) Q2 CY2025 Highlights:

Revenue: $1.55 billion vs analyst estimates of $1.60 billion (flat year on year, 3% miss)
Adjusted EPS: $2.36 vs analyst expectations of $2.39 (1.2% miss)
Adjusted EBITDA: $336.2 million vs analyst estimates of $332.9 million (21.7% margin, 1% beat)
EBITDA guidance for the full year is $1.18 billion at the midpoint, in line with analyst expectations
Operating Margin: 13.6%, in line with the same quarter last year
Organic Revenue was flat year on year (5.2% in the same quarter last year)
Market Capitalization: $12.77 billion

StockStory’s Take

Clean Harbors’ second quarter results were broadly in line with market expectations for profitability but fell short on revenue, as sales remained flat year over year. Management cited continued strength in Environmental Services, improved cost control, and margin gains despite fewer large emergency response projects. Co-CEO Eric Gerstenberg pointed to higher utilization and pricing in core disposal and recycling, while CFO Michael Battles noted that Safety-Kleen’s shift to charging for used oil collection supported margins. Management was cautious around industrial customer spending but highlighted stabilization in key business lines.

Looking forward, Clean Harbors’ guidance is anchored by optimism around ongoing reshoring activity, anticipated growth in remediation projects, and the expanding opportunity in PFAS chemical destruction. Management expects margin improvement in both Environmental Services and Safety-Kleen segments, aided by disciplined pricing and operational efficiencies. CFO Eric Dugas stated, “We see no material changes in our markets today that would prevent us from continuing on our current path of profitable growth.” Management also stressed the potential for additional organic investments and selective M&A to support long-term expansion.

Key Insights from Management’s Remarks

Management attributed the quarter’s outcome to resilient core waste processing demand, improved operational efficiency, and targeted pricing actions, even as revenue growth plateaued.

Margin improvement efforts: Environmental Services achieved its thirteenth consecutive quarter of margin expansion, driven by higher disposal and recycling volumes, diligent labor management, and cost discipline. Field Services and Industrial Services improved margins by focusing on base business and optimizing workforce deployment.
Shift in Safety-Kleen strategy: Safety-Kleen Sustainability Solutions (SKSS) benefited from transitioning to a “charge for oil” model from a “pay for oil” model, which management credited for stabilizing margins despite lower volumes and pricing. This shift also allowed SKSS to better balance plant utilization and pricing volatility.
PFAS opportunity gaining traction: Clean Harbors reported growing interest and project pipeline for its PFAS (per- and polyfluoroalkyl substances) destruction services, as regulatory activity increased at both state and federal levels. The company’s high-temperature incineration technology demonstrated strong performance in recent EPA studies, positioning it for future remediation demand.
Hub facility model expansion: The company advanced its hub strategy, acquiring a new site in Phoenix to replicate its integrated multi-service model. These hubs consolidate operations, foster cross-selling, and yield logistics and real estate efficiencies, supporting both growth and employee retention.
Active capital allocation: Management continued to evaluate internal investments and M&A opportunities, prioritizing bolt-on deals and facility expansions that promise operational synergies and margin enhancement. The balance sheet remains strong, with net leverage at 2x EBITDA and ample capacity for future investments.

Drivers of Future Performance

Management’s outlook for the remainder of the year centers on robust project pipelines, continued pricing discipline, and expected margin gains despite some external headwinds.

Reshoring and industrial investment: Clean Harbors anticipates increased demand from U.S. manufacturing expansion, with customers breaking ground on new projects and driving more waste into its facilities. Management views recent tax incentives and the reshoring trend as supportive of volume growth for disposal and recycling assets.
PFAS regulatory tailwinds: The company expects ongoing federal and state action on PFAS chemicals to accelerate remediation projects. Clean Harbors believes its proven incineration capabilities and end-to-end solutions will position it to capture a meaningful share of this emerging market.
Margin expansion focus: Management is targeting further margin improvement through pricing strategies, cost reductions, and operational efficiencies, particularly in Environmental Services. Risks include potential delays in customer maintenance spending and lingering tariff uncertainty, though guidance does not depend on a major upturn in industrial turnaround activity.

Catalysts in Upcoming Quarters

The StockStory team will be watching (1) the pace of new project starts and volumes tied to U.S. manufacturing expansion and reshoring, (2) regulatory developments and customer adoption in PFAS remediation services, and (3) continued margin progression in Environmental Services and SKSS segments. Advancements in hub facility integration and execution on capital deployment will also be closely tracked.

Clean Harbors currently trades at $238.03, in line with $238.56 just before the earnings. Is the company at an inflection point that warrants a buy or sell? See for yourself in our full research report (it’s free).

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