November 24, 2020

Nynas Nytex BT22 | FLD Top Leaderboard | 600×75

Clean Harbors Announces Third-Quarter 2020 Financial Results

Reports Q3 Revenues of $779.3 Million Posts Q3 Net Income of $54.9 Million; EPS of $0.99; Adjusted EPS of $0.90 Achieves Adjusted EBITDA of $161.2 Million, Including $13.3 Million From Government Assistance Programs Generates $29 Million in Q3 Decontamination Emergency Response Revenue Delivers Record Quarterly Adjusted Free Cash Flow of $123.5 Million Raises 2020 Adjusted EBITDA and Adjusted Free Cash Flow Guidance NORWELL, Mass.--(BUSINESS WIRE)--Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the third quarter ended September 30, 2020. “We delivered strong third-quarter results that came in ahead of our expectations,” said Alan S. McKim, Chairman, President and Chief Executive Officer. “Our performance reflects the resiliency of our business model, as well as the dedication of our people. We have now improved our Adjusted EBITDA margins for 11 consecutive quarters. In response to the pandemic and the dynamic market conditions it created, we established a leadership position in providing advanced decontamination and disposal services for customers affected by COVID-19. We also substantially improved our operational efficiencies and lowered our overall cost structure, which is reflected in our third-quarter margin performance. During the quarter, we saw a steady sequential pick up from the second quarter across several of our core lines of business, particularly within Safety-Kleen.” Third-Quarter 2020 Results Revenues were $779.3 million compared with $891.7 million in the same period of 2019. Income from operations was $83.9 million compared with $80.4 million in the third quarter of 2019. Net income was $54.9 million, or $0.99 per diluted share. This compares with net income of $36.4 million, or $0.65 per diluted share, for the same period in 2019. Adjusted for certain items in both periods, adjusted net income was $49.9 million, or $0.90 per diluted share, for the third quarter of 2020, compared with adjusted net income of $40.7 million, or $0.72 per diluted share, in the same period of 2019. (See reconciliation table below) Adjusted EBITDA (see description below) was $161.2 million, including $13.3 million of benefit from U.S. and Canadian government assistance programs, compared with $156.6 million in the same period of 2019. Q3 2020 Review “Environmental Services delivered strong profitability through a combination of cost reductions, productivity improvements, a healthy mix of higher margin work and government incentives,” McKim said. “We experienced a lower utilization rate of 80% at our incinerators in the quarter due to the timing of turnarounds and a production lag from some customers, but we continued to execute on our strategy to capture higher-value waste streams across our network. This resulted in an average price per pound increase of 5% from the prior year. Landfill volumes declined nominally, as stronger base business largely offset the lack of remediation and waste projects caused by the pandemic. While still below historical averages, activity in other service areas of the segment, including Technical Services and Industrial Services, saw steady increases in demand at key customers during the quarter. “Revenue from COVID-19 decontamination work totaled $29 million in the quarter, which helped drive a 20% top-line increase in Field Services,” McKim said. “Our team has now completed more than 9,000 COVID-19 responses, reinforcing our leadership position. We are extremely proud of the decontamination work being done by our people out on the front lines as they limit the spread of this virus, protect our customers and make our communities and workplaces safe again. “Safety-Kleen rebounded from the shelter-in-place restrictions that had severely disrupted customer demand in the second quarter of 2020,” McKim said. “In fact, on a year-over-year basis, revenue in our branch business was only off 6% in Q3 – much better than we anticipated. The lifting of local restrictions across much of North America led to an increase in vehicle miles driven generating improved lubricant demand. Based on the strength of the recovery in near-term demand for base oil and finished lube products, we restarted three re-refineries that were taken offline at the outset of the pandemic. Given the declining market value of waste oil, we maintained high charge-for-oil (CFO) rates for used motor oil (UMO) and increased our collection volumes to 50 million gallons, 16% ahead of second-quarter levels.” Business Outlook and Financial Guidance “We enter the final quarter of 2020 positioned for continued success in the current environment,” McKim said. “Our market leadership and renowned emergency response capabilities have enabled us to capitalize on opportunities and safely navigate the challenges presented by the pandemic. Over the past two quarters, prudent cost actions and reduced capital spending have helped us drive record Adjusted EBITDA margins and adjusted free cash flow. We believe that our COVID-19 decontamination business can continue to help hedge against potential slowdowns in revenue and profitability in other parts of the Company. “Within Environmental Services, we anticipate a sequential uptick in incineration utilization in the fourth quarter as we saw steady increases in production and waste volumes at our key customers during the third quarter. Because virus-related project delays remain, we do not expect landfills to