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By the numbers
Net income: $45.3M
The company's amount of incinerator capacity being utilized, versus 80% last year. Combined with a 14% uptick in landfill volumes, the company says it is now performing above pre-pandemic levels.
Approximately 50 captive incinerators
As this number dwindles, the company sees growing potential for its own sites, such as a pending expansion in Nebraska.
- 2022 growth: Massachusetts-based Clean Harbors reported first quarter earnings results on Wednesday, boosted in part by $184 million in new revenue from the late 2021 acquisition of HydroChem PSC. Revenue grew by more than 44% in each of its two main categories, hitting nearly $947.5 million in environmental services and $221.6 million in its Safety-Kleen sustainability division.
- Inflation: While executives were confident in their ability to offset economic headwinds via pricing, Chief Financial Officer Mike Battles also noted during a Wednesday earnings call that "you just can’t price your way to glory" and said the company was continually focused on cost reduction. CEO Alan McKim also said walking away from certain lower-value business is "the right thing for us to do" given constraints around labor, equipment and disposal capacity.
- Labor: Clean Harbors reported improving trends with labor retention and increasing head count due to investments in wages, benefits and equipment. The goal is to further grow head count and reduce the company's reliance on expensive subcontractors. Of an estimated 20,000 employees, McKim said more than 6,000 have been with the company for over 10 years and 1,500 have been there more than 25.
- Rebrand: Effective July 1, the legacy Clean Harbors industrial business will become HPC Industrial to reflect the recent integration. McKim noted cross-selling opportunities have already increased following the October deal.
- M&A: Clean Harbors didn't discuss any significant acquisition plans, but McKim said the company is assessing "several" bolt-on opportunities for its two main segments. Priorities will include growing the scale of its environmental services business and gaining more oil processing capacity. A March rumor that the company could be acquired by WM was not discussed.
- Capital expenditures: Work continues to ramp up on a new 70,000-ton-per-year hazardous waste incinerator in Kimball, Nebraska, which is slated for completion in 2025. Battles anticipates spending at least $40 million on that project this year, with a higher level of spending in 2023. This follows the recent opening of a similar facility in El Dorado, Arkansas.
- Looking ahead: While executives didn't fully address changing market dynamics following Republic Services' $2.2 billion acquisition of former competitor US Ecology, which closed on Monday, they expressed optimism about opportunities for continued growth. In the company's prior earnings call, Battles had said Clean Harbors controlled an estimated 70% of capacity for hazardous waste incineration and 30% for landfills. They anticipated that its share could grow further as trends such as reshoring of manufacturing, federal infrastructure spending and new environmental regulations boost demand for services at industrial sites.
- Parting thought: "We've seen the continuation of customers looking at alternatives to running their own waste treatment plants, whether it's a water treatment or an incineration facility. So I really feel like we're going to see more outsourcing," said McKim, adding that the company's presence at petrochemical, refinery and pharmaceutical sites is growing. “I think overall, unless there’s some significant great recession, that we have a really good market in front of us right now."
