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Press release from Business Wire

Clean Harbors Reports First-Quarter 2011 Financial Results

<p> <i>-- Broad-based Contributions Fuel Record Q1 Results</i> </p> <p> <i>-- Q1 Revenue Increases 23% to $435 Million</i> </p> <p> <i>-- Q1 Net Income More Than Doubles to $22.7 Million</i> </p> <p> <i>-- EBITDA Grows to $67.6 Million on Higher Volume and Pricing</i> </p> <p> <i>-- Company Increases 2011 Guidance</i> </p>

Wednesday, May 04, 2011

Clean Harbors Reports First-Quarter 2011 Financial Results07:30 EDT Wednesday, May 04, 2011 NORWELL, Mass. (Business Wire) -- Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental, energy and industrial services throughout North America,today announced financial results for the first quarter ended March 31, 2011. Revenues increased 23% to a first-quarter record of $435.0 million from $354.9 million in the same period in 2010. Income from operations increased 68% to $39.7 million from $23.6 million in the first quarter of 2010. First quarter 2011 net income rose 118% to $22.7 million, or $0.86 per diluted share, from $10.4 million, or $0.40 per diluted share, in the first quarter of 2010. First quarter 2011 other income includes a $3.4 million pre-tax benefit related to compensation for the release by eminent domain of certain rail rights. EBITDA (see description below) increased 38% to $67.6 million from $49.0 million in the first quarter of 2010. The Company concluded the first quarter with cash and marketable securities of $535.9 million, compared with $305.4 million at December 31, 2010. The increase in cash is primarily the result of the Company's $250 million senior secured notes offering in March 2011. Comments on the First Quarter “Our first-quarter performance reflects broad-based growth across all of our segments,” said Alan S. McKim, Chairman and Chief Executive Officer. “Within our Environmental business, we achieved revenue growth of nearly 30% at our TSDFs (Treatment, Storage and Disposal Facilities), while revenue at our wastewater treatment plants increased more than 50% as a result of refinery and frac water-related volumes. Utilization at our incineration facilities and landfills was steady in what is typically the Company's seasonally weakest quarter. Across our network, momentum continued from the large-scale project work that began to accelerate in late 2010, resulting in more than 25% growth in our Field Services segment. Within our Energy and Industrial business, the prolonged cold weather in Western Canada supported an extended period of drilling activity. Investments in U.S. gas and oil production also continued, driving steady demand for our services. In particular, lodging and exploration each generated exceptionally strong year-over-year results.” “We leveraged our extensive network of assets to grow our first-quarter 2011 EBITDA by 38% – a far greater rate than our revenues,” McKim said. “We increased our EBITDA margin year-over-year by more than 170 basis points to 15.5% as we successfully implemented pricing initiatives and tightly managed overall costs. In addition, we were effective at passing through higher fuel expenses in the quarter.” Acquisition Activity “We recently signed a definitive agreement to acquire Peak Energy Services of Calgary – a transaction that will significantly expand our presence in oil and natural gas drilling and production support. During the first quarter, we also agreed to acquire another Canadian company, Badger Daylighting. As we announced last week, we did not receive the required 66 2/3 percent of the votes cast by Badger shareholders, despite the support of Badger's Board of Directors, executive management and two leading independent shareholder advisory firms. But that decision has not diminished our intention to further expand through acquisitions. During the first quarter, we successfully raised $250 million in senior secured debt at favorable rates. With more than a half billion dollars in cash and cash equivalents on our balance sheet and the Peak transaction underway, we are moving forward on additional opportunities in our active acquisition pipeline.” The acquisition of Peak Energy Services for approximately CAD $196 million is expected to be completed during the second quarter of 2011. The transaction remains subject to approval by regulators and Peak shareholders, as well as other customary closing conditions. Each of the directors and officers of Peak and Deans Knight Capital Management Ltd., collectively holding 53.6% of the Peak shares, have entered into agreements in which they have agreed to vote their shares in favor of the acquisition at the Peak shareholders' meeting, now scheduled to be held on May 25, 2011. Non-GAAP 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 first quarter of 2011 and 2010 (in thousands):   For the three months ended:March 31, 2011   March 31, 2010   Net income $22,730 $10,430 Accretion of environmental liabilities 2,389 2,702 Depreciation and amortization 25,460 22,674 Other income (2,899) (446) Interest expense, net 6,478 6,928 Provision for income taxes 13,433 7,089 Income from discontinued operations, net of tax —   (382) EBITDA $67,591   $48,995 Business Outlook and Financial Guidance “We concluded 2010 with strong momentum that has carried into fiscal 