fully recover until sometime in 2021 when we believe PFAS and other larger opportunities start to come to market. For Industrial Services and Technical Services, we anticipate our core service offerings to close out the year on an upward trajectory. Field Services remains on track for a great year, with anticipated COVID-related revenue exceeding $100 million. “Our Safety-Kleen branch business remains below historical levels, but demand has improved markedly from the lows of April and May. With the ongoing spike in COVID-19 cases, we are sensitive to the possibility of new shelter-in-place mandates that could disrupt the recovery of this business. For Safety-Kleen Oil, our primary re-refineries are all back online and base oil pricing is stable. We continue to actively manage our CFO rates with the goal of growing collection volumes to supply our re-refinery network,” McKim concluded. Based on its year-to-date financial performance and current market conditions, Clean Harbors raised its Adjusted EBITDA and Adjusted free cash flow guidance ranges and currently expects: Adjusted EBITDA in the range of $530 million to $550 million, based on anticipated 2020 GAAP net income in the range of $104 million to $130 million; and Adjusted free cash flow in the range of $250 million to $270 million, based on anticipated 2020 net cash from operating activities in the range of $405 million to $445 million. Non-GAAP Results Clean Harbors reports Adjusted EBITDA, which is a non-GAAP financial measure and should not be considered an alternative to net income or other measurements under generally accepted accounting principles (GAAP), but viewed only as a supplement to those measurements. Adjusted EBITDA is not calculated identically by all companies, and therefore the Company’s measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Clean Harbors believes that Adjusted EBITDA provides additional useful information to investors since the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved and management routinely evaluates the performance of its businesses based upon levels of Adjusted EBITDA. The Company defines Adjusted EBITDA in accordance with its existing revolving credit agreement, as described in the following reconciliation showing the differences between reported net income and Adjusted EBITDA for the three and nine months ended September 30, 2020 and 2019 (in thousands): For the Three Months Ended: For the Nine Months Ended: September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Net income $54,910 $36,369 $95,505 $73,589 Accretion of environmental liabilities 2,822 2,490 8,149 7,624 Depreciation and amortization 74,470 73,756 221,497 223,328 Other (income) expense, net (2,268) 427 597 (1,992) Loss on sale of businesses 118 — 3,376 — Loss on early extinguishment of debt — 6,119 — 6,119 Interest expense, net 17,407 19,702 54,848 59,681 Provision for income taxes 13,712 17,750 35,269 39,752 Adjusted EBITDA $161,171 $156,613 $419,241 $408,101 Adjusted EBITDA Margin 20.7% 17.6% 17.9% 16.1% This press release includes a discussion of net income and earnings per share adjusted for the loss on early extinguishment of debt, net of tax of $1.8 million, the loss on sale of businesses and the impacts of tax-related valuation allowances and other as identified in the reconciliations provided below. The Company believes that discussion of these additional non-GAAP measures provides investors with meaningful comparisons of current results to prior periods’ results by excluding items that the Company does not believe reflect its fundamental business performance. The following shows the difference between net income and adjusted net income, and the difference between earnings per share and adjusted earnings per share for the three and nine months ended September 30, 2020 and 2019 (in thousands, except per share amounts): For the Three Months Ended: For the Nine Months Ended: September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Adjusted net income Net income $54,910 $36,369 $95,505 $73,589 Loss on early extinguishment of debt, net of tax of $1.8m — 4,284 — 4,284 Loss on sale of businesses 118 — 3,376 — Tax-related valuation allowances and other* (5,128) — (4,502) 4,762 Adjusted net income $49,900 $40,653 $94,379 $82,635 Adjusted earnings per share Earnings per share $0.99 $0.65 $1.71 $1.31 Loss on early extinguishment of debt, net of tax of $1.8m — 0.07 — 0.08 Loss on sale of businesses — — 0.06 — Tax-related valuation allowances and other* (0.09) — (0.08) 0.08 Adjusted earnings per share $0.90 $0.72 $1.69 $1.47 * For the three and nine months ended September 30, 2020, other amounts include a $1.6 million benefit, or $0.03 per share, related to tax benefits from impacts of prior period tax filing amendments. Adjusted Free Cash Flow Reconciliation Clean Harbors reports adjusted free cash flow, which it considers to be a measurement of liquidity that provides useful information to investors about its ability to generate cash. The Company defines adjusted free cash flow as net cash from operating activities excluding cash impacts of items derived from non-operating activities, less additions to property, plant and equipment plus proceeds from sale and disposal of fixed assets. The Company excludes cash impacts of items derived from non-operating activities such as taxes paid in connection with divestitures and in the current period have also excluded cash paid in connection with the purchase of its corporate headquarters and certain capital improvements to the site