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Press release from Business Wire

Clean Harbors Reports Record Second-Quarter 2010 Financial Results

<p> <i>-- Company Achieves Record Revenue of $472 Million and EBITDA of $96.6 Million</i> </p> <p> <i>-- Strong Contributions Across Segments and Gulf Spill Response Drive Performance</i> </p> <p> <i>-- Groundbreaking Begins on New Energy and Industrial Facility in Alberta Region</i> </p> <p> <i>-- Company Updates 2010 Guidance</i> </p> <p> </p>

Wednesday, August 04, 2010

Clean Harbors Reports Record Second-Quarter 2010 Financial Results07:30 EDT Wednesday, August 04, 2010 NORWELL, Mass. (Business Wire) -- Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental, energy and industrial services and hazardous waste management services throughout North America,today announced financial results for the second quarter ended June 30, 2010. Revenues more than doubled to $471.6 million from $215.3 million in the second quarter of 2009, reflecting the acquisition of Eveready Inc. in mid-2009, a strong performance in the legacy Clean Harbors' business and its response to the Gulf of Mexico oil spill. Income from operations increased to $71.9 million from $16.4 million in the second quarter of 2009. Second quarter 2010 net income grew to $57.9 million, or $2.19 per diluted share, from $8.6 million, or $0.36 per diluted share, in the second quarter of 2009. Due to a favorable release of unrecognized tax benefits, the effective tax rate for the second quarter of 2010 was 17%, compared with 42% in the second quarter of 2009. Second quarter 2010 net income also included: a favorable change in the estimate for environmental liabilities of $3.1 million on a pre-tax basis; other income of $2.7 million, on a pre-tax basis, resulting from gains on the sale of fixed assets and marketable securities; and $2.4 million in income from discontinued operations, net of tax, primarily from the sale of assets held for sale. Second quarter 2009 net income included approximately $3.3 million in expenses related to the Company's acquisition of Eveready. Weighted average diluted shares outstanding used to calculate net income per share in the second quarter of 2010 were 26.4 million, versus 23.9 million in the same period of 2009. EBITDA (see description below) more than tripled to $96.6 million from $31.3 million in the second quarter of 2009. Comments on the Second Quarter “The second quarter of 2010 was a milestone quarter for Clean Harbors, as we generated revenue of more than $470 million and achieved record profits and EBITDA,” said Alan S. McKim, Chairman and Chief Executive Officer. “Our results in the quarter were driven by the combination of our oil spill response in the Gulf of Mexico and an excellent performance across nearly all of our operating segments. Within our Technical Services business, incineration utilization for the quarter exceeded 91%, compared with 88% in the same period of 2009, while landfill volumes increased 17% year-over-year. For our Technical Services and Field Services segments, we saw strong contributions within a number of our key industry verticals including Chemicals, Manufacturing, Utilities and Government. Although the second quarter is historically the seasonally weakest period for Industrial Services, this segment exhibited healthy momentum fueled by growth in Western Canada and the refinery industry in particular.” “Our participation in the Gulf oil spill response exceeded our initial expectations and the guidance we provided in mid-May, accounting for more than 20% of revenue in the second quarter,” McKim said. “We worked closely with both government agencies and private organizations to provide a broad range of services within four primary areas: skimming, decontamination, water treatment and onshore clean-up. We deployed a large number of our own employees in the region and hired subcontractors who recruited a temporary workforce from the affected areas. At the peak level in the quarter, we had more than 3,500 response-related personnel in the Gulf region. We also supplied a wide variety of equipment, including boats, containment boom, skimmers, and vacuum trucks, as well as recovery and treatment systems.” “During the quarter, we made substantial progress on our integration efforts with Eveready,” McKim said. “Early in the quarter, we successfully divested the Pembina Area Landfill for $11.7 million and another non-core asset for $2.4 million. We continued with our rebranding program, which should be complete by the end of the third quarter. We also reallocated some of Eveready's extensive fleet of assets to further improve equipment utilization, including shifting dozens of trucks and specialized vehicles to the U.S., some of which were involved in the Gulf clean-up efforts. We continue to roll out new, enhanced systems to simplify the administration of the oil field services line of business.” 