CLEAN HARBORS INC

Clean Harbors, Inc. is a leading provider of environmental and industrial services throughout North America, operating in the hazardous waste management, industrial services, and used oil re-refining industries. The Company is the largest provider of parts cleaning and related environmental services to general manufacturing, automotive and commercial customers in North America and the largest re-refiner and recycler of used oil in North America. The Company serves over 350,000 customers, including the majority of Fortune 500 companies, across various markets including chemical and manufacturing, as well as numerous government agencies. The industry is subject to extensive and evolving federal, state, provincial and local environmental, health, safety and transportation laws and regulations, which serve as a barrier to rapid entry of competitors.

The Company faces competition from Veolia North America, Enviri Corporation, Republic Services, Waste Management, GFL Environmental and Crystal Clean as the principal national firms with which it competed in 2025. For commercial incineration services, competitors include Veolia North America, EQT Infrastructure and Ross Incineration. For industrial, field, emergency response and Safety-Kleen branches' core services, Crystal Clean in the United States and CEDA, GFL Environmental Inc. and Secure Waste Infrastructure Corp in Canada are the principal national firms. The Company believes its competitive strengths include being a leading provider of environmental and industrial services, operating the largest number of commercial hazardous waste incinerators, landfills, treatment facilities and TSDFs in North America, its integrated network of assets, comprehensive service capabilities, used motor oil collection and re-refining capabilities, effective cost management, a large and diversified customer base, a stable and recurring revenue base, regulatory compliance, and a proven and experienced management team.

The Company generates revenue through two operating segments: Environmental Services and Safety-Kleen Sustainability Solutions (SKSS). The Environmental Services segment offers an array of services including the collection, transportation, treatment, recycling and disposal of hazardous and non-hazardous waste, emergency response services, industrial maintenance and specialty industrial services, and containerized waste and parts washer services. The SKSS segment provides collections services for used oil, used oil filters and other automotive related fluids, and operates oil re-refineries to manufacture base oil, vacuum gas oil (VGO), and formulate and package high quality lubricants. The Company's business model involves a mix of recurring service revenues from long-standing customer relationships and transactional project-based revenues, with a significant portion of revenues derived from previously served customers with recurring needs.

The Environmental Services segment includes Technical Services, which provides waste management and disposal services through a network of service centers, incinerators, landfills, treatment, storage and disposal facilities (TSDFs), wastewater treatment facilities, and solvent recycling centers. As of December 31, 2025, the Company operated ten active incinerators at five facilities with a total annual practical capacity of 631,721 tons ¹. For the year ended December 31, 2025, total incinerator utilization was 85.0% ², and excluding the new Kimball incinerator, utilization across the remaining incinerators was 89% ³ for the full year. The Company operates seven commercial landfills, six of which are designed and permitted for disposal of hazardous waste, with approximately 33.0 million cubic yards ⁴ of remaining capacity in the six commercial hazardous waste landfills as of December 31, 2025. The Industrial Services segment performs industrial cleaning, maintenance and support services at refineries, chemical plants, and other industrial customers. The Field and Emergency Response Services segment provides large remediation projects, spill cleanup, and response to natural disasters. The Safety-Kleen Environmental branches provide containerized waste, parts-washer and vacuum services to small quantity waste generators.

The Safety-Kleen Sustainability Solutions segment's operations include seven re-refineries located in East Chicago, Indiana; Breslau, Ontario; Fallon, Nevada; Kingsland, Georgia; Tacoma, Washington; Wichita, Kansas; and Sanford, North Carolina, with the Newark, California and Rollinsford, New Hampshire re-refineries taken offline in early 2025. In 2025, the Company collected 243 million gallons ⁵ of used oil, which were processed, along with additives and some purchased used oil, into new re-refined base oil, lubricants and byproducts. The segment also sells recycled fuel oil (RFO) and vacuum gas oil (VGO). In 2025, the Company began construction of a state-of-the-art Solvent De-Asphalting (SDA) unit adjacent to its East Chicago, Indiana re-refinery, which is expected to be operational in 2028 ⁶. The SKSS segment also collects and recycles or disposes of related automotive products including antifreeze and oil filters.

