Clean Harbors (CLH): Q2 Revenue Miss and FY2024 Cash-Flow Resilience

Q2 2025: A $40M Revenue Miss and an EBITDA Beat — The Tension That Mattered#

Clean Harbors [CLH] delivered a mixed Q2 2025 in which consolidated revenue of $1.55 billion missed consensus by roughly $40 million (≈-2.52%), while Adjusted EBITDA of $336.2 million topped expectations and signaled continuing operational leverage. The quarter created a clear contrast: top-line momentum stalled, driven by a steep decline in Safety‑Kleen activity, even as Environmental Services and margin execution stabilized profitability metrics. According to the company’s Q2 release and accompanying materials, investors reacted modestly — the market digested an earnings-quality signal (EBITDA beat) against a growth concern (SKSS weakness) in near real time (Clean Harbors Q2 press release; Business Wire.

This single-quarter dichotomy encapsulates the company’s current investment story: operational discipline and high-margin remediation work underpin cash flow, but cyclical exposure in base-oil and parts-cleaning (Safety‑Kleen) produces revenue volatility that limits upside until recovery is visible.

FY2024 Results: Growth, Margin, and Cash-Flow Fundamentals#

Clean Harbors’ fiscal-year performance provides the longer-term frame for interpreting the Q2 noise. For FY2024 the company reported revenue of $5.89 billion, up +8.89% versus $5.41 billion in FY2023, and net income of $402.3 million, up +6.47% from $377.86 million in FY2023 (fundamental filings, FY2024 Form 10‑K filing date 2025‑02‑19). These moves reflect steady organic growth in Environmental Services (ES) plus incremental contributions from capital allocation into disposal capacity.

Profitability, measured on several metrics, improved at the margin. FY2024 EBITDA was $1.09 billion, yielding an EBITDA margin of ~18.5%, while operating income of $670.23 million represented an operating margin of 11.38%. Free cash flow for FY2024 came in at $345.53 million, after capital expenditures of $432.24 million, supporting the company’s reinvestment profile and selective share repurchases (FY2024 common stock repurchased ~$55.18 million) (FY2024 cash-flow statement, filed 2025‑02‑19).

Two balance-sheet items are central to the company’s optionality: total debt of $3.04 billion and net debt of $2.35 billion at year-end 2024, against stockholders’ equity of $2.57 billion. Using FY2024 EBITDA, net debt/EBITDA computes to roughly ~2.16x, a leverage level that leaves room for continued M&A or capital projects while staying within investment-grade-like covenant metrics used by many lenders.

Table — Income Statement Trends (FY2021–FY2024)#

The income-statement table highlights a multi-year growth trajectory and margin recovery after the pandemic-era trough: revenue expanded organically plus through selective investments, and EBITDA scaled in absolute terms even as operating margins fluctuated with segment mix.

Table — Selected Balance-Sheet Metrics (FY2021–FY2024)#

The balance-sheet table shows steady growth in assets and an intentional build-out of disposal and treatment infrastructure (PPE net increased to $2.7 billion in 2024), financed through a combination of operating cash flow and debt. Cash at year-end increased materially in 2024 versus 2023, reflecting strong operating cash flow and financing activity that included modest buybacks.

Dissecting the Q2 Revenue Miss: SKSS vs ES#

The core reason Q2 tripped investors was segment divergence. The Safety‑Kleen Sustainability Solutions (SKSS) business recorded a -19% revenue decline to ~$197.7 million, while Environmental Services (ES) grew ~+3% to $1.35 billion in the quarter (company Q2 disclosures; subsequent call transcript commentary). SKSS’s contraction was the principal contributor to the ~$40 million shortfall versus consensus.

SKSS is exposed to base-oil pricing and industrial maintenance cycles. Lower base oil prices compress ASPs and used-oil processing revenue, and when industrial customers tighten discretionary maintenance spend, SKSS volumes can fall quickly. ES, by contrast, benefits from remediation, disposal and recycling — higher-margin, often contract-backed flows that are less cyclical and can expand through increased regulatory-driven work such as PFAS remediation.

Management described the Kimball incinerator and other disposal assets as entering early-ramp stages; these facilities carry a classic start-up cadence where initial volumes and utilization trail potential. The long-term thesis is that ramped disposal capacity will raise ES throughput and margins, but the near-term timing is patchy, which contributed to the revenue/earnings tension in Q2.

Quality of Earnings: Cash Flow and Capital Allocation#

Quality checks favor Clean Harbors. In FY2024, net cash provided by operating activities was $777.77 million and free cash flow was $345.53 million after $432.24 million in capital expenditures. The conversion of EBITDA to operating cash flow and then to FCF indicates earnings are underpinned by real cash generation rather than purely accounting gains.

The company returned capital through modest buybacks (~$55 million in FY2024) and did not pay dividends. Acquisition activity persisted: acquisitions netted -$478.01 million in 2024, reflecting continued inorganic investment to expand capacity and service coverage. Historically the company has leaned on bolt-on acquisitions to build scale in remediation and specialized services; the 2024 acquisition level is consistent with that playbook but also points to the trade-off between M&A and immediate deleveraging.

Net leverage near ~2.15x net debt/EBITDA is acceptable for a capital-intensive environmental services company that targets growth through asset builds and acquisitions, but it does place emphasis on sustaining free-cash-flow generation if management pursues larger inorganic deals.

Valuation and Analyst Estimates: Modest Multiple Compression, Growth Expectations#

Consensus medium-term estimates embedded in the company data show revenue and EPS growth accelerating out to 2029: analysts project revenues rising to ~$7.48 billion by 2029 and EPS to ~$13.09 (aggregated estimate buckets). Forward multiples compress slightly in the near term — forward P/E for 2025 at ~32.03x falling to ~18.57x by 2029 — reflecting expected earnings expansion and some margin normalization as new assets ramp and remediation work scales.

