Clean Harbors (MM) (NASDAQ:CLHB)
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Clean Harbors, Inc. (“Clean Harbors”)
(NASDAQ: CLHB), the leading provider of environmental and hazardous
waste management services throughout North America, today
announced financial results for the second quarter ended June 30, 2008.
For the second quarter of 2008, Clean Harbors reported an 11.1 percent
increase in revenue to $265.3 million from $238.7 million in the second
quarter of 2007. Income from operations rose 26.3 percent to $29.8
million from $23.6 million in the second quarter of 2007. Second quarter
2008 net income attributable to common shareholders increased 43.8
percent to $16.0 million, or $0.70 per diluted share, from $11.1
million, or $0.54 per diluted share, in the second quarter of 2007.
EBITDA (see description below) increased 23.1 percent to a record $43.4
million in the second quarter of 2008, from $35.2 million in the
comparable period of 2007.
Comments on the Second Quarter
“Clean Harbors delivered another record
quarter in Q2, with double digit increases in both revenue and
profitability,” said Alan S. McKim, Chairman
and Chief Executive Officer. “Solid growth
across nearly all of our operations enabled us to generate revenues of
$265.3 million. Utilization at our domestic incinerators, which includes
the additional capacity rolled out in the first quarter of the year, was
especially strong, and helped overall utilization reach 88 percent for
the quarter, despite scheduled maintenance that was performed at several
of our facilities. We did experience some softness in our landfill
disposal facilities, primarily due to the timing of projects, as well as
our strategic decision to selectively increase pricing, which resulted
in lower volumes. Within our Site Services segment, we saw solid growth
from our petrochemical, specialty chemical and refinery clients and also
benefited from some limited emergency response work from flood-related
clean up projects in the Midwest.”
“Demonstrating once again the leverage of our
network of assets, EBITDA growth exceeded our revenue growth for the
quarter, increasing 23 percent year-over-year to a record $43.4 million,”
McKim said. “We achieved this record EBITDA
through a combination of price increases and tighter cost controls, even
while experiencing lower landfill volumes and significantly higher fuel
costs.”
“During the quarter, we continued to
successfully execute on the expansion of our incineration capacity,”
McKim said. “Earlier this year, we
established an 18-month goal of adding 10 percent, or 50,000 tons, to
our overall capacity. We made substantial progress on that program in
the second quarter. After having brought on an initial 7,000 tons in the
first quarter, we added approximately 14,000 additional tons in the
second quarter. We expect to bring another 7,000 tons online in the
third quarter, and the remaining new capacity will commence before
mid-2009, depending upon the permitting process and construction
schedules.”
“In the second quarter, we significantly
enhanced our balance sheet through our successful follow-on common stock
offering,” said McKim. “We
raised $173.6 million in net proceeds, which provides ample financial
flexibility for potential acquisitions, repayment of debt and working
capital needs. Using the proceeds from the offering, we redeemed $50
million principal amount of our outstanding Senior Secured Notes on July
28, which is expected to lower the Company’s
interest expense by an estimated $5.6 million annually.”
In connection with the redemption, Clean Harbors expects to record a
$4.3 million charge below the EBITDA line in the third quarter,
consisting of a prepayment penalty and non-cash expense for the
unamortized discount and financing costs related to the notes.
Non-GAAP Second-Quarter Results
Clean Harbors reports EBITDA results, which are non-GAAP financial
measures, as a complement to results provided in accordance with
accounting principles generally accepted in the United States (GAAP) and
believes that such information provides additional useful information to
investors since the Company’s loan covenants
are based upon levels of EBITDA achieved. The Company defines EBITDA in
accordance with its existing credit agreement, as described in the
following reconciliation showing the differences between reported net
income and EBITDA for the second quarter and first six months of 2008
and 2007 (in thousands):
For the three months ended:
For the six months ended:
June 30, 2008
June 30, 2007
June 30, 2008
June 30, 2007
Net income
$15,987
$11,188
$24,909
$14,689
Accretion of environmental liabilities
2,726
2,554
5,396
5,028
Depreciation and amortization
10,806
9,049
21,281
17,987
Interest expense, net
2,515
3,695
5,900
6,879
Provision for income taxes
11,404
8,739
18,993
12,713
Other (income) expense
(59
)
5
45
(1
)
EBITDA
$43,379
$35,230
$76,524
$57,295
Business Outlook and Financial Guidance
“As we enter the second half of 2008, we are
optimistic about our future prospects,”
concluded McKim. “We anticipate continued
growth across our operations, both from our Technical and Site Services
business segments. Moreover, the acquisition pipeline remains healthy
and we are continuing to evaluate strategic opportunities that have the
potential to accelerate our growth and further strengthen our company.