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 2010 and 2009 (in thousands):     For the three months ended:       For the six months ended: June 30, 2010     June 30, 2009       June 30, 2010     June 30, 2009         Net income $ 57,929 $ 8,624 $ 68,359 $ 13,579 Accretion of environmental liabilities 2,602 2,634 5,304 5,284 Depreciation and amortization 22,105 12,241 44,779 24,302 Interest expense, net 7,646 1,609 14,574 2,989 Other income (2,708 ) (11 ) (3,154 ) (44 ) Provision for income taxes 11,468 6,208 18,557 10,619 Income from discontinued operations, net of tax   (2,412 )       —           (2,794 )       —   EBITDA $ 96,630       $ 31,305         $ 145,625       $ 56,729   Business Outlook and Financial Guidance “We concluded the first half of the year with a strong cash position of nearly $300 million that will enable us to accelerate our growth through selective acquisitions and strategic investments,” McKim said. “Our acquisition pipeline remains healthy and we are continuing to evaluate a number of strategic opportunities. On the internal front, we are broadening our presence in the Ruth Lake region, north of Ft. McMurray, Alberta. We are building a $25 million facility consisting of a new Energy and Industrial service location, a 400-bed open camp, a training facility and maintenance shops. We are excited about the potential for this integrated facility, which will become the Company's northernmost service location in Alberta and provide us with a greater presence in this attractive market. Site preparation for the location is already underway and we anticipate opening the first phase – a 200-bed camp and training facility – by year-end.” “As we enter the second half of 2010, we are optimistic about our prospects for the full year,” McKim said. “While the North American economy has yet to fully recover from the recession, we continue to see stabilization and improved performance across the majority of our key end markets. We remain encouraged by the combination of sizeable project opportunities in our pipeline and the outlook for routine maintenance and remediation work within our verticals. In addition, we expect our Gulf response-related activities to continue in the current quarter at a reduced level before winding down to significantly lower levels in the fourth quarter.” “Within our core business, we intend to leverage our extensive network of assets to continue to grow our EBITDA at a greater pace than our revenues. Our ongoing cost reduction initiatives have proven to be highly successful. As we further integrate Eveready, we expect to gain increased efficiencies from those assets. Overall, we remain on track to capture the $15 million in synergies we are targeting for Eveready in 2010,” McKim concluded. Based on year-to-date performance, current market conditions and the impact of the emergency response event in the Gulf, Clean Harbors is revising its 2010 annual revenue and EBITDA guidance, exclusive of potential future acquisitions. The Company currently expects full-year 2010 revenue in the range of $1.6 billion to $1.65 billion, which includes anticipated revenues related to the Gulf oil spill through the third quarter. The Company is now targeting EBITDA for 2010 in the range of $270 million to $280 million for the full year. Conference Call Information Clean Harbors will conduct a conference call for investors to discuss the information contained in this press release today, Wednesday, August 4, 2010 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 2010 webcast should log onto www.cleanharbors.com/investor_relations. The live call also can be accessed by dialing 877.709.8155 or 201.689.8881 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 HarborsClean Harbors is the leading provider of environmental, energy and industrial services and hazardous waste management services throughout North America. The Company serves more than 50,000 customers, including a majority of the Fortune 500 companies, thousands of smaller private entities and numerous federal, state, provincial and local governmental agencies. Within Clean Harbors Environmental Services, the Company offers Technical Services and Field Services. Technical Services provide a broad range of hazardous material management and disposal services including the collection, packaging, recycling, treatment and disposal of hazardous and non-hazardous waste. Field Services provide a wide variety of environmental cleanup services on customer sites or other locations on a scheduled or emergency response basis. Within Clean Harbors Energy and Industrial Services, the Company offers Industrial Services and Exploration Services. Industrial Services provide industrial and specialty services, such as high-pressure and chemical cleaning, catalyst handling, decoking, material processing and industrial lodging services to refineries, chemical plants, pulp and paper mills, and other industrial facilities. Exploration Services provide exploration and directional boring services to the energy sector serving oil and gas exploration, production, and power generation. Headquartered in Norwell, Massachusetts, Clean Harbors has more than 175 locations, including over 50 waste management facilities, throughout North America in 36 U.S. states, seven Canadian provinces, Mexico and Puerto Rico. The Company also operates international locations in Bulgaria, China, Singapore, Sweden, Thailand and the United Kingdom. 