Clean Harbors (CLH) investor relations material

Industry trends and growth drivers

• PFAS remediation is a major growth area, expected to drive strong business expansion over the next 5–10 years, supported by increasing regulation and customer demand.

• Reshoring and increased domestic production, especially in semiconductor and pharma, are fueling pipeline and volume growth, with new facilities requiring waste management solutions.

• Captive incinerator closures present a significant long-term opportunity, with regulatory changes and capital requirements likely to accelerate transitions to commercial providers.

• Industrial production and PMI improvements are anticipated to further boost demand, with current growth achieved even in flat macro environments.

• Tailwinds from regulation, reshoring, and PFAS are expected to absorb new incineration capacity without negatively impacting pricing.

Capacity, pricing, and operational outlook

• New incinerator capacity, such as the Kimball facility, is expected to be absorbed over several years, with pricing remaining robust and no anticipated oversupply.

• Backlogs and strong customer demand from sectors like pharma and semiconductors support confidence in capacity utilization.

• Expansion decisions for new incinerators will be timed to match demand, with a typical four-and-a-half-year build timeline and potential for incremental capacity at existing sites.

• M&A activity has focused on acquisitions that fit core business lines, such as wastewater treatment and solidification, with recent deals integrating smoothly and contributing to margin growth.

• Free cash flow conversion is driven by margin expansion, with targets to increase conversion from 40–42% to 45% and beyond.

Regulatory and technological developments

• Clearer PFAS regulation is anticipated to stimulate further activity, with some states already advancing their own rules and the EPA engaging with industry frameworks.

• Multiple PFAS destruction technologies are being evaluated, with proven, scalable, and compliant solutions prioritized; collaboration across technologies is expected due to the complexity of PFAS.

• The company maintains close relationships with captive incinerator operators, offering redundancy and long-term waste management solutions to facilitate future transitions.