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Press release from Business Wire

Clean Harbors Reports Third-Quarter 2012 Financial Results

<ul> <li class='bwlistitemmargb'> <i>Company Reports Revenue of $533.8 Million </i> </li> <li class='bwlistitemmargb'> <i>Landfill Business Delivers Record Quarter</i> </li> <li class='bwlistitemmargb'> <i>Company Achieves EBITDA Margin of 18.8%</i> </li> <li class='bwlistitemmargb'> <i>Safety-Kleen Acquisition Expected to Close by Year-end </i> </li> <li class='bwlistitemmargb'> <i>Updates 2012 Guidance and Provides Preliminary 2013 Guidance</i> </li> </ul>

Wednesday, November 07, 2012

Clean Harbors Reports Third-Quarter 2012 Financial Results07:30 EST Wednesday, November 07, 2012 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 third quarter ended September 30, 2012. Revenues for the third quarter were $533.8 million compared with $556.1 million in the same period in 2011. Revenue in the third quarter of 2011 included approximately $42 million in emergency response revenue related to the Yellowstone River oil spill. For the first nine months of 2012, revenue grew 13% to $1.6 billion from $1.4 billion in the same period in 2011. Income from operations in the third quarter of 2012 decreased to $56.7 million from $66.8 million in the same period of 2011 primarily based on lower revenue and an increase in depreciation and amortization expense. For the first nine months of 2012, income from operations increased to $166.0 million from $158.4 million in the first nine months of 2011. Third quarter 2012 net income was $12.4 million, or $0.23 per diluted share, compared with $37.1 million, or $0.70 per diluted share, in the third quarter of 2011. The third quarter of 2012 included a $26.4 million pre-tax charge related to the Company's recent senior debt refinancing. Adjusted net income, excluding the charge, was $28.8 million, or $0.54 per diluted share. Net income for the first nine months of 2012 was $67.8 million, or $1.27 per diluted share, compared with $89.0 million, or $1.67 per diluted share. Adjusted net income for the first nine months of 2012, excluding the charge, was $84.3 million, or $1.57 per diluted share. EBITDA (see description below) was $100.5 million in the third quarter of 2012 compared with $103.8 million in the same period of 2011. For the first nine months of 2012, EBITDA grew 15% to $290.2 million from $252.6 million in the same period of 2011. Comments on the Third Quarter “Solid contributions from our Technical Services and Industrial Services segments enabled us to deliver high EBITDA margins of 18.8% and top $100 million in quarterly EBITDA for only the third time in our history,” said Alan S. McKim, Chairman and Chief Executive Officer. “Our EBITDA results were driven by increased efficiencies and economies of scale from our acquisitions, productivity gains across our asset base and our comprehensive cost reduction initiatives. Our third-quarter performance also reflected the diversity of our business as strong results in incineration, landfills and oil sands offset a lack of emergency response revenue and a slowdown in oil and gas field services.” “Within our operating segments, Technical Services had a strong quarter as the utilization rate at our incineration facilities was a robust 91.3% based on higher U.S. volumes,” McKim said. “At the same time, our landfills business generated a record performance this quarter with a substantial increase in volumes, driven by large-scale projects and Bakken-related work. Excluding revenue related to the Yellowstone River oil spill in 2011, our Field Services segment was flat year-over-year. This is the fourth consecutive quarter in which we have not recorded a major emergency response event.” “Our Industrial Services segment had an excellent quarter, achieving 17% growth and significantly improving its margins,” McKim said. “This segment benefited from steady Oil Sands related work, strong utilization within our lodging business and a high level of cross-selling activity with our refinery customers. Within our Oil & Gas Field Services segment, our revenue was down from the prior year due to the repositioning of our solids control assets in the U.S. and unfavorable weather conditions in Western Canada.” Non-GAAP Results Clean Harbors reports EBITDA and adjusted net income 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). The Company believes that EBITDA 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 three and nine months ended September 30, 2012 and 2011 (in thousands):     For the three months ended:     For the nine months ended: September 30,2012   September 30,2011 September 30,2012   September 30,2011     Net income $12,359 $37,133 $67,800 $89,019 Accretion of environmental liabilities 2,488 2,435 7,409 7,231 Depreciation and amortization 41,300 34,604 116,794 87,000 Other expense (income) 91 (164) 465 (5,931) Loss on early extinguishment of debt 26,385 —   26,385 — Interest expense, net 11,596 10,927 33,836 28,047 Provision for income taxes 6,308   18,896 37,487   47,283 EBITDA $100,527   $103,831 $290,176   $252,649   The Company provides adjusted net income so that analysts, investors and other interested parties have the same data it uses to assess its core operating performance. The following reconciliation shows the differences between reported net income and adjusted net income for the three and nine months ended September 30, 2012 and 2011 (in thousands):     For the three months ended:     For the nine months ended: September 30,2012   September 30,2011 September 30,2012   September 30,2011     Net income $12,359 $37,133 $67,800 $89,019 Loss on early extinguishment of debt, net of tax 16,461   — 16,461   — Adjusted net income $28,820   $37,133 $84,261   $89,019 Adjusted net income per share $0.54   $0.70 $1.57   $1.67   Business Outlook and Financial Guidance “As we near the conclusion of 2012, we remain encouraged about our overall prospects,” McKim said. “While we experienced some turbulence in certain markets in 2012, the underlying industry and outsourcing trends remain favorable for the long-term outlook of all four of our operating segments. We are building momentum across all of our lines of business. Within our Environmental business, we continue to have an active pipeline of projects and ongoing engagements to generate a sizeable amount of waste volumes. Within our Energy & Industrial business, we are looking forward to entering its strongest operating periods during the cold winter months, particularly in Western Canada and more remote locations.” “Our favorable outlook is further supported by the recent announcement of a definitive agreement to acquire Safety-Kleen. This $1.25 billion transaction, which we continue to expect to complete by year-end, is the largest in Clean Harbors' history and we believe will add significant long-term value for our shareholders. With industry-leading assets, a talented workforce and a strong commitment to sustainability, Safety-Kleen is a recognized leader in the environmental services field. The addition of its re-refining waste oil and expanded solvent recycling capabilities will significantly broaden our portfolio of services. We also expect to benefit from the consistent volumes that its business can generate for our network of waste disposal facilities. Upon completion, we believe the merger of our two businesses should extend our growth momentum in 2013 and beyond, and greatly enhance our cash flow generation going forward,” McKim concluded. Based on its year-to-date performance and current market conditions, Clean Harbors is updating its 2012 annual revenue and EBITDA guidance. The Company now expects 2012 revenues in the range of $2.15 billion to $2.16 billion, revised from its previously announced guidance of $2.20 billion to $2.25 billion. For 2012, the Company now expects EBITDA in the range of $375 million to $380 million, revised from its previously announced guidance of $400 million to $410 million. This guidance does not include the revenues from the Company's emergency response efforts associated with Hurricane Sandy as it is too early to estimate the duration of the clean-up activities presently being performed by more than 500 Clean Harbors personnel at various sites. Based upon preliminary estimates of the markets it serves, the Company expects 2013 revenues in the range of $2.30 billion to $2.35 billion. The Company expects its EBITDA margin to be approximately 18.5% at this level of growth in 2013, which translates into an EBITDA range of $425 million to $435 million. This guidance is exclusive of the planned acquisition of Safety-Kleen or any other potential future acquisitions. As Clean Harbors completes its 2013 budgeting process in the coming months, it plans to update this preliminary guidance in conjunction with the announcement of its fourth-quarter and year-end results in February 2013. 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, management will discuss Clean Harbors' financial results, recently announced acquisition of Safety-Kleen, business outlook and growth strategy. Investors who wish to listen to the webcast should visit the Investor Relations section of the Company's website at www.cleanharbors.com. The live call also can be accessed by dialing 201.689.8881 or 877.709.8155 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 the leading provider of environmental, energy and industrial services throughout North America. The Company serves more than 60,000 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 200 locations, including over 50 waste management facilities, throughout North America in 38 U.S. states, seven 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. 