as these expenditures are considered one-time in nature. Adjusted free cash flow should not be considered an alternative to net cash from operating activities or other measurements under GAAP. Adjusted free cash flow is not calculated identically by all companies, and therefore the Company’s measurement of adjusted free cash flow may not be comparable to similarly titled measures reported by other companies. An itemized reconciliation between net cash from operating activities and adjusted free cash flow is as follows for the three and nine months ended September 30, 2020 and 2019 (in thousands): For the Three Months Ended: For the Nine Months Ended: September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Adjusted free cash flow Net cash from operating activities $143,946 $146,205 $317,432 $284,675 Additions to property, plant and equipment (24,636) (56,161) (150,357) (174,533) Purchase and capital improvements of corporate HQ — — 21,080 — Proceeds from sale and disposal of fixed assets 4,206 1,559 7,307 8,948 Adjusted free cash flow $123,516 $91,603 $195,462 $119,090 Adjusted EBITDA Guidance Reconciliation An itemized reconciliation between projected GAAP net income and projected Adjusted EBITDA is as follows (in millions): For the Year Ending December 31, 2020 Projected GAAP net income $104 to $130 Adjustments: Accretion of environmental liabilities 11 to 10 Depreciation and amortization 295 to 285 Other expense, net 1 to 1 Loss on sale of businesses 3 to 3 Interest expense, net 74 to 73 Provision for income taxes 42 to 48 Projected Adjusted EBITDA $530 to $550 Adjusted Free Cash Flow Guidance Reconciliation An itemized reconciliation between projected net cash from operating activities and projected adjusted free cash flow is as follows (in millions): For the Year Ending December 31, 2020 Projected net cash from operating activities $405 to $445 Additions to property, plant and equipment (186) to (206) Purchase and capital improvements of corporate headquarters 21 to 21 Proceeds from sale and disposal of fixed assets 10 to 10 Projected adjusted free cash flow $250 to $270 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. During the call, management will discuss Clean Harbors’ financial results, business outlook and growth strategy. Investors who wish to listen to the webcast and view the accompanying slides 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 time. If you are unable to listen to the live conference call, the webcast will be archived on the Company’s website. About Clean Harbors Clean Harbors (NYSE: CLH) is North America’s leading provider of environmental and industrial services. The Company serves a diverse customer base, including a majority of Fortune 500 companies. Its customer base spans a number of industries, including chemical, energy and manufacturing, as well as numerous government agencies. These customers rely on Clean Harbors to deliver a broad range of services such as end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services. Through its Safety-Kleen subsidiary, Clean Harbors also is North America’s largest re-refiner and recycler of used oil and a leading provider of parts washers and environmental services to commercial, industrial and automotive customers. Founded in 1980 and based in Massachusetts, Clean Harbors operates in the United States, Canada, Mexico, Puerto Rico and India. 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,” “seeks,” “should,” “estimates,” “projects,” “may,” “likely,” or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, 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, the risks and uncertainties surrounding COVID-19 and the related impact on the Company’s business, and those items identified as “Risk Factors” in Clean Harbors’ most recently filed Form 10-K and Form 10-Q. Forward-looking statements are neither historical facts nor assurances of future performance. 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 SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) For the Three Months Ended: For the Nine Months Ended: September 30, 2020 September 30, 2019 September 30, 2020 September 30, 2019 Revenues $779,344 $891,668 $2,347,907 $2,541,185 Cost of revenues (exclusive of items shown separately below) 511,629 612,754 1,588,976 1,772,051 Selling, general and administrative expenses 106,544 122,301 339,690 361,033 Accretion of environmental liabilities 2,822 2,490 8,149 7,624 Depreciation and amortization 74,470 73,756 221,497 223,328 Income from operations 83,879 80,367 189,595 177,149 Other income (expense), net 2,268 (427) (597) 1,992 Loss on sale of businesses (118) — (3,376) — Loss on early extinguishment of debt — (6,119) — (6,119) Interest expense, net (17,407) (19,702) (54,848) (59,681) Income before provision for income taxes 68,622 54,119 130,774 113,341 Provision for income taxes 13,712 17,750 35,269 39,752 Net income $54,910 $36,369 $95,505 $73,589 Earnings per share: Basic $0.99 $0.65 $1.72 $1.32 Diluted $0.99 $0.65 $1.71 $1.31 Shares used to compute earnings per share — Basic 55,592 55,850 55,646 55,858 Shares used to compute earnings per share — Diluted 55,738 56,165 55,832 56,109 CLEAN HARBORS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) September 30, 2020 December 31, 2019 Current assets: Cash and cash equivalents $475,706 $371,991 Short-term marketable securities 56,639 42,421 Accounts receivable, net 602,069 644,738 Unbilled accounts receivable 59,438 56,326 Deferred costs 20,212 21,746 Inventories and supplies 220,884 214,744 Prepaid