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. Such statements may include, but are not limited to, statements about the benefits of the acquisition of Eveready, including future financial and operating results, the combined company's plans, objectives, expectations and intentions and other statements that are not historical facts. Such statements are based upon the current beliefs and expectations of Clean Harbors' management and are subject to significant risks and uncertainties. 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. A variety of factors 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 prior acquisitions; The availability and costs of liability insurance and financial assurance required by governmental entities related to the Company's facilities; General conditions in the oil and gas industries, particularly in the Alberta oil sands and other parts of Western Canada; The possibility that the expected synergies from the acquisition of Eveready will not be timely or fully realized; The extent to which the Company's major customers commit to and schedule major projects; The occurrence of events such as the recent Gulf spill, which require cleanup and other services; The Company's future cash flow and earnings; The Company's ability to meet its debt obligations; The Company's ability to increase its market share; 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, energy and industrial services marketplaces; 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 SUBSIDIARIESUNAUDITED CONSOLIDATED STATEMENTS OF INCOME(in thousands except per share amounts)           For the three months ended:For the six months ended:June 30,     June 30,June 30,     June 30,2010200920102009   Revenues $ 471,639 $ 215,337 $ 826,535 $ 421,643 Cost of revenues (exclusive of items shown separately below) 324,280 146,254 584,697 289,767 Selling, general and administrative expenses 50,729 37,778 96,213 75,147 Accretion of environmental liabilities 2,602 2,634 5,304 5,284 Depreciation and amortization   22,105     12,241     44,779     24,302   Income from operations 71,923 16,430 95,542 27,143 Other income 2,708 11 3,154 44 Interest (expense), net   (7,646 )   (1,609 )   (14,574 )   (2,989 ) Income from continuing operations before provision for income taxes 66,985 14,832 84,122 24,198 Provision for income taxes   11,468     6,208     18,557     10,619   Income from continuing operations 55,517 8,624 65,565 13,579 Income from discontinued operations, net of tax   2,412     —     2,794     —   Net income $ 57,929 $ 8,624 $ 68,359 $ 13,579 Earnings per share: Basic $ 2.20   $ 0.36   $ 2.60   $ 0.57   Diluted $ 2.19   $ 0.36   $ 2.59   $ 0.57     Weighted average common shares outstanding   26,291     23,777     26,271     23,763   Weighted average common shares outstanding plus potentially  dilutive common shares   26,425     23,889     26,398     23,876   CLEAN HARBORS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSASSETS(in thousands)               June 30,December 31,20102009 Current assets: Cash and cash equivalents $ 295,300 $ 233,546 Marketable securities 1,331 2,072 Accounts receivable, net 337,636 274,918 Unbilled accounts receivable 31,951 12,331 Deferred costs 6,844 5,192 Prepaid expenses and other current assets 18,708 18,348 Supplies inventories 40,962 41,417 Deferred tax assets 18,748 18,865 Assets held for sale   —   13,561 Total current assets   751,480   620,250   Property, plant and equipment, net   599,220   589,944   Other assets: Long-term investments 5,315 6,503 Deferred financing costs 9,175 10,156 Goodwill 56,997 56,085 Permits and other intangibles, net 113,737 114,188 Other   8,304   3,942 Total other assets   193,528   190,874 Total assets $ 1,544,228 $ 1,401,068 CLEAN HARBORS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSLIABILITIES AND STOCKHOLDERS' EQUITY(in thousands)               June 30,December 31,20102009 Current liabilities: Current portion of capital lease obligations $ 5,136 $ 1,923 Accounts payable 145,672 97,923 Deferred revenue 28,090 21,156 Accrued expenses 120,644 90,707 Current portion of closure, post-closure and remedial liabilities 21,308 18,412 Liabilities held for sale   —   3,199 Total current liabilities   320,850   233,320 Other liabilities: Closure and post-closure liabilities, less current portion 27,923 28,505 Remedial liabilities, less current portion 128,893 134,379 Long-term obligations 292,874 292,433 Capital lease obligations, less current portion 11,274 6,915 Unrecognized tax benefits and other long-term liabilities   82,250   91,691 Total other liabilities   543,214   553,923 Total stockholders' equity, net   680,164   613,825 Total liabilities and stockholders' equity $ 1,544,228 $ 1,401,068