Our quarter end cash position of more than $280 million affords us many
options in this area. Improved cost containment measures will continue
to be a major goal, as we work to offset higher fuel and natural gas
expenses. We look forward to steady revenue and EBITDA growth for the
remainder of the year.”
For the third quarter of 2008, the Company expects revenue in the range
of $270 million to $275 million. The Company expects to generate EBITDA
for the third quarter of 2008 in the range of $45 million to $47 million.
For full-year 2008, the Company now expects to increase annual revenues
at the high-end of its previously announced range of 8 percent to 10
percent, and achieve EBITDA growth at the high-end of its previously
announced range of 20 percent to 22 percent.
Conference Call Information
Clean Harbors will conduct a conference call for investors to discuss
the information contained in this press release today, Wednesday, August
6, 2008 at 9:00 a.m. (ET). On the call, Chairman, President and Chief
Executive Officer Alan S. McKim and Executive Vice President and Chief
Financial Officer James M. Rutledge will discuss Clean Harbors’
financial results, business outlook and growth strategy.
Investors who wish to listen to the second-quarter webcast should log
onto www.cleanharbors.com/investor_relations.
The live call also can be accessed by dialing 877.407.5790 or
201.689.8328 prior to the start of the call. If you are unable to listen
to the live call, the webcast will be archived on the Company’s
website.
About Clean Harbors
Clean Harbors is North America's
leading provider of environmental and hazardous waste management
services. With an unmatched infrastructure of waste management
facilities, Clean Harbors serves over 45,000 customers, including more
than 325 Fortune 500 companies, thousands of smaller private entities
and numerous federal, state and local governmental agencies. Clean
Harbors’ Technical Services provides a broad
range of hazardous material management and disposal services including
hazardous and non-hazardous waste recycling,
treatment
and disposal, CleanPack®
laboratory
chemical packing, and household
hazardous waste management services. Clean Harbors’
Site Services provides field
services, industrial
services, vacuum
services, emergency
response and disaster
recovery, transformer
services, tank
cleaning and decontamination.
Headquartered in Norwell, Massachusetts, Clean Harbors has more than 100
locations strategically positioned throughout North America in 36 U.S.
states, six Canadian provinces, Mexico and Puerto Rico. For more
information, visit www.cleanharbors.com.
Safe Harbor Statement
Any statements contained herein that are not historical facts are
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995, and involve risks and uncertainties.
These forward-looking statements are generally identifiable by use of
the words “believes,”
“expects,” “intends,”
“anticipates,” “plans
to,” “estimates,”
“projects,” or
similar expressions. These forward-looking statements are subject to
certain risks and uncertainties that could cause actual results to
differ materially from those reflected in these forward-looking
statements. Readers are cautioned not to place undue reliance on these
forward-looking statements, which reflect management’s
opinions only as of the date hereof. The Company undertakes no
obligation to revise or publicly release the results of any revision to
these forward-looking statements other than through its various filings
with the Securities and Exchange Commission. Furthermore, all financial
information in this press release is based on preliminary data and is
subject to the final closing of the Company’s
books and records.