expenses and other current assets 58,711 48,942 Total current assets 1,493,659 1,400,908 Property, plant and equipment, net 1,539,333 1,588,151 Other assets: Operating lease right-of-use assets 146,454 162,206 Goodwill 524,261 525,013 Permits and other intangibles, net 392,401 419,066 Other 10,079 13,560 Total other assets 1,073,195 1,119,845 Total assets $4,106,187 $4,108,904 Current liabilities: Current portion of long-term obligations $7,535 $7,535 Accounts payable 213,776 298,375 Deferred revenue 67,412 73,370 Accrued expenses 293,200 276,540 Current portion of closure, post-closure and remedial liabilities 22,324 23,301 Current portion of operating lease liabilities 36,814 40,979 Total current liabilities 641,061 720,100 Other liabilities: Closure and post-closure liabilities, less current portion 77,070 68,368 Remedial liabilities, less current portion 100,389 98,155 Long-term obligations, less current portion 1,550,756 1,554,116 Operating lease liabilities, less current portion 110,097 121,020 Deferred taxes, unrecognized tax benefits and other long-term liabilities 322,099 277,332 Total other liabilities 2,160,411 2,118,991 Total stockholders’ equity, net 1,304,715 1,269,813 Total liabilities and stockholders’ equity $4,106,187 $4,108,904 CLEAN HARBORS, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Nine Months Ended: September 30, 2020 September 30, 2019 Cash flows from operating activities: Net income $95,505 $73,589 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 221,497 223,328 Allowance for doubtful accounts 10,441 (745) Amortization of deferred financing costs and debt discount 2,688 2,908 Accretion of environmental liabilities 8,149 7,624 Changes in environmental liability estimates 9,050 (585) Deferred income taxes — (973) Other expense (income), net 597 (1,992) Stock-based compensation 12,739 14,664 Loss on sale of businesses 3,376 — Loss on early extinguishment of debt — 6,119 Environmental expenditures (8,816) (12,804) Changes in assets and liabilities, net of acquisitions: Accounts receivable and unbilled accounts receivable 23,969 (31,408) Inventories and supplies (9,554) (11,982) Other current and non-current assets (19,320) (5,425) Accounts payable (63,898) 3,035 Other current and long-term liabilities 31,009 19,322 Net cash from operating activities 317,432 284,675 Cash flows used in investing activities: Additions to property, plant and equipment (150,357) (174,533) Proceeds from sale and disposal of fixed assets 7,307 8,948 Acquisitions, net of cash acquired (8,839) (29,479) Proceeds from sale of businesses, net of transactional costs 7,712 — Additions to intangible assets including costs to obtain or renew permits (1,863) (2,896) Proceeds from sale of available-for-sale securities 39,141 41,612 Purchases of available-for-sale securities (53,397) (30,761) Net cash used in investing activities (160,296) (187,109) Cash flows used in financing activities: Change in uncashed checks 381 (3,516) Tax payments related to withholdings on vested restricted stock (4,407) (5,505) Repurchases of common stock (39,542) (16,390) Deferred financing costs paid — (10,053) Premiums paid on early extinguishment of debt — (2,689) Payments on finance leases (2,755) (327) Principal payments on debt (5,652) (850,652) Issuance of unsecured senior notes — 845,000 Borrowing from revolving credit facility 150,000 — Payment on revolving credit facility (150,000) — Net cash used in financing activities (51,975) (44,132) Effect of exchange rate change on cash (1,446) 2,292 Increase in cash and cash equivalents 103,715 55,726 Cash and cash equivalents, beginning of period 371,991 226,507 Cash and cash equivalents, end of period $475,706 $282,233 Supplemental information: Cash payments for interest and income taxes: Interest paid $66,000 $52,440 Income taxes paid, net of refunds 14,195 23,797 Non-cash investing activities: Property, plant and equipment accrued 11,732 14,875 ROU assets obtained in exchange for operating lease liabilities 19,993 8,008 ROU assets obtained in exchange for finance lease liabilities 28,333 31,011 Supplemental Segment Data (in thousands) For the Three Months Ended: Revenue September 30, 2020 September 30, 2019 Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Environmental Services $498,183 $29,787 $527,970 $550,122 $36,750 $586,872 Safety-Kleen 281,089 (29,449) 251,640 341,417 (35,272) 306,145 Corporate Items 72 (338) (266) 129 (1,478) (1,349) Total $779,344 $— $779,344 $891,668 $— $891,668 For the Nine Months Ended: Revenue September 30, 2020 September 30, 2019 Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Environmental Services $1,490,641 $100,605 $1,591,246 $1,550,114 $108,856 $1,658,970 Safety-Kleen 857,048 (97,640) 759,408 990,146 (105,540) 884,606 Corporate Items 218 (2,965) (2,747) 925 (3,316) (2,391) Total $2,347,907 $— $2,347,907 $2,541,185 $— $2,541,185 Contacts Michael L. Battles EVP and Chief Financial Officer Clean Harbors, Inc. 781.792.5100 [email protected] Jim Buckley SVP Investor Relations Clean Harbors, Inc. 781.792.5100 [email protected] Read full story here
  • Reports Q3 Revenues of $779.3 Million
  • Posts Q3 Net Income of $54.9 Million; EPS of $0.99; Adjusted EPS of $0.90
  • Achieves Adjusted EBITDA of $161.2 Million, Including $13.3 Million From Government Assistance Programs
  • Generates $29 Million in Q3 Decontamination Emergency Response Revenue
  • Delivers Record Quarterly Adjusted Free Cash Flow of $123.5 Million
  • Raises 2020 Adjusted EBITDA and Adjusted Free Cash Flow Guidance