In 2024, the Company acquired HEPACO for an all-cash purchase price of $392.2 million ⁷, net of cash acquired, expanding the Environmental Services segment's field services business. Also in 2024, the Company acquired Noble Oil Services, Inc. for an all-cash purchase price of $68.7 million ⁸, net of cash acquired, expanding the SKSS segment's oil collection operations. In 2025, the Company repurchased $250.0 million ⁹ of common stock. On February 18, 2026, the Board authorized a $350.0 million ¹⁰ expansion of the share repurchase program. On February 17, 2026, the Company signed a purchase agreement to acquire certain environmental businesses of Depot Connect International for an all-cash purchase price of approximately $130.0 million ¹¹, subject to customary closing adjustments. During the three months ended December 31, 2025, the Company repurchased 598,012 ¹² shares as part of its publicly announced plans or programs. The Company also executed a refinancing of its Term Loan debt due in 2028 and its Senior Notes due in 2027 in the fourth quarter of 2025, recognizing a loss on early extinguishment of debt of $8.3 million ¹³.

Total revenues for 2025 were $6,030.8 million ¹⁴, compared to $5,889.9 million ¹⁵ in 2024, an increase of 2.4% ¹⁶. Net income for 2025 was $391.0 million ¹⁷, a decrease of $11.3 million ¹⁸ or 2.8% ¹⁹, compared to net income of $402.3 million ²⁰ in 2024. Adjusted EBITDA was $1,169.9 million ²¹ in 2025, compared to $1,116.9 million ²² in 2024, an increase of 4.7% ²³. Net cash from operating activities for 2025 was $866.7 million ²⁴, an increase of $89.0 million ²⁵ from 2024. Adjusted free cash flow was $509.3 million ²⁶ in 2025, a $151.4 million ²⁷ increase over 2024. Income from operations in 2025 was $673.4 million ²⁸, compared to $670.2 million ²⁹ in 2024.

The Company anticipates that 2026 capital spending, net of disposals, will be in the range of $450.0 million to $510.0 million ³⁰. This range includes strategic growth investment spend in 2026 for the SDA unit of $85 million ³¹, the fleet growth project of $25 million ³², and the Phoenix Hub of $0 ³³ (completed in 2025). The SDA unit has an expected full project cost of $210 to $220 million ³⁴ and an expected completion date of 2028 ³⁵. The fleet growth project has an expected full project cost of $50 million ³⁶ and an expected completion date of 2026/2027 ³⁷. The Phoenix Hub had an expected full project cost of $13 million ³⁸ and was completed in 2025 ³⁹.

The Company's Environmental Services segment growth is driven by customer demand for its wide variety of services, the volume, pricing and mix of waste managed, and project work. The Company is expanding incineration capacity, notably through the construction of a second incinerator at its Kimball, Nebraska facility, which commenced operations in late 2024 and is expected to be running at full capacity by the end of 2026 ⁴⁰. The Company also launched its Total PFAS Solutions service, leveraging its unique combination of permitted laboratory, transportation, filtration and disposal assets. The Company is also constructing a state-of-the-art Solvent De-Asphalting (SDA) unit adjacent to its East Chicago, Indiana re-refinery, which will utilize industry-proven solvent de-asphalting processes to reprocess certain by-products into 600N base oil, a high purity base oil that historically captures a higher sales price. This facility is expected to be operational in 2028 ⁴¹.

The SKSS segment's growth is impacted by customer demand for high-quality, environmentally responsible recycled oil products and related service offerings. The Company's circular capability to serve as an outlet for used lubricants, which it then re-refines and converts into high-quality, environmentally responsible recycled products, distinguishes it from many competitors. The Company is also expanding its oil collection operations through acquisitions, such as the 2024 acquisition of Noble Oil Services, which expanded operations in the southeastern region of the United States. The Company also seeks opportunities to expand waste handling capacity including certain non-hazardous waste streams or oil processing at its facilities by modifying existing permits, improving technology or significantly expanding its facilities.

The Company manages its cost of revenues through constant cost monitoring and a focus on cost savings areas, including lowering employee turnover, as well as overall customer pricing strategies designed to offset inflationary impacts on margins. The Company continues to upgrade the quality and efficiency of its services through the development of new technology and continued modifications and expansion at its facilities while also leveraging certain fixed costs of its operating infrastructure. The Company invests in new business opportunities and aggressively implements strategic sourcing and logistics solutions, while also continuing to optimize its workforce and operating structure in an effort to manage its operating margins. The Company's effective cost management programs aim to maintain or improve overall margins in spite of inflation, tariffs, increased compliance and regulatory requirements and other drivers of higher costs.

