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, |
September 30, |
September 30, |
September 30, |
|||||||
| 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, |
September 30, |
September 30, |
September 30, |
|||||||
| 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 SUBSIDIARIES |
||||||||||||
| UNAUDITED 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, | |||||||||
|
2012 |
2011 |
2012 |
2011 |
|||||||||
| 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 SUBSIDIARIES | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
| ASSETS | ||||||||
| (in thousands) | ||||||||
| September 30, | December 31, | |||||||
|
2012 |
2011 |
|||||||
| 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 SUBSIDIARIES | ||||||||
| UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS | ||||||||
|
LIABILITIES AND STOCKHOLDERS’ EQUITY |
||||||||
| (in thousands) | ||||||||
|
September 30, |
December 31, | |||||||
|
2012 |
2011 |
|||||||
| 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: | |||||||||||
| Revenue |
September 30, |
September 30, |
September 30, |
September 30, |
||||||||
| 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: | |||||||||||
| EBITDA |
September 30, |
September 30, |
September 30, |
September 30, |
||||||||
| 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 | ||||||||