NORWELL, Mass.–(BUSINESS WIRE)–Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the third quarter ended September 30, 2020.

“We delivered strong third-quarter results that came in ahead of our expectations,” said Alan S. McKim, Chairman, President and Chief Executive Officer. “Our performance reflects the resiliency of our business model, as well as the dedication of our people. We have now improved our Adjusted EBITDA margins for 11 consecutive quarters. In response to the pandemic and the dynamic market conditions it created, we established a leadership position in providing advanced decontamination and disposal services for customers affected by COVID-19. We also substantially improved our operational efficiencies and lowered our overall cost structure, which is reflected in our third-quarter margin performance. During the quarter, we saw a steady sequential pick up from the second quarter across several of our core lines of business, particularly within Safety-Kleen.”

Third-Quarter 2020 Results

Revenues were $779.3 million compared with $891.7 million in the same period of 2019. Income from operations was $83.9 million compared with $80.4 million in the third quarter of 2019.

Net income was $54.9 million, or $0.99 per diluted share. This compares with net income of $36.4 million, or $0.65 per diluted share, for the same period in 2019. Adjusted for certain items in both periods, adjusted net income was $49.9 million, or $0.90 per diluted share, for the third quarter of 2020, compared with adjusted net income of $40.7 million, or $0.72 per diluted share, in the same period of 2019. (See reconciliation table below)

Adjusted EBITDA (see description below) was $161.2 million, including $13.3 million of benefit from U.S. and Canadian government assistance programs, compared with $156.6 million in the same period of 2019.

Q3 2020 Review

“Environmental Services delivered strong profitability through a combination of cost reductions, productivity improvements, a healthy mix of higher margin work and government incentives,” McKim said. “We experienced a lower utilization rate of 80% at our incinerators in the quarter due to the timing of turnarounds and a production lag from some customers, but we continued to execute on our strategy to capture higher-value waste streams across our network. This resulted in an average price per pound increase of 5% from the prior year. Landfill volumes declined nominally, as stronger base business largely offset the lack of remediation and waste projects caused by the pandemic. While still below historical averages, activity in other service areas of the segment, including Technical Services and Industrial Services, saw steady increases in demand at key customers during the quarter.

“Revenue from COVID-19 decontamination work totaled $29 million in the quarter, which helped drive a 20% top-line increase in Field Services,” McKim said. “Our team has now completed more than 9,000 COVID-19 responses, reinforcing our leadership position. We are extremely proud of the decontamination work being done by our people out on the front lines as they limit the spread of this virus, protect our customers and make our communities and workplaces safe again.

“Safety-Kleen rebounded from the shelter-in-place restrictions that had severely disrupted customer demand in the second quarter of 2020,” McKim said. “In fact, on a year-over-year basis, revenue in our branch business was only off 6% in Q3 – much better than we anticipated. The lifting of local restrictions across much of North America led to an increase in vehicle miles driven generating improved lubricant demand. Based on the strength of the recovery in near-term demand for base oil and finished lube products, we restarted three re-refineries that were taken offline at the outset of the pandemic. Given the declining market value of waste oil, we maintained high charge-for-oil (CFO) rates for used motor oil (UMO) and increased our collection volumes to 50 million gallons, 16% ahead of second-quarter levels.”

Business Outlook and Financial Guidance

“We enter the final quarter of 2020 positioned for continued success in the current environment,” McKim said. “Our market leadership and renowned emergency response capabilities have enabled us to capitalize on opportunities and safely navigate the challenges presented by the pandemic. Over the past two quarters, prudent cost actions and reduced capital spending have helped us drive record Adjusted EBITDA margins and adjusted free cash flow. We believe that our COVID-19 decontamination business can continue to help hedge against potential slowdowns in revenue and profitability in other parts of the Company.

“Within Environmental Services, we anticipate a sequential uptick in incineration utilization in the fourth quarter as we saw steady increases in production and waste volumes at our key customers during the third quarter. Because virus-related project delays remain, we do not expect landfills to fully recover until sometime in 2021 when we believe PFAS and other larger opportunities start to come to market. For Industrial Services and Technical Services, we anticipate our core service offerings to close out the year on an upward trajectory. Field Services remains on track for a great year, with anticipated COVID-related revenue exceeding $100 million.