2011,” McKim said. “In the first quarter, we recorded double-digit year-over-year increases in all four of our newly aligned reporting segments – Technical Services, Field Services, Industrial Services and Oil & Gas Field Services. Looking ahead, we remain encouraged about our prospects for profitable growth. The underlying economic and outsourcing trends remain favorable for Clean Harbors. Our comprehensive efforts to reduce our cost infrastructure – even while investing heavily in our business – have proven to be effective as we continue to expand our margins. In addition, our acquisition pipeline remains active and we are in the process of evaluating a number of potential opportunities.” Based on its first-quarter performance and current market conditions, Clean Harbors is increasing its 2011 annual revenue and EBITDA guidance. The Company currently expects 2011 revenues in the range of $1.62 billion to $1.67 billion, up from its previous revenue guidance of $1.54 billion to $1.59 billion. For 2011, the Company now expects EBITDA in the range of $275 million to $284 million, an increase from its previous guidance of $262 million to $270 million. This guidance is exclusive of any potential future acquisitions, including the Company's planned purchase of Peak Energy Services. Conference Call Information Clean Harbors will conduct a conference call for investors today at 9:00 a.m. (ET) to discuss the information contained in this press release. 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 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 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. 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. These forward-looking statements are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or similar expressions. Such statements may include, but are not limited to, statements about the Company's business outlook and financial guidance and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors' management as of this date only and are subject to certain risks and uncertainties that could cause actual results to differ materially, including, without limitation, those items identified as “risk factors” in the Company's most recently filed Form 10-K and Form 10-Q. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. 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, which may be viewed at 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:March 31,   March 31,20112010   Revenues $434,962 $354,896 Cost of revenues (exclusive of items shown separately below) 312,577 260,417 Selling, general and administrative expenses 54,794 45,484 Accretion of environmental liabilities 2,389 2,702 Depreciation and amortization 25,460 22,674 Income from operations 39,742 23,619 Other income 2,899 446 Interest (expense), net (6,478) (6,928) Income from continuing operations before provision for income taxes 36,163 17,137 Provision for income taxes 13,433 7,089 Income from continuing operations 22,730 10,048 Income from discontinued operations, net of tax — 382 Net income $22,730 $10,430 Earnings per share: Basic $0.86 $0.40 Diluted $0.86 $0.40   Weighted average common shares outstanding 26,399 26,251 Weighted average common shares outstanding plus potentially   dilutive common shares 26,579 26,371   CLEAN HARBORS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSASSETS(in thousands)   March 31,December 31,20112010 Current assets: Cash and cash equivalents $ 531,763 $ 302,210 Marketable securities 4,143 3,174 Accounts receivable, net 347,532 332,678 Unbilled accounts receivable 16,891 19,117 Deferred costs 6,359 6,891 Prepaid expenses and other current assets 30,007 28,939 Supplies inventories 43,817 44,546 Deferred tax assets   17,364   14,982 Total current assets   997,876   752,537   Property, plant and equipment, net   683,284   655,394   Other assets: Long-term investments 5,379 5,437 Deferred financing costs 12,941 7,768 Goodwill 61,786 60,252 Permits and other intangibles, net 113,650 114,400 Other   5,728   6,687 Total other assets   199,484   194,544 Total assets $ 1,880,644 $ 1,602,475   CLEAN HARBORS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSLIABILITIES AND STOCKHOLDERS' EQUITY(in thousands)   March 31,December 31,20112010 Current liabilities: Current portion of capital lease obligations $ 7,214 $ 7,954 Accounts payable 135,998 136,978 Deferred revenue 28,500 30,745 Accrued expenses 95,847 116,089 Current portion of closure, post-closure and remedial liabilities   14,761   14,518 Total current liabilities   282,320   306,284 Other liabilities: Closure and post-closure liabilities, less current portion 29,877 32,830 Remedial liabilities, less current portion 128,005 128,944 Long-term obligations 525,416 264,007 Capital lease obligations, less current portion 6,216 6,839 Unrecognized tax benefits and other long-term liabilities   86,940   82,744 Total other liabilities   776,454   515,364 Total stockholders' equity, net   821,870   780,827 Total liabilities and stockholders' equity $ 1,880,644 $ 1,602,475 Clean Harbors, Inc.James M. Rutledge, 781-792-5100EVP and Chief Financial OfficerInvestorRelations@cleanharbors.comorClean Harbors, Inc.Bill Geary, 781-792-5130Corporate Counsel for Public AffairsorSharon Merrill AssociatesJim Buckley, 617-542-5300Executive Vice Presidentclh@investorrelations.com