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 third quarter ended September 30,
2008.
For the third quarter of 2008, Clean Harbors reported an 11 percent
increase in revenue to $273.2 million from $245.5 million in the third
quarter of 2007. Income from operations rose 21 percent to $31.3 million
from $25.9 million in the third quarter of 2007. Third quarter 2008 net
income attributable to common shareholders was $14.6 million, or $0.61
per diluted share, which includes an $0.11 per share charge related to
the early extinguishment of $50 million in debt. This compares with
$12.9 million, or $0.63 per diluted share, in the third quarter of 2007.
Weighted average diluted shares outstanding used to calculate the net
income per share in the third quarter of 2008 were 23.8 million, versus
20.7 million in the third quarter of fiscal 2007.
EBITDA (see description below) increased 18.1 percent to a record $45.4
million in the third quarter of 2008, from $38.4 million in the
comparable period of 2007.
Comments on the Third Quarter
“Given the hurricanes and flooding that
affected our business during the quarter, we were pleased to achieve our
guidance,” said Alan S. McKim, Chairman and
Chief Executive Officer. “On the top-line, we
delivered another record quarter as the overall utilization rate at our
incinerators was nearly 93 percent with strong contributions from both
our U.S. and Canada facilities. This was even more impressive given that
our Deer Park, Texas incinerators were shut down for five days due to
Hurricane Ike. We estimate that interruption of business, along with the
consequent weather-related slowdown in the region, cost us between $5
and $7 million in revenue. Helping to offset that unexpected shortfall
was approximately $9.1 million in emergency response business stemming
from a major oil spill on the Mississippi River and some
hurricane-related work in the Gulf region. While our landfill volumes
improved sequentially, that business continued to experience some
softness related to ongoing project delays. Our Site Services segment
continued its steady performance with growth driven by our
petrochemical, specialty chemical and utilities clients.”
“In the third quarter, we continued to
leverage our extensive network of assets to grow our EBITDA at a far
greater rate than our revenues,” McKim said. “We
continued to successfully implement our pricing initiatives, pass
through higher fuel expenses and tightly manage our overall costs. One
of our ongoing areas of focus has been reducing our reliance on outside
transportation. During the quarter, we lowered our outside
transportation expense by $2.9 million compared to the third quarter of
2007 as we gained efficiencies and expanded our internal fleet of
vehicles. As a percentage, outside transportation represented only 5.1%
of revenues compared with 6.8% in the same period of 2007.”
“Our financial position remains strong, as we
closed the third quarter with cash and equivalents of $253 million,”
McKim said. “Using the proceeds from the
successful follow-on offering we completed in the second quarter, we
redeemed $50 million in outstanding Senior Secured Notes in July. As we
previously announced, we incurred a $4.3 million charge below the EBITDA
line, consisting of a prepayment penalty and non-cash expense for the
unamortized discount and financing costs related to the notes. The
elimination of these notes is expected to save the Company an estimated
$5.6 million annually in interest expense.”
Non-GAAP Third-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 third quarter and first nine months of 2008
and 2007 (in thousands):
For the three months ended:
For the nine months ended:
September 30,2008
September 30,2007
September 30,2008
September 30,2007
Net income
$14,628
$12,940
$39,537
$27,629
Accretion of environmental liabilities
2,682
2,715
8,078
7,743
Depreciation and amortization
11,414
9,814
32,695
27,801
Loss on early extinguishment of debt
4,251
—
4,251
—
Interest expense, net
1,889
3,022
7,789
9,901
Provision for income taxes
10,388
9,978
29,381
22,691
Other (income) expense
104
(61
)
149
(62
)
EBITDA
$45,356
$38,408
$121,880
$95,703
Business Outlook and Financial Guidance
“Despite the current economic uncertainty, we
expect to exceed our previously announced annual guidance of revenue
growth in the range of 8 to 10 percent, and EBITDA growth in the range
of 20 to 22 percent,” said McKim. “We
remain encouraged about our prospects as we enter the final quarter of
the year with momentum in both segments of our business. Within
Technical Services, our incineration volumes are healthy with a sizeable
backlog of materials and our ongoing capacity expansion plans are
proceeding on schedule. Within Site Services, our organic growth
strategy is succeeding and we have another office opening planned for
the fourth quarter. We also expect some residual emergency response work
related to the Gulf hurricanes. On the cost side, we remain committed to
our ongoing expense reduction initiatives. We are confident that the
leverage that is inherent in our business model will enable us to
continue to grow EBITDA at relatively high margins. And our cash
position affords us significant flexibility to expand our business
through selective acquisitions and strategic investments.”