“Our Safety-Kleen branch business remains below historical levels, but demand has improved markedly from the lows of April and May. With the ongoing spike in COVID-19 cases, we are sensitive to the possibility of new shelter-in-place mandates that could disrupt the recovery of this business. For Safety-Kleen Oil, our primary re-refineries are all back online and base oil pricing is stable. We continue to actively manage our CFO rates with the goal of growing collection volumes to supply our re-refinery network,” McKim concluded.

Based on its year-to-date financial performance and current market conditions, Clean Harbors raised its Adjusted EBITDA and Adjusted free cash flow guidance ranges and currently expects:

  • Adjusted EBITDA in the range of $530 million to $550 million, based on anticipated 2020 GAAP net income in the range of $104 million to $130 million; and
  • Adjusted free cash flow in the range of $250 million to $270 million, based on anticipated 2020 net cash from operating activities in the range of $405 million to $445 million.

Non-GAAP Results

Clean Harbors reports Adjusted EBITDA, which is a non-GAAP financial measure and should not be considered an alternative to net income or other measurements under generally accepted accounting principles (GAAP), but viewed only as a supplement to those measurements. Adjusted EBITDA is not calculated identically by all companies, and therefore the Company’s measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Clean Harbors believes that Adjusted EBITDA provides additional useful information to investors since the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved and management routinely evaluates the performance of its businesses based upon levels of Adjusted EBITDA. The Company defines Adjusted EBITDA in accordance with its existing revolving credit agreement, as described in the following reconciliation showing the differences between reported net income and Adjusted EBITDA for the three and nine months ended September 30, 2020 and 2019 (in thousands):

For the Three Months Ended:

For the Nine Months Ended:

September 30,

2020

September 30,

2019

September 30,

2020

September 30,

2019

Net income

$54,910

$36,369

$95,505

$73,589

Accretion of environmental liabilities

2,822

2,490

8,149

7,624

Depreciation and amortization

74,470

73,756

221,497

223,328

Other (income) expense, net

(2,268)

427

597

(1,992)

Loss on sale of businesses

118

3,376

Loss on early extinguishment of debt

6,119

6,119

Interest expense, net

17,407

19,702

54,848

59,681

Provision for income taxes

13,712

17,750

35,269

39,752

Adjusted EBITDA

$161,171

$156,613

$419,241

$408,101

Adjusted EBITDA Margin

20.7%

17.6%

17.9%

16.1%

This press release includes a discussion of net income and earnings per share adjusted for the loss on early extinguishment of debt, net of tax of $1.8 million, the loss on sale of businesses and the impacts of tax-related valuation allowances and other as identified in the reconciliations provided below. The Company believes that discussion of these additional non-GAAP measures provides investors with meaningful comparisons of current results to prior periods’ results by excluding items that the Company does not believe reflect its fundamental business performance. The following shows the difference between net income and adjusted net income, and the difference between earnings per share and adjusted earnings per share for the three and nine months ended September 30, 2020 and 2019 (in thousands, except per share amounts):

For the Three Months Ended:

For the Nine Months Ended:

September 30,

2020

September 30,

2019

September 30,

2020

September 30,

2019

Adjusted net income

Net income

$54,910

$36,369

$95,505

$73,589

Loss on early extinguishment of debt, net of tax of $1.8m

4,284

4,284

Loss on sale of businesses

118

3,376

Tax-related valuation allowances and other*

(5,128)

(4,502)

4,762

Adjusted net income

$49,900

$40,653

$94,379

$82,635

Adjusted earnings per share

Earnings per share

$0.99

$0.65

$1.71

$1.31

Loss on early extinguishment of debt, net of tax of $1.8m

0.07

0.08

Loss on sale of businesses

0.06

Tax-related valuation allowances and other*

(0.09)

(0.08)

0.08

Adjusted earnings per share

$0.90

$0.72

$1.69

$1.47

* For the three and nine months ended September 30, 2020, other amounts include a $1.6 million benefit, or $0.03 per share, related to tax benefits from impacts of prior period tax filing amendments.

