Clean Harbors (CLH) Q3 2025: PFAS Revenue Jumps 25%, Waste Network Drives Margin Expansion
PFAS, per- and polyfluoroalkyl substances, revenue acceleration and robust waste volumes offset softness in field and industrial services, fueling Clean Harbors’ margin expansion and record free cash flow. Strategic capital deployment, network leverage, and validated PFAS solutions position CLH for continued resilience and upside as macro headwinds persist into 2026.
Summary
- PFAS Solutions: EPA-validated incineration and a growing pipeline fuel Clean Harbors’ environmental services momentum.
- Waste Network Leverage: High incinerator utilization and landfill volumes underpin margin gains despite segment volatility.
- Capital Discipline: Internal investment and buybacks outpace M&A as management prioritizes organic growth and returns.
Performance Analysis
Clean Harbors’ Q3 2025 results highlight the company’s ability to drive profitable growth through operational leverage in its waste management network, even as certain end markets remained pressured. Environmental Services (ES), which accounts for the majority of revenue, delivered a 3% top-line increase and 7% adjusted EBITDA growth, with margin rising for the fourteenth consecutive quarter. The segment benefited from double-digit growth in technical services—notably incineration and landfill volumes, the latter up 40% year-over-year—offsetting declines in field services (down 11%) and industrial services (down 4%) tied to deferred projects in chemical and refining verticals.
Within Safety-Kleen Sustainable Solutions (SKSS), management navigated persistent base oil pricing headwinds by lowering waste oil collection costs and expanding direct lubricant sales, resulting in a 100 basis point margin improvement and stable adjusted EBITDA. Corporate costs rose on insurance and healthcare inflation, but were partially offset by cost control. Record free cash flow and a $50 million share buyback underscored Clean Harbors’ capital discipline. The company’s revised full-year guidance reflects near-term segment softness, but management remains confident in the underlying strength and margin trajectory of its core businesses.
- Incinerator Utilization Resilience: Utilization held at 92% (excluding new Kimball unit), supporting network efficiency and pricing power.
- Free Cash Flow Upside: Q3 delivered record adjusted free cash flow, up $86 million year-over-year, driven by disciplined CapEx and working capital.
- Field and Industrial Services Drag: Revenue shortfalls in episodic project work and customer cost deferrals weighed on consolidated results.
Overall, Clean Harbors’ diversified waste network and strategic pricing initiatives enabled margin expansion and cash generation, even as certain cyclical service lines lagged.
Executive Commentary
"Our Q3 performance reflected year-on-year growth from an increase in overall waste volumes into our network. Pricing gains and increased productivity, even in an environment where softer conditions resulting from macroeconomic factors, have impacted some customers."
Eric Gerstenberg, Co-Chief Executive Officer
"Our Q3 cash flow performance was exceptional. Operating cash flow of $302 million and a Q3 record adjusted free cash flow of $231 million, which was up $86 million year-on-year, underscores the cash generative nature of our business model."
Eric Dugas, EVP and Chief Financial Officer
Strategic Positioning
1. PFAS Commercialization and Regulatory Validation
PFAS, a class of persistent “forever chemicals,” is emerging as a secular growth engine for Clean Harbors. The completion and EPA publication of a rigorous incineration study at the Utah facility validated the company’s ability to safely destroy PFAS at commercial scale. With PFAS-related revenue expected to reach $100–$120 million in 2025 (up 20–25%), and a project pipeline growing 15–20% quarterly, Clean Harbors is positioned as a go-to provider for remediation, analytics, and disposal as regulations tighten and customers seek compliant solutions.
2. Waste Network Scale and Pricing Power
Incineration and landfill assets remain the backbone of margin expansion, with utilization rates at or near historical highs. The addition of the Kimball incinerator is driving both volume and transportation efficiencies. Technical services posted 12% revenue growth, and the company’s ability to route diverse waste streams from multiple verticals into its network underpins pricing leverage and operational stability, even as certain customer segments delay spending.
3. Internal Investment and Capital Allocation Discipline
Clean Harbors is leaning into high-return organic projects over M&A in the current environment. The newly announced $210–$220 million SDA unit, a solvent de-asphalting plant, will upgrade a byproduct into premium 600N base oil, targeting a 6–7 year payback and $30–$40 million in annual EBITDA. Management sees a pipeline of $500 million in internal investments, including network expansions and processing upgrades, as more accretive than current acquisition targets, while opportunistic share buybacks continue to supplement returns.