Based on current market conditions and its year-to-date performance, the
Company expects revenue in the range of $261 million to $263 million for
the fourth quarter of 2008. The Company expects to generate EBITDA for
the fourth quarter in the range of $42 million to $44 million.
For full-year 2009, the Company is early in its budgeting process, but
anticipates continued growth in revenues and profitability based on its
diversified customer base and wide range of services. Excluding the
effect of any potential acquisitions, the Company currently expects
revenue growth in the range of 5 percent to 7 percent, and EBITDA growth
in the range of 10 percent to 15 percent.
Conference Call Information
Clean Harbors will conduct a conference call for investors to discuss
the information contained in this press release today, Wednesday,
November 5, 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 third-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 nine months ended:
September 30,
September 30,
September 30,
September 30,
2008
2007
2008
2007
Revenues
$273,157
$245,507
$780,925
$689,239
Cost of revenues
187,063
169,007
535,641
485,893
Selling, general and administrative expenses
40,738
38,092
123,404
107,643
Accretion of environmental liabilities
2,682
2,715
8,078
7,743
Depreciation and amortization
11,414
9,814
32,695
27,801
Income from operations
31,260
25,879
81,107
60,159
Other (expense) income
(104
)
61
(149
)
62
Loss on early extinguishment of debt
(4,251
)
—
(4,251
)
—
Interest (expense), net
(1,889
)
(3,022
)
(7,789
)
(9,901
)
Income before provision for income taxes
25,016
22,918
68,918
50,320
Provision for income taxes
10,388
9,978
29,381
22,691
Net income
14,628
12,940
39,537
27,629
Dividends on Series B Preferred Stock
—
69
—
206
Net income attributable to common stockholders
$14,628
$12,871
$39,537
$27,423
Earnings per share:
Basic income attributable to common stockholders
$0.62
$0.65
$1.79
$1.39
Diluted income attributable to common stockholders
$0.61
$0.63
$1.75
$1.33
Weighted average common shares outstanding
23,423
19,840
22,052
19,788
Weighted average common shares outstanding plus potentially
dilutive common shares
23,822
20,686
22,530
20,715
CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
ASSETS
(in thousands)
September 30,
December 31,
2008
2007
Current assets:
Cash and cash equivalents
$ 252,959
$ 119,538
Marketable securities
428
850
Accounts receivable, net
186,249
193,126
Unbilled accounts receivable
10,469
14,703
Deferred costs
6,382
7,359
Prepaid expenses and other current assets
6,335
10,098
Supplies inventories
27,196
22,363
Deferred tax assets
11,497
11,491
Properties held for sale
—
910
Total current assets
501,515
380,438
Property, plant and equipment, net
294,398
262,601
Other assets:
Long-term investments
6,625
8,500
Deferred financing costs
3,776
5,881
Goodwill
22,726
21,572
Permits and other intangibles, net
76,228
74,809
Deferred tax assets
11,480
12,176
Other
4,194
3,911
125,029
126,849
Total assets
$920,942
$769,888
CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS’ EQUITY
(in thousands)
September 30,
December 31,
2008
2007
Current liabilities:
Uncashed checks
$ 6,966
$ 5,489
Current portion of long-term debt
19,226
—
Current portion of capital lease obligations
484
1,251
Accounts payable
73,294
81,309
Deferred revenue
25,784
29,730
Other accrued expenses
68,977
65,789
Current portion of closure, post-closure and remedial liabilities
17,073
18,858
Income taxes payable
172
8,427
Total current liabilities
211,976
210,853
Other liabilities:
Closure and post-closure liabilities, less current portion
25,746
24,202
Remedial liabilities, less current portion
136,968
141,428
Long-term obligations
51,982
120,712
Capital lease obligations, less current portion
421
1,520
Unrecognized tax benefits and other long-term liabilities
73,841
68,276
Total other liabilities
288,958
356,138
Total stockholders’ equity, net
420,008
202,897
Total liabilities and stockholders’ equity
$ 920,942
$ 769,888