The Company's operations are supported by a fleet of more than 20,000 vehicles ⁴² and a network of over 100 waste disposal facilities ⁴³ including incinerators, landfills, TSDFs, wastewater treatment facilities, and solvent recycling centers. The Company has approximately 860 operating locations ⁴⁴ sited across approximately 620 properties or parcels ⁴⁵ covering all 50 U.S. states, eight Canadian provinces, Puerto Rico and Mexico. The Company employs 22,155 ⁴⁶ active full-time employees as of December 31, 2025, with a total of all active employees, inclusive of temporary and part-time workforce, of 22,591 ⁴⁷. The Company's safety metrics for 2025 were a Total Recordable Incident Rate (TRIR) of 0.49 ⁴⁸ and a Days Away, Restricted Activity and Transfer Rate (DART) of 0.23 ⁴⁹, an improvement of 25% ⁵⁰ and 15% ⁵¹ year-over-year respectively.

The Company's capital allocation strategy includes funding operations, capital expenditures, interest payments, and investments in line with its business strategy. In 2025, capital expenditures, net of disposals, were $403.4 million ⁵² including strategic growth investments. The Company anticipates 2026 capital spending, net of disposals, will be in the range of $450.0 million to $510.0 million ⁵³. The Company repurchased $250.0 million ⁵⁴ of common stock in 2025. As of December 31, 2025, the amount available for repurchase under the existing Board approved share repurchase program was $249.4 million ⁵⁵. On February 18, 2026, the Board authorized a $350.0 million ⁵⁶ expansion of the share repurchase program. The Company has never declared nor paid any cash dividends on its common stock and does not intend to pay any dividends in the foreseeable future. The Company expects to pay $12.6 million ⁵⁷ in principal payments on the secured senior term loans in 2026 and approximately $146 million ⁵⁸ in interest payments on the entire portfolio of financing arrangements.

The Company's SKSS segment results are significantly impacted by market pricing of oil products, and to reduce this commodity exposure, the Company actively manages the pricing on its used oil collection services as a strategy to manage the re-refinery spreads. The Company's operations are also subject to volatility in oil prices, which may lead to reduced profitability and increased operating costs. The Company faces headwinds from economic downturns or recessionary conditions in North America, and increased outsourcing by North American manufacturers to plants located in countries with lower wage costs and less stringent environmental regulations, which have adversely affected and may in the future adversely affect the demand for its services. The Company's business is also cyclical to the extent that it is dependent upon streams of waste from cyclical industries such as chemical and petrochemical.

The Company's operations are subject to extensive and evolving federal, state, provincial and local environmental, health, safety and transportation laws and regulations. Changes in environmental regulation often present new business opportunities for the Company, but may also result in increased operating and compliance costs or changes to how its facilities are able to operate. The Company is subject to risks relating to the imposition of trade sanctions or tariffs, fluctuations in interest rates and foreign currency exchange rates, and risks relating to its indebtedness and covenants in its debt agreements. The Company also faces risks from natural disasters or other catastrophic events, which could negatively affect its operations and financial performance.

The Company's hazardous waste management business is subject to significant environmental liabilities, with closure, post-closure and remedial liabilities of $230.7 million ⁵⁹ as of December 31, 2025, substantially all of which were assumed in connection with acquisitions. The Company is subject to existing and potential product liability lawsuits relating to its parts washer services, and as of December 31, 2025, was involved in 76 ⁶⁰ such proceedings. The Company's SKSS segment is exposed to volatility in oil prices, and a 100 basis point change in the average interest rate on the remaining variable portion of its long-term debt would change annual interest expense by up to approximately $6.5 million ⁶¹. The Company's levels of outstanding debt, which as of December 31, 2025 consisted of $1,545.0 million ⁶² of unsecured senior notes and $1,260.0 million ⁶³ of secured senior term loans, with letters of credit of $146.5 million ⁶⁴ drawn against its revolving credit facility, could adversely impact its ability to obtain additional financing and require a substantial portion of cash flow to be dedicated to interest payments. The Company's ability to continue operating its facilities and conducting its operations would be adversely affected if it became unable to obtain sufficient insurance, surety bonds, letters of credit and other forms of financial assurance at reasonable cost to meet its regulatory and other business requirements.

Management's message emphasizes the Company's commitment to safety, compliance, and sustainability as core values and competitive strengths. The Company's safety metrics for 2025, with a TRIR of 0.49 ⁶⁵ and DART of 0.23 ⁶⁶, represent the lowest in the Company's history and indicate a continued decline in the frequency and severity of injuries. Management highlights the Company's strategy of leveraging its core competitive strengths to develop and maintain ongoing relationships with a diversified group of customers while continuing to grow its service lines. Key strategic priorities include cross-selling solutions across segments, expanding the network and suite of offerings, pursuing acquisitions and divestitures, executing cost, pricing and productivity initiatives, fostering innovation through technology, and capturing emergency response opportunities. Management also emphasizes the Company's commitment to transparency about the impacts and benefits of its business activities and its focus on environmental stewardship and sustainability.