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Press release from Business Wire

Clean Harbors Reports Fourth-Quarter and Year-End 2012 Financial Results

<ul> <li class='bwlistitemmargb'> <i>Company Achieves Q4 Revenue of $559 Million and $2.19 Billion for 2012</i> </li> <li class='bwlistitemmargb'> <i>2012 Net Income of $129.7 Million Reflects Release of Unrecognized Tax Benefits</i> </li> <li class='bwlistitemmargb'> <i>Adjusted EBITDA Increases 7% in 2012 to $373.8 Million</i> </li> <li class='bwlistitemmargb'> <i>Company Confirms 2013 Annual Guidance</i> </li> </ul>

Wednesday, February 20, 2013

Clean Harbors Reports Fourth-Quarter and Year-End 2012 Financial Results07:30 EST Wednesday, February 20, 2013 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 fourth quarter and year ended December 31, 2012. Revenues for the fourth quarter increased to $559.0 million compared with $545.9 million in the same period in 2011. Income from operations in the fourth quarter of 2012 decreased to $36.2 million from $59.2 million in the same period of 2011 primarily based on costs associated with the Safety-Kleen acquisition and an increase in depreciation and amortization expense. Fourth quarter 2012 net income was $61.9 million, or $1.11 per diluted share, compared with $38.2 million, or $0.72 per diluted share, in the fourth quarter of 2011. Fourth-quarter 2012 net income included a $52.4 million benefit from the release of unrecognized tax benefits due to expired statute of limitation periods, partially offset by approximately $7.5 million (net of tax) in costs related to the Safety-Kleen acquisition. Adjusted EBITDA (see description below) in the fourth quarter of 2012, which includes the costs related to Safety-Kleen, was $83.6 million compared with $97.4 million in the same period of 2011. Comments on the Fourth Quarter “We achieved year-over-year revenue growth in the fourth quarter as strong contributions in our Industrial Services and Field Services segments offset a slowdown in our Oil & Gas Field Services segment,” said Alan S. McKim, Chairman and Chief Executive Officer. “Our margins in the quarter were affected by both external and internal costs associated with our $1.25 billion acquisition of Safety-Kleen, which we completed in late December. Our bottom-line benefited from the reversal of reserves we had previously accrued related to unrecognized tax benefits.” “Within our operating segments, Technical Services had a solid quarter with 90% utilization at our incineration facilities and very high landfill volumes, driven again by Bakken-related work and large-scale projects,” McKim said. “Field Services generated double-digit growth in its base business, along with approximately $12 million in clean-up work associated with Hurricane Sandy. Within Industrial Services, lodging, specialty services and Oil Sands-related work all contributed to a strong quarterly performance in this segment. Within Oil & Gas Field Services, the winter drilling season was not as robust as the same period in 2011 with lower rig counts in Western Canada and margin pressure in the U.S. related to the shift away from natural gas.” Full-Year 2012 Results Revenues for 2012 increased 10% to a record $2.19 billion from $1.98 billion in 2011. Income from operations in 2012 was $202.2 million compared with $217.7 million in 2011. 2012 net income was $129.7 million, or $2.40 per diluted share, compared with $127.3 million, or $2.39 per diluted share, in 2011. Adjusted EBITDA (see description below) increased 7% in 2012 to a record $373.8 million from $350.0 million for 2011. “In 2012, we again achieved double-digit growth and delivered Adjusted EBITDA margins (Adjusted EBITDA divided by revenues) for the year of 17%,” McKim said. “A number of our businesses – ranging from landfills to turnaround services to lodging – generated record results in 2012, which offset some of the near-term challenges we experienced in the energy space. With the completion of the Safety-Kleen acquisition at year-end, we exited 2012 with significant momentum and many exciting growth opportunities.” Business Outlook and Financial Guidance “Our outlook for 2013 and beyond is enhanced by our acquisition of Safety-Kleen in late December,” McKim said. “Safety-Kleen brings well-established leadership positions in several important lines of business, including parts washers, small quantity waste generators, used oil collection and recycling. The transaction significantly broadens our portfolio of services and will generate a substantial increase in disposal volumes. The addition of Safety-Kleen also enhances our commitment to sustainability and enables us to capitalize on the growing demand for recycled products including re-refined oil. We remain confident that this acquisition will enhance our cash flow generation going forward and build significant long-term value for our shareholders.” “Following the completion of the Safety-Kleen acquisition, we are aggressively moving forward with our integration plans,” McKim said. “Our integration teams are identifying areas where we believe we can reduce costs and improve efficiencies by streamlining functions. Through reductions in