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 in the “Investors” section of the Company's website at www.cleanharbors.com. CLEAN HARBORS, INC. AND SUBSIDIARIESUNAUDITED CONSOLIDATED STATEMENTS OF INCOME(in thousands except per share amounts)         For the three months ended:For the nine months ended:September 30,     September 30,September 30,     September 30,2012201120122011   Revenues $533,806 $556,053 $1,628,946 $1,438,250 Cost of revenues (exclusive of items shown separately below) 372,940 386,518 1,140,878 1,006,849 Selling, general and administrative expenses 60,339 65,704 197,892 178,752 Accretion of environmental liabilities 2,488 2,435 7,409 7,231 Depreciation and amortization 41,300 34,604 116,794 87,000 Income from operations 56,739 66,792 165,973 158,418 Other (expense) income (91) 164 (465) 5,931 Loss on early extinguishment of debt (26,385) — (26,385) — Interest (expense), net (11,596) (10,927) (33,836) (28,047) Income before provision for income taxes 18,667 56,029 105,287 136,302 Provision for income taxes 6,308 18,896 37,487 47,283 Net income $12,359 $37,133 $67,800 $89,019 Earnings per share: Basic $0.23 $0.70 $1.27 $1.68 Diluted $0.23 $0.70 $1.27 $1.67   Weighted average common shares outstanding 53,374 53,023 53,303 52,921 Weighted average common shares outstanding plus potentially dilutive common shares 53,565 53,370 53,519 53,298   CLEAN HARBORS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSASSETS(in thousands)     September 30,     December 31,20122011 Current assets: Cash and cash equivalents $ 523,614 $ 260,723 Marketable securities 11,113 111 Accounts receivable, net 399,362 449,553 Unbilled accounts receivable 34,401 29,385 Deferred costs 6,995 5,903 Prepaid expenses and other current assets 53,252 73,349 Supplies inventories 63,934 56,242 Deferred tax assets   16,617   16,602 Total current assets   1,109,288   891,868   Property, plant and equipment, net   1,003,414   903,947 Other assets: Long-term investments 4,326 4,245 Deferred financing costs 12,530 13,607 Goodwill 157,724 122,392 Permits and other intangibles, net 151,810 139,644 Other   10,311   10,100 Total other assets   336,701   289,988 Total assets $ 2,449,403 $ 2,085,803   CLEAN HARBORS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSLIABILITIES AND STOCKHOLDERS' EQUITY(in thousands)     September 30,     December 31,20122011 Current liabilities: Current portion of capital lease obligations $ 5,937 $ 8,310 Accounts payable 174,327 178,084 Deferred revenue 29,060 32,297 Accrued expenses 136,687 147,992 Current portion of closure, post-closure and remedial liabilities   19,552   15,059 Total current liabilities   365,563   381,742 Other liabilities: Closure and post-closure liabilities, less current portion 29,712 30,996 Remedial liabilities, less current portion 117,981 124,146 Long-term obligations 800,000 524,203 Capital lease obligations, less current portion 3,477 6,375 Unrecognized tax benefits and other long-term liabilities   125,915   117,354 Total other liabilities   1,077,085   803,074 Total stockholders' equity, net   1,006,755   900,987 Total liabilities and stockholders' equity $ 2,449,403 $ 2,085,803   Supplemental Segment Data (in thousands)     For the three months ended:     For the nine months ended:RevenueSeptember 30,2012     September 30,2011September 30,2012     September 30,2011         Technical Services $242,106 $228,358 $698,853 $650,368 Field Services 57,663 99,520 164,248 203,098 Industrial Services 144,521 123,468 438,888 344,317 Oil & Gas Field Services 89,915 105,014 327,120 241,412 Corporate Items (399)     (307) (163)     (945) Total $533,806     $556,053 $1,628,946     $1,438,250   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.     For the three months ended:     For the nine months ended:EBITDASeptember 30,2012     September 30,2011September 30,2012     September 30,2011         Technical Services $67,332 $62,531 $184,874 $174,033 Field Services 5,707 19,318 15,599 31,527 Industrial Services 37,860 25,933 107,452 77,630 Oil & Gas Field Services 14,752 25,062 60,961 45,748 Corporate Items (25,124)     (29,013) (78,710)     (76,289) Total $100,527     $103,831 $290,176     $252,649 Clean Harbors, Inc.James M. Rutledge, 781-792-5100Vice Chairman, President and Chief Operating OfficerInvestorRelations@cleanharbors.comorSharon Merrill AssociatesJim Buckley, 617-542-5300Executive Vice Presidentclh@investorrelations.com