Clean Harbors Announces Increases to Used Oil Pricing and Service Stop Fees in Safety-Kleen Waste Oil Collection Business

Rhea-AI Summary

Clean Harbors announced immediate pricing revisions for its Safety-Kleen subsidiary's used engine and industrial oils collection services. The company is implementing broad rate increases across its customer base in the U.S. and Canada, citing declining prices in base oil, vacuum gas oil (VGO), and recycled fuel oil (RFO), which have reduced the value of re-refined products. Additionally, Safety-Kleen will expand its stop fee program to offset rising transportation and labor costs. The changes aim to address market pressures and prevent further financial deterioration in the Safety-Kleen Sustainability Solutions (SKSS) segment.

Positive

• Rate increases will help improve SKSS segment's financial performance
• Implementation of expanded stop fee program to recover rising operational costs
• Large customer base of over 100,000 across North America

Negative

• Material decline in base oil, VGO, and RFO product values
• Deteriorating financial performance in SKSS segment
• Rising transportation and labor costs impacting margins

Insights

Financial Analyst

This price increase announcement is strategically significant for Clean Harbors' profitability. The company's SKSS segment has been facing margin pressure due to declining base oil, VGO and RFO prices, compounded by softening crude oil markets. The implementation of higher collection rates and expanded stop fees across their 100,000+ customer base should help offset these headwinds.

The pricing adjustment represents a defensive move to protect margins in their used oil business, which is important for maintaining segment profitability. While some customer pushback may occur, Clean Harbors' dominant market position and essential service nature should enable successful implementation. The timing suggests management expects continued weakness in oil-related markets, making this a necessary step to maintain financial performance.

Market Research Analyst

The broader implications for the waste management industry are noteworthy. Clean Harbors' pricing action could trigger similar moves by competitors, potentially leading to industry-wide rate adjustments. The company's focus on both rate increases and stop fee expansion indicates a comprehensive approach to revenue enhancement, addressing both collection economics and operational costs.

The emphasis on transportation and labor cost recovery through expanded stop fees reflects persistent inflationary pressures in these areas. This dual-pronged pricing strategy should provide better cost coverage and more stable margins, though it may impact customer retention metrics in the short term.

Company Adjusting Collection Costs to Reflect Current Market Dynamics for its SKSS Segment

NORWELL, Mass.--(BUSINESS WIRE)-- Clean Harbors, Inc. (“Clean Harbors” or the “Company”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced that its Safety-Kleen subsidiary is revising pricing related to collecting and managing used engine and industrial oils. Effective immediately, the Company will be targeting a broad range of rate changes across its used oil customer base.

“Pricing declines in base oil, vacuum gas oil (VGO) and recycled fuel oil (RFO) have materially lowered the value and return on our re-refined products,” said Brian Weber, President of Safety-Kleen Sustainability Solutions (SKSS). “The current conditions are showing no sign of easing, particularly with crude oil pricing softening. As a result, we must significantly raise our rates to address the market-derived pressure and avoid further deterioration in the financial performance of our SKSS segment. The rate adjustments will apply to U.S. and Canadian customers. In addition, we will be expanding our stop fee program to recoup some of the transportation and labor costs associated with our oil collection services, which have experienced meaningful inflation in recent years.

“These rate changes are needed for Safety-Kleen to continue to perform and be appropriately compensated for the safe, compliant and reliable waste oil collection services we provide to more than 100,000 customers across North America annually,” Weber concluded.

About Clean Harbors
Clean Harbors (NYSE: CLH) is North America’s leading provider of environmental and industrial services. The Company serves a diverse customer base, including a majority of Fortune 500 companies. Its customer base spans a number of industries, including chemical, manufacturing and refining, as well as numerous government agencies. These customers rely on Clean Harbors to deliver a broad range of services such as end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services. Through its Safety-Kleen subsidiary, Clean Harbors also is a leading provider of parts washers and environmental services to commercial, industrial and automotive customers, as well as North America’s largest re-refiner and recycler of used oil. Founded in 1980 and based in Massachusetts, Clean Harbors operates in the United States, Canada, Mexico, Puerto Rico and India. For more information, visit www.cleanharbors.com.

Safe Harbor Statement
Any statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “seeks,” “should,” “estimates,” “projects,” “may,” “likely,” “potential” or similar expressions. Such statements may include, but are not limited to, statements about the Company’s future financial and operating results, plans, strategy, objectives and goals, cost management initiatives, contingent liabilities, liquidity, business and market conditions, customer demand, acquisitions, growth opportunities, expectations, and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors’ management as of the date of this press release only and are subject to certain risks and uncertainties that could cause actual results to differ materially, including, without limitation, those items identified as “Risk Factors” in Clean Harbors’ most recently filed reports on Form 10-K and Form 10-Q. Forward-looking statements are neither historical facts nor assurances of future performance. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. Clean Harbors undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements other than through its filings with the Securities and Exchange Commission, which may be viewed in the “Investors” section of Clean Harbors’ website at www.cleanharbors.com.

View source version on businesswire.com: https://www.businesswire.com/news/home/20241111428635/en/

Eric J. Dugas

EVP and Chief Financial Officer

Clean Harbors, Inc.

781.792.5100

InvestorRelations@cleanharbors.com

Jim Buckley

SVP Investor Relations

Clean Harbors, Inc.

781.792.5100

Buckley.James@cleanharbors.com

Source: Clean Harbors, Inc.

FAQ

Why is Clean Harbors (CLH) increasing its used oil collection prices?

Clean Harbors is increasing prices due to declining values in base oil, VGO, and RFO products, along with rising transportation and labor costs, to prevent further deterioration in its SKSS segment's financial performance.

What changes is Clean Harbors (CLH) implementing in its Safety-Kleen business?

Clean Harbors is implementing broad rate increases for used oil collection services and expanding its stop fee program across its U.S. and Canadian customer base.

How many customers will be affected by Clean Harbors' (CLH) price increases?

The price increases will affect more than 100,000 customers across North America who use Safety-Kleen's waste oil collection services.