Adjusted Free Cash Flow Reconciliation

Clean Harbors reports adjusted free cash flow, which it considers to be a measurement of liquidity that provides useful information to investors about its ability to generate cash. The Company defines adjusted free cash flow as net cash from operating activities excluding cash impacts of items derived from non-operating activities, less additions to property, plant and equipment plus proceeds from sale and disposal of fixed assets. The Company excludes cash impacts of items derived from non-operating activities such as taxes paid in connection with divestitures and in the current period have also excluded cash paid in connection with the purchase of its corporate headquarters and certain capital improvements to the site as these expenditures are considered one-time in nature. Adjusted free cash flow should not be considered an alternative to net cash from operating activities or other measurements under GAAP. Adjusted free cash flow is not calculated identically by all companies, and therefore the Company’s measurement of adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

An itemized reconciliation between net cash from operating activities and adjusted free cash flow is as follows for the three and nine months ended September 30, 2020 and 2019 (in thousands):

For the Three Months Ended:

For the Nine Months Ended:

September 30,

2020

September 30,

2019

September 30,

2020

September 30,

2019

Adjusted free cash flow

Net cash from operating activities

$143,946

$146,205

$317,432

$284,675

Additions to property, plant and equipment

(24,636)

(56,161)

(150,357)

(174,533)

Purchase and capital improvements of corporate HQ

21,080

Proceeds from sale and disposal of fixed assets

4,206

1,559

7,307

8,948

Adjusted free cash flow

$123,516

$91,603

$195,462

$119,090

Adjusted EBITDA Guidance Reconciliation

An itemized reconciliation between projected GAAP net income and projected Adjusted EBITDA is as follows (in millions):

For the Year Ending

December 31, 2020

Projected GAAP net income

$104

to

$130

Adjustments:

Accretion of environmental liabilities

11

to

10

Depreciation and amortization

295

to

285

Other expense, net

1

to

1

Loss on sale of businesses

3

to

3

Interest expense, net

74

to

73

Provision for income taxes

42

to

48

Projected Adjusted EBITDA

$530

to

$550

Adjusted Free Cash Flow Guidance Reconciliation

An itemized reconciliation between projected net cash from operating activities and projected adjusted free cash flow is as follows (in millions):

For the Year Ending

December 31, 2020

Projected net cash from operating activities

$405

to

$445

Additions to property, plant and equipment

(186)

to

(206)

Purchase and capital improvements of corporate headquarters

21

to

21

Proceeds from sale and disposal of fixed assets

10

to

10

Projected adjusted free cash flow

$250

to

$270

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. During the call, management will discuss Clean Harbors’ financial results, business outlook and growth strategy. Investors who wish to listen to the webcast and view the accompanying slides 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 time. If you are unable to listen to the live conference call, the webcast will be archived on the Company’s website.

About Clean Harbors

Clean Harbors (NYSE: CLH) is North America’s leading provider of environmental and industrial services. The Company serves a diverse customer base, including a majority of Fortune 500 companies. Its customer base spans a number of industries, including chemical, energy and manufacturing, as well as numerous government agencies. These customers rely on Clean Harbors to deliver a broad range of services such as end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services. Through its Safety-Kleen subsidiary, Clean Harbors also is North America’s largest re-refiner and recycler of used oil and a leading provider of parts washers and environmental services to commercial, industrial and automotive customers. Founded in 1980 and based in Massachusetts, Clean Harbors operates in the United States, Canada, Mexico, Puerto Rico and India. 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,” “seeks,” “should,” “estimates,” “projects,” “may,” “likely,” or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, 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, the risks and uncertainties surrounding COVID-19 and the related impact on the Company’s business, and those items identified as “Risk Factors” in Clean Harbors’ most recently filed Form 10-K and Form 10-Q. Forward-looking statements are neither historical facts nor assurances of future performance. 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 SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

For the Three Months Ended:

For the Nine Months Ended:

September 30,

2020

September 30,

2019

September 30,

2020

September 30,

2019

Revenues

$779,344

$891,668

$2,347,907

$2,541,185

Cost of revenues (exclusive of items shown separately below)

511,629

612,754

1,588,976

1,772,051

Selling, general and administrative expenses

106,544

122,301

339,690

361,033

Accretion of environmental liabilities

2,822

2,490

8,149

7,624

Depreciation and amortization

74,470

73,756

221,497

223,328

Income from operations

83,879

80,367

189,595

177,149

Other income (expense), net

2,268

(427)

(597)

1,992

Loss on sale of businesses

(118)

(3,376)

Loss on early extinguishment of debt

(6,119)

(6,119)

Interest expense, net

(17,407)

(19,702)

(54,848)

(59,681)

Income before provision for income taxes

68,622

54,119

130,774

113,341

Provision for income taxes

13,712

17,750

35,269

39,752

Net income

$54,910

$36,369

$95,505

$73,589

Earnings per share:

Basic

$0.99

$0.65

$1.72

$1.32

Diluted

$0.99

$0.65

$1.71

$1.31

Shares used to compute earnings per share — Basic

55,592

55,850

55,646

55,858

Shares used to compute earnings per share — Diluted

55,738

56,165

55,832

56,109

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

September 30, 2020

December 31, 2019

Current assets:

