Citi: Both Clean Harbors businesses beat expectations; full-year earnings and cash flow guidance raised

Where did third-quarter results exceed expectations?

Clean Harbors’ third-quarter revenue was 1.87 billion dollars, above the market consensus of 1.73 billion dollars; EBITDA was 456 million dollars, above the consensus of 409 million dollars.
Earnings per share were 3.93 dollars, above the market consensus of 3.22 dollars. Citi noted that both businesses exceeded market expectations.

Environmental Services (ES) posted third-quarter EBITDA of 425 million dollars, up 68 million dollars year over year; SKSS EBITDA was 126 million dollars, up 85 million dollars year over year, with higher prices a contributing factor.
Unallocated items were negative 96 million dollars, compared with negative 78 million dollars a year earlier, offsetting some of the business growth.
Citi is watching the sources of further ES growth: acquisitions and strong US domestic manufacturing performance coexist with weakness in industrial services.

The company raised its 2026 EBITDA guidance from 1.35 billion–1.41 billion dollars to 1.44 billion–1.48 billion dollars, above the market consensus of 1.41 billion dollars.
Full-year operating cash flow guidance was raised from 890 million–1.01 billion dollars to 970 million–1.09 billion dollars, compared with market consensus of 954 million dollars.
Capital expenditure guidance was also raised from 505 million–565 million dollars to 530 million–590 million dollars, including an increase in growth project spending from 120 million dollars to 145 million dollars.

Citi has a Buy rating and a 378-dollar price target, valuing the company at 30 times its forecast 2027 free cash flow per share; the multiple exceeds the historical peak and five-year average, reflecting the bank’s view of rising environmental services asset values and resilient growth.
Hazardous waste disposal volumes are linked to the US economy, particularly activity in chemicals and manufacturing. Citi believes industrial services and the waste oil business are also affected by crude oil prices: about half of industrial services revenue comes from refiners, while the waste oil business sells blended oils and base oils made from used motor oil.
The company spent 331 million dollars on previously announced acquisitions in the third quarter. Citi noted that acquisitions could change earnings forecasts and that execution risks exist in integration and achieving growth targets.