4. SKSS Stabilization and Margin Focus
SKSS, the re-refining and lubricants segment, is stabilizing through cost initiatives and product mix improvements. Margin gains were achieved by lowering waste oil collection costs and growing higher-margin lubricant sales, while maintaining collection volumes. The new SDA project will further shift the segment up the value chain, reducing exposure to base oil price swings and supporting future margin expansion.
5. M&A Pipeline Remains Active but Selective
Management continues to evaluate both large and small M&A opportunities, but remains patient and disciplined in deployment. Synergy potential and valuation are key filters, with internal investments currently offering more attractive returns. The balance sheet and cash flow profile provide flexibility should the right deal emerge.
Key Considerations
This quarter’s results reinforce Clean Harbors’ ability to leverage its asset-intensive network, pricing discipline, and emerging regulatory tailwinds for PFAS to offset cyclical end market weakness. Investors should weigh the following:
- PFAS Regulatory Tailwind: EPA validation and growing customer pipeline position Clean Harbors as a leader in PFAS remediation, with multi-year secular growth potential.
- Waste Network Utilization: High incinerator and landfill volumes continue to drive margin expansion, even as episodic project work remains soft.
- Internal Investment Focus: A $500 million pipeline of organic projects offers higher returns and lower risk than current M&A prospects.
- Healthcare and Cost Inflation: Elevated employee healthcare costs were a headwind, but management is taking steps to mitigate future increases.
- Field and Industrial Services Volatility: Deferred customer spending in chemicals and refining will likely persist into early 2026, limiting near-term upside from these segments.
Risks
Cyclical end markets in industrial services and field services remain under pressure, with recovery not expected until the spring turnaround season. Healthcare and insurance cost inflation could persist, pressuring SG&A. Base oil price volatility remains a risk for SKSS, though internal projects aim to mitigate exposure. Regulatory delays or project deferrals in PFAS could slow expected growth, and acquisition integration risk remains should larger deals materialize.
Forward Outlook
For Q4 2025, Clean Harbors guided to:
- Adjusted EBITDA range of $1.155 billion to $1.175 billion for the full year
- Adjusted free cash flow midpoint raised to $475 million (over 30% growth YoY)
For full-year 2025, management expects:
- Environmental Services adjusted EBITDA up more than 5% YoY
- SKSS adjusted EBITDA of $140 million, with upside potential
Management highlighted continued strength in waste collection and disposal, margin expansion initiatives, and a robust PFAS and project pipeline as offsetting ongoing field and industrial services softness.
- Incinerator and landfill utilization to remain strong through year-end
- Recovery in industrial and field services not expected before spring 2026
Takeaways
Clean Harbors continues to demonstrate the resilience and cash generation of its network-centric business model, leveraging pricing power and regulatory tailwinds even as certain service lines remain cyclical.
- PFAS Momentum: EPA validation and a growing pipeline make PFAS a multi-year growth lever with accelerating revenue contribution.
- Margin Expansion: Network utilization and internal cost initiatives are driving sustained margin gains, even as field and industrial services lag.
- Organic Investment Priority: The SDA unit and a robust pipeline of internal projects suggest continued focus on high-return, low-risk capital deployment over near-term M&A.
Conclusion
Despite near-term volatility in certain segments, Clean Harbors’ Q3 results underscore the strength of its integrated waste network, emerging PFAS leadership, and disciplined capital allocation. The company is well-positioned for margin-driven growth as macro conditions stabilize and regulatory drivers accelerate.
Industry Read-Through
Clean Harbors’ results reinforce a broader trend in the environmental services sector: asset-intensive waste networks with regulatory tailwinds are best positioned for margin growth and cash generation. The company’s PFAS commercialization and EPA validation set a benchmark for peers, while high utilization rates highlight the value of scale in hazardous waste infrastructure. Companies exposed to cyclical industrial and field services should expect continued volatility, but those with diversified customer bases and pricing power can offset sector-specific downturns. The shift toward internal investment over M&A may become more common as industry valuations rise and organic projects offer superior returns.