A North American environmental and industrial services company that collects, treats, and disposes of hazardous and non-hazardous waste, and through its Safety-Kleen arm re-refines used oil into fresh base oil and lubricants for manufacturers, refineries, and others. It began in 1980 when Alan McKim started a four-person tank-cleaning business in the Boston area with a single truck. One of its early jobs was cleaning up the 1984 oil spill from the beached tanker Eldia off Cape Cod, helping launch its emergency-response reputation.
Safety-Kleen re-refining margin rebounded sharply, lifting total Adjusted EBITDA 21.6% to $409M on a 40.8% revenue increase in the segment.
The Safety-Kleen re-refining business reversed its multi-year profit decline in a single quarter. rose 11.9% to $1.74 billion and grew 21.6% to $409 million, driven by a 40.8% revenue increase in Safety-Kleen Sustainability Solutions as base oil pricing recovered and feedstock costs fell. The recovery in the company's most cyclical is underway, but it arrives alongside a step-up in to as much as $550 million.
Key takeaways
Safety-Kleen Sustainability Solutions (SKSS) direct rose 40.8% to $278.3 million, as higher market pricing for base and blended oil products and specialty refinery products combined with lower used oil feedstock acquisition costs to widen the 's cost-of-revenues ratio by 12.7 percentage points.
Total rose 21.6% to $409 million, with the Adjusted EBITDA margin expanding 1.9 points to 23.6%, as the SKSS recovery amplified the contribution from Environmental Services.
Section summaries
Management's Discussion and Analysis
Q2 FY2026 revenue rose 11.9% to $1.74B and Adjusted EBITDA grew 21.6% to $409M, driven by Environmental Services growth and a sharp SKSS margin recovery.
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Total direct revenues increased 11.9% to $1,735.0 million in Q2 FY2026, with Environmental Services up 7.7% and SKSS up 40.8%.
Environmental Services direct grew 7.7% to $1.46 billion, led by Technical Services — which included over $30 million from a PFAS-related filtration project — and higher Safety-Kleen core service volumes and pricing.
rose 6.6% to $118.9 million, a slower pace than growth, as and continued to rise with the Kimball incinerator and other assets in service.
improved to $59.8 million for the first half from $17.4 million a year ago, helped by lower as the Kimball project spend wound down, though the company raised its full-year capex outlook to $490–$550 million.
The company guided 2026 to $490–$550 million, up from $460–$520 million, reflecting strategic investments in a Solvent De-Asphalting unit, fleet expansion, and data center assets.
What changed
The Safety-Kleen re-refining spread — flagged in every prior filing since FY2022 as the single largest variable for profitability — recovered sharply: SKSS direct rose 40.8% after declining 18.7% in Q2 FY2025 and 6.1% in Q3 FY2025, and the 's cost of revenues improved to 58.4% of direct revenue from 71.1% a year ago.
The 500-basis-point improvement in SKSS cost of revenues flagged in Q1 FY2026 not only held but widened further, confirming that the Q1 benefit from lower feedstock costs was not a one-quarter event.
turned positive at $59.8 million for the first half, up from $17.4 million a year ago, as the Kimball incinerator capital spend concluded — resolving a watch item that had persisted since the FY2022 10-K.
The company raised its 2026 to $490–$550 million from $460–$520 million, introducing new strategic spending on data center assets alongside the previously disclosed SDA unit and fleet expansion, which will weigh on in the second half.
What to watch
Whether the SKSS recovery is sustained in Q3 and Q4, or whether the 40.8% Q2 increase reflects a one-time pricing spike that fades as base oil markets normalize.
Incinerator utilization rates and the ramp of the Kimball, Nebraska unit, to see whether the network moves toward the 90% target with the added 70,000 tons of annual capacity now that the facility is operational.
Whether the $490–$550 million in 2026 — including new data center investments — keeps below the $441.8 million generated in FY2025, and how the company funds the increase.
The closing and integration of the $130 million Depot Connect International acquisition, and whether it sustains Environmental Services growth without diluting margins as the PFAS-related project annualizes.
Environmental Services growth was led by Technical Services, including over $30 million from a PFAS-related filtration project, and higher Safety-Kleen core service volumes and pricing.
SKSS surged 40.8% on higher market pricing for base and blended oil products, specialty refinery products, and increased pricing for used oil collection services.
margin expanded 190 to 23.6%, as SKSS cost of revenues improved sharply to 58.4% of direct revenues from 71.1% a year ago.
Net cash from operating activities rose to $245.5 million for the first half, and improved to $59.8 million from $17.4 million.
The company raised its 2026 outlook to $490–$550 million, including strategic investments in an SDA unit, fleet expansion, and data center assets.
Quantitative and Qualitative Disclosures About Market Risk
In the first six months of 2026, there were no material changes to the information provided under Item 7A. “Quantitative and Qualitative Disclosures about Market Risk,” in our Annual Report on Form 10-K for the year ended December 31, 2025.
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In the first six months of 2026, there were no material changes to the information provided under Item 7A. “Quantitative and Qualitative Disclosures about Market Risk,” in our Annual Report on Form 10-K for the year ended December 31, 2025.
See Note 15, “Commitments and Contingencies,” to the unaudited consolidated financial statements included in Item 1 of this report, which description is incorporated herein by reference.
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See Note 15, “Commitments and Contingencies,” to the unaudited consolidated financial statements included in Item 1 of this report, which description is incorporated herein by reference.
There have been no material changes to the risk factors from the information provided in Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2025.
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There have been no material changes to the risk factors from the information provided in Item 1A. in our Annual Report on Form 10-K for the year ended December 31, 2025.