Clean Harbors (CLH) -- Structural Improvements Drive Earnings Growth | Merion Road 2024 Q4

Capitalizing on Specialty Waste Sector Dynamics and Margin Expansion Opportunities

Apr 08, 2025

Summary

Investment rationale rooted in structural improvements within the specialty waste sector.
Market positioning strengthened by recent sector transactions, highlighting valuation upside.
Risks include potential regulatory changes and market volatility affecting waste management.
Recent performance boosted by exceeding earnings expectations and sector consolidation.
Future outlook positive with multi-year runway for organic growth and margin expansion.

Clean Harbors (CLH, Financial) was a prominent position in Merion Road Capital Management’s Q4 2024 letter, underscoring the fund's confidence in the company's structural improvements and growth potential within the specialty waste sector.

"Our thesis has not changed since initiating a position in Q1. Earnings have generally exceeded expectations due to structural improvements to the specialty waste sector. Just this month GFL announced the sale of their environmental services business in a transaction valued at $8.0bn or ~17x LTM EBITDA. Despite recent price appreciation, CLH is still trading at 13x trailing EBITDA. As discussed previously, I believe there is a multi-year runway for both organic revenue growth (onshoring, PFA’s) and margin expansion." — Merion Road 2024 Q4 Fund Letter

Read full letter at gurufocus Merion Road 2024 Q4 page.

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