redundant headcount, increased asset utilization and economies of scale in areas such as procurement and IT, we are currently targeting $60 to $65 million in acquisition-related synergies in 2013 – up from our previously announced target of $30 million. At the same time, we are seeing a near-term pricing imbalance in the Group 2 lubricants market. These additional costs savings will help offset this pricing pressure. We are confident that we can leverage the operational efficiencies of our combined organization to further enhance the long-term profitability of Clean Harbors.” “Looking ahead, we are optimistic about our overall prospects for profitable growth based on favorable industry trends. We see substantial cross-selling and long-term growth opportunities within each of our segments. Within Technical Services and Field Services, we have a healthy pipeline of ongoing and potential projects that should continue to drive considerable waste volumes into our disposal network. Throughout 2012, our Industrial Services business consistently delivered strong results based on steady demand, and we expect that to continue in the coming year. Our Oil & Gas Field Services segment is well-positioned to rebound from the slowdown we experienced in 2012 as the transformation and growth of the North American energy market continues in the years ahead,” McKim concluded. Based on its 2012 performance and current market conditions, Clean Harbors is confirming its previously announced 2013 annual revenue and Adjusted EBITDA guidance. The Company continues to expect 2013 revenues in the range of $3.72 billion to $3.77 billion. For 2013, the Company expects Adjusted EBITDA in the range of $605 million to $620 million. A reconciliation of the Company's Adjusted EBITDA guidance to net income guidance is included below. The Company's full-year Adjusted EBITDA guidance excludes an estimated $20 million of one-time non-cash acquisition-related fair value adjustments to inventory values and deferred revenue to be amortized in the Company's first-quarter results. Non-GAAP Results Clean Harbors reports Adjusted EBITDA results, which is a non-GAAP financial measure, as a complement to results provided in accordance with accounting principles generally accepted in the United States (GAAP). The Company believes that Adjusted EBITDA provides additional useful information to investors since the Company's loan covenants are based upon levels of Adjusted EBITDA achieved. The Company defines Adjusted EBITDA in accordance with its existing credit agreement, as described in the following reconciliation showing the differences between reported net income and Adjusted EBITDA for the fourth quarter and full-year 2012 and 2011 (in thousands):       For the three months ended:       For the year ended:December 31,2012   December 31,2011December 31,2012   December 31,2011     Net income $ 61,874 $ 38,233 $ 129,674 $ 127,252 Accretion of environmental liabilities 2,508 2,449 9,917 9,680 Depreciation and amortization 44,852 35,663 161,646 122,663 Other expense (income) 337 (471 ) 802 (6,402 ) Loss on early extinguishment of debt — — 26,385 — Interest expense, net 13,451 11,342 47,287 39,389 (Benefit) provision for income taxes   (39,431 )     10,143       (1,944 )     57,426   Adjusted EBITDA $ 83,591     $ 97,359     $ 373,767     $ 350,008     Adjusted EBITDA Guidance Reconciliation An itemized reconciliation between projected net income and projected Adjusted EBITDA is as follows:   For the Year Ended December 31, 2013Amount   Margin % (1) (In millions)     Projected GAAP net income $ 141   to   $ 164 3.8% to 4.3% Adjustments: Amortization of acquisition-related fair value adjustments to inventory and deferred revenue 20 to 20 0.5% to 0.5% Accretion of environmental liabilities 13 to 11 0.4% to 0.3% Depreciation and amortization 265 to 255 7.1% to 6.8% Other (income) expense - to - 0.0% to 0.0% Loss on early extinguishment of debt - to - 0.0% to 0.0% Interest expense, net 79 to 78 2.1% to 2.1% Provision for income taxes 87   to   92 2.4%   to   2.4% Projected Adjusted EBITDA $ 605   to   $ 620 16.3%   to   16.4%   Revenues (In millions) $3,720 to $3,770   (1) The Margin % indicates the percentage that the line-item represents to total revenues for the respective reporting period, calculated by dividing the dollar amount for the line-item by total revenues for the reporting period. 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, 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 (NYSE: CLH) is the leading provider of environmental, energy and industrial services throughout North America. The Company serves a diverse customer base, including a majority of the Fortune 500 companies, thousands of smaller private entities and numerous federal, state, provincial and local governmental agencies. Through its Safety-Kleen subsidiary, Clean Harbors also is a premier provider of used oil recycling and re-refining, parts washers and environmental services for the small quantity generator market. Headquartered in Massachusetts, Clean Harbors has waste disposal facilities and service locations throughout the United States and Canada, as well as 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 benefits of the acquisition of Safety-Kleen, 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 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 Clean Harbors' most recently filed Form 10-K and Form 10-Q. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. Clean Harbors undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements other than through its filings with the Securities and Exchange Commission, which may be viewed in the “Investors” section of Clean Harbors' 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 year ended:December 31,December 31,December 31,December 31,2012201120122011   Revenues $ 558,962 $ 545,886 $ 2,187,908 $ 1,984,136 Cost of revenues (exclusive of items shown separately below) 399,743 373,142 1,540,621 1,379,991 Selling, general and administrative expenses 75,628 75,385 273,520 254,137 Accretion of environmental liabilities 2,508 2,449 9,917 9,680 Depreciation and amortization   44,852     35,663     161,646     122,663   Income from operations 36,231 59,247 202,204 217,665 Other (expense) income (337 ) 471 (802 ) 6,402 Loss on early extinguishment of debt — — (26,385 ) — Interest (expense), net   (13,451 )   (11,342 )   (47,287 )   (39,389 ) Income before (benefit) provision for income taxes 22,443 48,376 127,730 184,678 (Benefit) provision for income taxes   (39,431 )   10,143     (1,944 )   57,426   Net income $ 61,874   $ 38,233   $ 129,674   $ 127,252   Earnings per share: Basic $ 1.11   $ 0.72   $ 2.41   $ 2.40   Diluted $ 1.11   $ 0.72   $ 2.40   $ 2.39     Weighted average common shares outstanding   55,614     53,081     53,884     52,931   Weighted average common shares outstanding plus potentially  dilutive common shares   55,746     53,401     54,079     53,324     CLEAN HARBORS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSASSETS(in thousands)           December 31,December 31,20122011 Current assets: Cash and cash equivalents $ 229,836 $ 260,723 Marketable securities 11,778 111 Accounts receivable, net 541,423 449,553 Unbilled accounts receivable 27,072 29,385 Deferred costs 6,888 5,903 Prepaid expenses and other current assets 75,778 73,349 Supplies inventories 171,441 56,242 Deferred tax assets   22,577   16,602 Total current assets   1,086,793   891,868   Property, plant and equipment, net   1,531,763   903,947   Other assets: Long-term investments 4,354 4,245 Deferred financing costs 21,657 13,607 Goodwill 593,771 122,392 Permits and other intangibles, net 572,817 139,644 Other   14,651   10,100 Total other assets   1,207,250   289,988 Total assets $ 3,825,806 $ 2,085,803   CLEAN HARBORS, INC. AND SUBSIDIARIESUNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETSLIABILITIES AND STOCKHOLDERS' EQUITY(in thousands)           December 31,December 31,20122011 Current liabilities: Current portion of capital lease obligations $ 5,092 $ 8,310 Accounts payable 256,468 178,084 Deferred revenue 50,942 32,297 Accrued expenses 232,429 147,992 Current portion of closure, post-closure and remedial liabilities   24,121   15,059 Total current liabilities   569,052   381,742 Other liabilities: Closure and post-closure liabilities, less current portion 45,457 30,996 Remedial liabilities, less current portion 151,890 124,146 Long-term obligations 1,400,000 524,203 Capital lease obligations, less current portion 2,879 6,375 Unrecognized tax benefits and other long-term liabilities   224,456   117,354 Total other liabilities   1,824,682   803,074 Total stockholders' equity, net   1,432,072   900,987 Total liabilities and stockholders' equity $ 3,825,806 $ 2,085,803   Supplemental Segment Data (in thousands)       For the three months ended:     For the twelve months ended:RevenueDecember 31,2012     December 31,2011December 31,2012     December 31,2011         Technical Services $238,901 $235,006 $937,754 $885,374 Field Services 75,720 57,214 239,968 260,312 Industrial Services 142,760 125,633 581,648 469,950 Oil & Gas Field Services 101,812 127,778 428,932 369,190 Corporate Items (231)     255 (394)     (690) Total $558,962     $545,886 $2,187,908     $1,984,136   Non-GAAP Results Clean Harbors reports Adjusted EBITDA results, which is a non-GAAP financial measure, 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 Adjusted EBITDA achieved. The Company defines Adjusted EBITDA in accordance with its existing credit agreement. See “Non-GAAP Results” for a reconciliation of the Company's total Adjusted EBITDA to GAAP net income.       For the three months ended:     For the twelve months ended:Adjusted EBITDADecember 31,2012     December 31,2011December 31,2012     December 31,2011         Technical Services $ 60,115 $ 61,641 $ 244,989 $ 235,674 Field Services 9,488 7,625 25,087 39,152 Industrial Services 32,471 25,905 139,923 103,535 Oil & Gas Field Services 14,848 30,635 75,809 76,383 Corporate Items   (33,331 )       (28,447 )   (112,041 )       (104,736 ) Total $ 83,591       $ 97,359   $ 373,767       $ 350,008     Clean Harbors, Inc.James M. Rutledge, 781-792-5100Vice Chairman, President and Chief Financial OfficerInvestorRelations@cleanharbors.comorSharon Merrill AssociatesJim Buckley, 617-542-5300Executive Vice Presidentclh@investorrelations.com