A critical cross-check is enterprise-value-to-EBITDA: FY2024 shows EV/EBITDA ≈ 14.0x, with forward EV/EBITDA estimates falling toward low-double-digit levels as EBITDA grows. Those multiple dynamics assume that ES growth and remediation contract wins materialize and that SKSS returns toward normalized volumes; absent that, earnings expansion will be slower and multiple compression possible.

Strategic & Industry Context: PFAS, Reshoring, and Disposal Capacity#

Three structural themes matter most to CLH’s strategic trajectory. First, PFAS remediation is an emerging secular growth engine. Regulatory tightening and public remediation funding create a durable pipeline for specialized disposal and treatment services. Clean Harbors is positioning for this demand through capacity additions and service capabilities, which — if realized — would provide higher-margin, non-cyclical revenue for years.

Second, reshoring of manufacturing and any recovery in industrial capex would directly benefit both ES and SKSS by lifting volumes and steadying demand for parts cleaning, used-oil processing, and hazardous waste handling. Reshoring is a slow-moving macro theme, but it is directionally supportive.

Third, disposal capacity is a moat-like asset: new incinerators and treatment facilities are capital-intensive and heavily regulated, creating barriers to entry and pricing power for established operators. The Kimball incinerator ramp is a test case: steady utilization will convert capital into durable EBITDA, but early start-up costs and staggered throughput mean investors should expect quarterly variability during the ramp period.

Where Execution Still Matters: Key Operational & Financial Readouts to Watch#

Near-term signals that will determine whether the current mix of margin improvement and revenue pressure resolves in Clean Harbors’ favor include: (1) sequential SKSS revenue stabilization and recovery in base-oil pricing or volumes, (2) utilization and margin contribution from the Kimball incinerator and other new disposal assets, (3) the cadence and funded pipeline of PFAS remediation contracts, and (4) free-cash-flow conversion relative to acquisition cadence and share-repurchase policy.

From a financial perspective, watch quarterly trends in operating cash flow and organic revenue growth. The company’s ability to sustain FCF above $300 million annually while investing in capacity and selectively transacting on acquisitions will be a practical test of management’s capital-allocation discipline.

What This Means For Investors#

Clean Harbors’ recent report presents a clear “quality vs. growth” trade-off. The company is demonstrating operational quality: EBITDA and margins are improving in pockets, and cash flow generation is real. At the same time, top-line momentum is uneven because a cyclical, commodity‑exposed business (SKSS) hit a soft patch. Investors who follow Clean Harbors should focus on a set of measurable, repeatable outcomes rather than narratives alone: sequential SKSS revenue trends; quarterly EBITDA conversion to operating cash flow; and contract wins or funded remediation programs tied to PFAS.

Because valuation metrics (EV/EBITDA ~14.0x on FY2024 data) bake in future growth, the pace at which ES ramps and SKSS normalizes will determine margin expansion and whether forward multiples compress or expand. Management’s historical pattern of targeted M&A plus organic capacity builds means that the company will continue to trade on execution milestones tied to disposals, remediation, and cyclical industrial recovery.

Historical Execution & Risks#

Historically, Clean Harbors has grown revenue and EBITDA through a mix of organic expansion and acquisitions. FY2021–FY2024 shows revenue rising from $3.81 billion to $5.89 billion and EBITDA from $647.7 million to $1.09 billion, demonstrating execution across a multi-year cycle. That track record supports confidence in management’s playbook, but key risks remain: commodity-cycle exposure in SKSS, timing risk around new-asset ramps, and regulatory or permitting delays in critical disposal projects. Moreover, the company’s acquisition appetite requires continual FCF generation to avoid materially elevating leverage.

Bottom Line — Conclusions Grounded in Data#

Clean Harbors’ latest quarter crystallized the company’s central trade-offs. The Q2 revenue miss of roughly $40 million highlighted cyclical exposure in Safety‑Kleen, while the Adjusted EBITDA beat at $336.2 million reinforced the view that underlying operations and higher-margin ES activity are improving. FY2024 financials show healthy revenue growth (+8.89% YoY), robust EBITDA, and real cash-flow conversion, with net leverage near ~2.15x net debt/EBITDA.

The investment story for Clean Harbors is no longer purely growth-at-all-costs; it is now a hybrid of strategic asset builds (disposal and remediation capacity), measured M&A, and disciplined capital allocation that together should drive earnings per share expansion over a multi-year horizon if execution is consistent and SKSS recovers. The immediate market reaction to Q2 — muted rather than panic-driven — reflects that nuanced picture.

(For full quarter-by-quarter figures and to review management’s Q&A, consult Clean Harbors’ Q2 press release and earnings-call transcript linked above: Clean Harbors Q2 press release; Earnings call transcript.

Final Observations — Data-Driven Watch List#

Investors and analysts should monitor these measurable items over the next 2–4 quarters: sequential SKSS revenue recovery and price trends in base oil; ramp rates and per-ton margins from Kimball and similar disposal assets; booked or funded PFAS remediation contracts; and quarterly free-cash-flow conversion after capex and acquisitions. Those readouts will determine whether margin improvements translate into sustainable earnings growth and whether the current multiples implied by forward estimates are justified.

Clean Harbors sits at an operational inflection — not because uncertainty has vanished, but because the company now offers clearer levers (disposal capacity, remediation pipelines, and cash-flow discipline) that can either validate or undermine its multi-year growth profile. The difference will show up in sequential results and cash-flow statements, quarter by quarter.