CLH Q3 Deep Dive: Waste Network Growth Offset by Industrial Slowdown, Capital Projects Announced

Environmental and industrial services company Clean Harbors (NYSE:CLH) fell short of the markets revenue expectations in Q3 CY2025 as sales only rose 1.3% year on year to $1.55 billion. Its GAAP profit of $2.21 per share was 7.7% below analysts’ consensus estimates.

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StockStory’s Take

Clean Harbors reported third-quarter results that fell short of Wall Street’s expectations, with a sharp negative reaction from the market. Management attributed the underperformance to persistent slowness in field and industrial services, as well as higher-than-expected employee healthcare costs. Co-Chief Executive Officer Eric Gerstenberg described the results as “slightly short of our expectations due primarily to slowness in field services and industrial services, combined with some higher-than-anticipated employee health care costs.” Despite these challenges, the company highlighted continued strength in waste collection and disposal and noted positive momentum in its core Environmental Services segment.

Looking forward, Clean Harbors’ guidance is shaped by optimism around the ongoing ramp-up of its new Kimball incinerator, steady demand for PFAS (per- and polyfluoroalkyl substances) remediation, and expectations for margin improvement from operational initiatives. However, management acknowledged that a meaningful recovery in industrial and field services is not anticipated until at least the spring turnaround season. CFO Eric Dugas emphasized, “We are maintaining our full year SG&A guidance as a percentage of revenue in the low to mid-12% range,” and noted that investments in processing capabilities and capital projects are expected to boost long-term profitability.

Key Insights from Management’s Remarks

Management pointed to resilient waste volumes and project activity, but acknowledged the drag from slower industrial and field services, as well as higher costs, as the main reasons for missing analyst expectations.

• Waste network utilization remains strong: Demand for incineration and landfill services was robust, with incineration utilization at 92%, excluding the ramping Kimball unit. Technical Services revenue grew 12%, driven by steady demand and project diversity.
• PFAS remediation pipeline expanding: The company’s PFAS incineration study, completed with the EPA and Department of Defense, validated its ability to destroy these chemicals at commercial scale. PFAS-related sales are expected to rise 20–25% this year, with management emphasizing accelerating future opportunities as regulatory and customer interest grows.
• Industrial and field services softness: Field Services revenue dropped 11%, and Industrial Services declined 4% year over year, attributed to the absence of large response projects and continued cost pressure in the chemical and refining sectors. Management does not expect a near-term rebound in these segments.
• Operational efficiency and margin focus: Margin improvement was supported by pricing actions, cost controls, and network leverage, with all Environmental Services sub-segments showing year-over-year margin expansion. The company highlighted improved labor management and reduced use of subcontractors as factors positioning it for future recovery.
• Capital deployment and project announcements: Clean Harbors announced a $210–$220 million investment in a new Solvent De-Asphalting (SDA) unit to produce high-value base oils, targeting a 6–7 year payback. The company also increased direct lubricant sales, expanded Group III base oil production, and continued to prioritize capital allocation toward both organic projects and M&A.

Drivers of Future Performance

Management’s outlook is driven by ongoing investments in processing capacity, continued PFAS project demand, and the expectation that industrial and field services will recover as macroeconomic conditions improve.

• Incinerator and network expansion: The ramp-up of the Kimball incinerator is expected to deliver higher waste processing volumes and improved transportation efficiencies, supporting both revenue growth and network margins in coming quarters.
• PFAS and remediation growth: Management sees growing customer demand for PFAS destruction solutions, underpinned by recent regulatory validation and a rising project pipeline. This is expected to remain a long-term growth engine as regulations and customer requirements tighten.
• Industrial and field services recovery timing: A return to stronger industrial and field services activity is not anticipated until the spring turnaround season, with management highlighting that current budgets reflect ongoing caution among chemical and refining customers. The company is focused on cost discipline until demand returns.

Catalysts in Upcoming Quarters

Looking ahead, the StockStory team will focus on (1) the pace of volume and margin gains as the Kimball incinerator reaches full capacity, (2) whether PFAS project wins continue to accelerate as regulatory and customer activity increases, and (3) signs of stabilization or recovery in industrial and field services as the spring turnaround season approaches. Execution on capital projects and efficiency initiatives also remains a key marker for Clean Harbors’ progress.

Clean Harbors currently trades at $217.92, down from $246.24 just before the earnings. At this price, is it a buy or sell? The answer lies in our full research report (it’s free for active Edge members).

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