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SKSS’ Q1 EBITDA rose 17% as surging Group III base oils prices boosted margins despite weaker sales
Global Group III prices surged from March after Middle East supply disruptions tightened availability across major markets
Clean Harbors raised full-year guidance, expecting SKSS to deliver stronger earnings through Q3 before conditions normalise later in the year
Safety-Kleen Sustainability Solutions (SKSS) posted higher profit in the first quarter as surging base oils prices late in the quarter offset seasonally weaker market conditions earlier in the year.
Earnings before interest, tax, depreciation and amortisation (EBITDA) rose 17% year on year to $33 million in the first three months of the year, even as revenue declined for a fourth straight quarter, Clean Harbors earnings data showed.
The stronger earnings boosted SKSS’ profit margin and lifted its share of parent company Clean Harbors’ total EBITDA to a six-quarter high of 13.3%.
Profit rose as the US’ largest base oils re-refiner benefited from stronger oil collection economics and a marked rise in re-refined base oil margins, while higher Group III production amplified the impact of the price rally.
Global Group III base oils prices surged from early March after key export flows from the Middle East paused, tightening supply across major markets.
Middle East shipments account for more than 40% of US Group III supply and more than 35% of European supply, leaving both regions exposed to the disruption to export flows.
The increase in Group III prices far outpaced gains in Group I and Group II base oils, widening margins for producers with exposure to the premium-grade supply.
“Overall, our SKSS segment delivered better-than-anticipated results,” Clean Harbors Co-Chief Executive Officer Michael Battles said during an earnings call. “For SKSS, we are capitalizing on elevated pricing and demand dynamics associated with global market disruptions.”
Clean Harbors raised its full-year EBITDA guidance by $40 million to a midpoint of $1.27 billion, with higher SKSS expectations accounting for most of the increase.
“This 2026 guidance midpoint now assumes that our SKSS segment delivers approximately $165 million of adjusted EBITDA, up approximately 20% from 2025 and higher than the $135 million we provided in February due to the increase in base oil prices,” Chief Financial Officer Eric Dugas said during the earnings call.
SKSS was expected to realise the largest share of the benefit in the second and third quarters.
“We certainly realized some of the benefit in Q1,” Dugas said. “In Q2 and Q3, I would say kind of an equal amount of incremental benefit and then kind of back down to normal in Q4.”