A variety of factors beyond the control of the Company may affect the
Company’s performance, including, but not
limited to:
The Company’s ability to manage the
significant environmental liabilities that it assumed in connection
with the CSD and other acquisitions;
The availability and costs of liability insurance and financial
assurance required by governmental entities relating to our facilities;
The effects of general economic conditions in the United States,
Canada and other territories and countries where the Company does
business;
The effect of economic forces and competition in specific marketplaces
where the Company competes;
The possible impact of new regulations or laws pertaining to all
activities of the Company’s operations;
The outcome of litigation or threatened litigation or regulatory
actions;
The effect of commodity pricing on overall revenues and profitability;
Possible fluctuations in quarterly or annual results or adverse
impacts on the Company’s results caused by
the adoption of new accounting standards or interpretations or
regulatory rules and regulations;
The effect of weather conditions or other aspects of the forces of
nature on field or facility operations;
The effects of industry trends in the environmental services and waste
handling marketplace; and
The effects of conditions in the financial services industry on the
availability of capital and financing.
Any of the above factors and numerous others not listed nor foreseen may
adversely impact the Company’s financial
performance. Additional information on the potential factors that could
affect the Company’s actual results of
operations is included in its filings with the Securities and Exchange
Commission, which may be viewed on www.cleanharbors.com/investor_relations.
CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
For the three months ended:
For the six months ended:
June 30,
June 30,
June 30,
June 30,
2008
2007
2008
2007
Revenues
$265,259
$238,708
$507,768
$443,732
Cost of revenues
178,384
165,282
348,578
316,886
Selling, general and administrative expenses
43,496
38,196
82,666
69,551
Accretion of environmental liabilities
2,726
2,554
5,396
5,028
Depreciation and amortization
10,806
9,049
21,281
17,987
Income from operations
29,847
23,627
49,847
34,280
Other (expense) income
59
(5
)
(45
)
1
Interest (expense), net
(2,515
)
(3,695
)
(5,900
)
(6,879
)
Income before provision for income taxes
27,391
19,927
43,902
27,402
Provision for income taxes
11,404
8,739
18,993
12,713
Net income
15,987
11,188
24,909
14,689
Dividends on Series B Preferred Stock
—
69
—
138
Net income attributable to common stockholders
$15,987
$11,119
$24,909
$14,551
Earnings per share:
Basic income attributable to common stockholders
$0.71
$0.56
$1.16
$0.74
Diluted income attributable to common stockholders
$0.70
$0.54
$1.14
$0.71
Weighted average common shares outstanding
22,437
19,817
21,392
19,773
Weighted average common shares outstanding plus potentially
dilutive common shares
22,936
20,661
21,907
20,683
CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(in thousands)
June 30,
December 31,
2008
2007
Current assets:
Cash and cash equivalents
$ 281,893
$ 119,538
Marketable securities
438
850
Accounts receivable, net
185,228
193,126
Unbilled accounts receivable
10,235
14,703
Deferred costs
5,795
7,359
Prepaid expenses and other current assets
11,369
10,098
Supplies inventories
24,660
22,363
Deferred tax assets
11,497
11,491
Properties held for sale
374
910
Total current assets
531,489
380,438
Property, plant and equipment, net
293,118
262,601
Other assets:
Long-term investments
6,625
8,500
Deferred financing costs
5,228
5,881
Goodwill
25,109
21,572
Permits and other intangibles, net
77,619
74,809
Deferred tax assets
12,158
12,176
Other
3,842
3,911
130,581
126,849
Total assets
$955,188
$769,888
CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS’EQUITY
(in thousands)
June 30,
December 31,
2008
2007
Current liabilities:
Uncashed checks
$ 7,531
$ 5,489
Current portion of long-term debt
69,224
—
Current portion of capital lease obligations
482
1,251
Accounts payable
72,273
81,309
Deferred revenue
23,492
29,730
Other accrued expenses
65,878
65,789
Current portion of closure, post-closure and remedial liabilities
22,795
18,858
Income taxes payable
—
8,427
Total current liabilities
261,675
210,853
Other liabilities:
Closure and post-closure liabilities, less current portion
25,877
24,202
Remedial liabilities, less current portion
138,634
141,428
Long-term obligations
51,557
120,712
Capital lease obligations, less current portion
556
1,520
Unrecognized tax benefits and other long-term liabilities
71,979
68,276
Total other liabilities
288,603
356,138
Total stockholders’ equity, net
404,910
202,897
Total liabilities and stockholders’ equity
$ 955,188
$ 769,888