Dive Brief:
- Clean Harbors will have new leadership come April, the environmental services and hazardous waste company announced Wednesday. It’s the first major transition since CEO Alan McKim founded the company in 1980.
- Chief Financial Officer Mike Battles, a nine-year company veteran, and Chief Operating Officer Eric Gerstenberg, a 32-year veteran, will serve as co-CEOs. The Norwell, Massachusetts-based company has yet to determine who will fill the CFO and COO roles after the transition.
- McKim will stay on as executive chairman of the board of directors and chief technology officer, where he will “continue to spearhead” M&A and technology initiatives, the company said. The announcement coincided with Clean Harbors’ third-quarter earnings call.
Dive Insight:
McKim dropped out of college to pursue his vision for Clean Harbors, starting the business at age 24. Succession planning has been going on for quite some time, McKim said on Wednesday’s call. He noted that the company is on the verge of meeting some of his long-held financial goals, including hitting $5 billion in revenue, which contributed to his decision on the timing of when to step down.
The company’s leadership ultimately decided the most seamless transition would involve elevating existing executives into a joint CEO model. When asked about the model, executives said the team will continue to sort out how that looks through the first quarter. Battles also said the company will host an investor day at some point in 2023.
Battles, whose background is in public accounting and finance, joined Clean Harbors as chief accounting officer in 2013 and became chief financial officer in 2016. Gerstenberg’s history with Clean Harbors goes back much farther: He joined the company in 1989 as a frontline worker. He’s since risen through the organization and served in numerous roles, including as general manager of various facilities and head of its disposal and environmental businesses, before being named COO in 2015, he shared on the call.
During the third quarter, Clean Harbors’ revenue grew 43% to $1.36 billion. Net income totaled $135.8 million. Part of that growth comes from its ongoing integration of HydroChem PSC, which it acquired in late 2021. The company also saw strong demand across environmental services, where it’s seeing a record backlog of waste, it said in the earnings release, and it’s trying to hire “as rapidly as possible” across the segment. The company sees future tailwinds in PFAS regulations and expanded high-tech manufacturing, including for electric vehicle batteries.
McKim also touted the company’s resilience through Hurricane Ian during the quarter, and he noted the company’s total recordable incident rate has dipped below one, to 0.65 in the third quarter, for a 0.74 rate across the first nine months of the year.
Clean Harbors raised its guidance for full-year earnings, in part due to accelerated demand in environmental services and products. It now expects adjusted earnings before interest, taxes, depreciation and amortization of up to $1.030 billion. It’s reducing anticipated adjusted free cash flow to up to $290 million in light of changing working capital needs.
