Clean Harbors releases ‘Vision 2027’ at investors event

Clean Harbors Inc., a Norwell, Massachusetts-based provider of environmental and industrial services throughout North America, unveiled “Vision 2027,” the company’s long-term growth strategy, during its 2023 Investor Day in Chicago on March 29.

The event featured presentations by several members of its executive leadership. The team discussed the company’s strategic priorities and capital allocation strategy, provided an in-depth review of core businesses and corporate functions and introduced Clean Harbors’ long-term financial targets.

“Vision 2027 is our plan for building on our track record of growth and sustainability through a continued focus on value creation across all areas of our business,” Clean Harbors co-CEO Eric Gerstenberg says. “Since our founding, our mission to create a safer, cleaner environment has expanded through the introduction of new products and services, as well as numerous strategic acquisitions.”

Co-CEO Mike Battles says the company sees a variety of tailwinds for the company, including reshoring, regulations and a shift toward sustainable solutions.

“Driven by our commitment to achieving a superior return on invested capital, our five-year targets for adjusted EBITDA (earnings before income tax, depreciation and amortization) and adjusted free cash flow are expected to build on our original mission,” Battles said. “We believe that these new anticipated milestones within our Vision 2027 reflect the significant growth potential of our businesses and the long-term stability of our markets. These market dynamics will underpin the next exciting phase of the company’s growth that will consist of a combination of organic growth and acquisitions, which has been Clean Harbors’ formula for success throughout its long history.”

Clean Harbors’ five-year financial targets include an organic-growth-only model that the company expects will generate 2027 Adjusted EBITDA of about $1.4 billion and adjusted free cash flow of about $600 million. The company also says it expects to generate 2027 adjusted EBITDA of about $2 billion and adjusted free cash flow of about $800 million when combining organic growth and growth through acquisitions.

The company’s performance over the past 20 years has included a compound annual growth rate of 23 percent.

Assumptions associated with both models include expected revenue growth that is 100-300 basis points above U.S. gross domestic product and expected adjusted EBITDA growth that is 200-300 basis points above revenue growth.

As previously announced, company founder CEO and President Alan McKim stepped down as CEO and president March 31, becoming the company’s executive chairman and chief technology officer while Battles Gerstenberg have taken over as co-CEOs.

“This transition has really been ongoing for a number of years,” McKim said during the event. “Both Mike and Eric have been integral partners with me in running the business.”

McKim says the company is doing well financially.

“We have leading market shares in all our core businesses,” he says. “The company also has a deep management … team.”

Within the Safety-Kleen Sustainability Solutions business, the company says its market share is about three-times larger than the next leading competitor, which is Canada-based GFL Environmental.

The company’s share of recycling and disposal facilities is even greater, the company says. While Phoenix-based Republic Services handles more slightly hazardous waste landfill volume, the company holds about a third of the market share within treatment, storage and disposal facility volume and more than half the market volume for commercial hazardous waste incinerator volume.

The company’s nine incinerators, eight landfills, 33 treatment, storage and disposal facilities, eight solvent recycling facilities, 10 wastewater treatment plants and eight “re-refineries” for used motor oil help solidify its place in the market.

Battles said the company holds about 500 permits to dispose of hazardous waste.

“And within regulated waste, which includes incinerators and landfills, there hasn’t been a new incinerator landfill in 20 years,” he said.

The barrier to entry in the market is difficult from a permitting standpoint and also requires millions of dollars in investment, said Loan Mansey, executive vice president of environmental sales and service.

Underpinning the company’s operations is a commitment to safety, McKim said.

“We’ve really tried to integrate safety into every part of the company,” he says. “I know safety isn’t always necessarily the focus of our investors, but it really is foundational to everything we do here at Clean Harbors.”

The company reports an 84 percent reduction in its total recordable incident rate since 2002 and says its greenhouse gas emissions were a net environmental benefit in 2021. Clean Harbors' total emissions were about 1.6 million tons of carbon dioxide while it avoided emitting nearly 3.3 million tons of carbon dioxide through its recycling and refining activities, led by its used motor oil recycling.