Cash and cash equivalents

$475,706

$371,991

Short-term marketable securities

56,639

42,421

Accounts receivable, net

602,069

644,738

Unbilled accounts receivable

59,438

56,326

Deferred costs

20,212

21,746

Inventories and supplies

220,884

214,744

Prepaid expenses and other current assets

58,711

48,942

Total current assets

1,493,659

1,400,908

Property, plant and equipment, net

1,539,333

1,588,151

Other assets:

Operating lease right-of-use assets

146,454

162,206

Goodwill

524,261

525,013

Permits and other intangibles, net

392,401

419,066

Other

10,079

13,560

Total other assets

1,073,195

1,119,845

Total assets

$4,106,187

$4,108,904

Current liabilities:

Current portion of long-term obligations

$7,535

$7,535

Accounts payable

213,776

298,375

Deferred revenue

67,412

73,370

Accrued expenses

293,200

276,540

Current portion of closure, post-closure and remedial liabilities

22,324

23,301

Current portion of operating lease liabilities

36,814

40,979

Total current liabilities

641,061

720,100

Other liabilities:

Closure and post-closure liabilities, less current portion

77,070

68,368

Remedial liabilities, less current portion

100,389

98,155

Long-term obligations, less current portion

1,550,756

1,554,116

Operating lease liabilities, less current portion

110,097

121,020

Deferred taxes, unrecognized tax benefits and other long-term liabilities

322,099

277,332

Total other liabilities

2,160,411

2,118,991

Total stockholders’ equity, net

1,304,715

1,269,813

Total liabilities and stockholders’ equity

$4,106,187

$4,108,904

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

For the Nine Months Ended:

September 30,

2020

September 30,

2019

Cash flows from operating activities:

Net income

$95,505

$73,589

Adjustments to reconcile net income to net cash from operating activities:

Depreciation and amortization

221,497

223,328

Allowance for doubtful accounts

10,441

(745)

Amortization of deferred financing costs and debt discount

2,688

2,908

Accretion of environmental liabilities

8,149

7,624

Changes in environmental liability estimates

9,050

(585)

Deferred income taxes

(973)

Other expense (income), net

597

(1,992)

Stock-based compensation

12,739

14,664

Loss on sale of businesses

3,376

Loss on early extinguishment of debt

6,119

Environmental expenditures

(8,816)

(12,804)

Changes in assets and liabilities, net of acquisitions:

Accounts receivable and unbilled accounts receivable

23,969

(31,408)

Inventories and supplies

(9,554)

(11,982)

Other current and non-current assets

(19,320)

(5,425)

Accounts payable

(63,898)

3,035

Other current and long-term liabilities

31,009

19,322

Net cash from operating activities

317,432

284,675

Cash flows used in investing activities:

Additions to property, plant and equipment

(150,357)

(174,533)

Proceeds from sale and disposal of fixed assets

7,307

8,948

Acquisitions, net of cash acquired

(8,839)

(29,479)

Proceeds from sale of businesses, net of transactional costs

7,712

Additions to intangible assets including costs to obtain or renew permits

(1,863)

(2,896)

Proceeds from sale of available-for-sale securities

39,141

41,612

Purchases of available-for-sale securities

(53,397)

(30,761)

Net cash used in investing activities

(160,296)

(187,109)

Cash flows used in financing activities:

Change in uncashed checks

381

(3,516)

Tax payments related to withholdings on vested restricted stock

(4,407)

(5,505)

Repurchases of common stock

(39,542)

(16,390)

Deferred financing costs paid

(10,053)

Premiums paid on early extinguishment of debt

(2,689)

Payments on finance leases

(2,755)

(327)

Principal payments on debt

(5,652)

(850,652)

Issuance of unsecured senior notes

845,000

Borrowing from revolving credit facility

150,000

Payment on revolving credit facility

(150,000)

Net cash used in financing activities

(51,975)

(44,132)

Effect of exchange rate change on cash

(1,446)

2,292

Increase in cash and cash equivalents

103,715

55,726

Cash and cash equivalents, beginning of period

371,991

226,507

Cash and cash equivalents, end of period

$475,706

$282,233

Supplemental information:

Cash payments for interest and income taxes:

Interest paid

$66,000

$52,440

Income taxes paid, net of refunds

14,195

23,797

Non-cash investing activities:

Property, plant and equipment accrued

11,732

14,875

ROU assets obtained in exchange for operating lease liabilities

19,993

8,008

ROU assets obtained in exchange for finance lease liabilities

28,333

31,011

Supplemental Segment Data (in thousands)

For the Three Months Ended:

Revenue

September 30, 2020

September 30, 2019

Third Party

Revenues

Intersegment

Revenues

(Expense),

net

Direct

Revenues

Third

Party

Revenues

Intersegment

Revenues

(Expense),

net

Direct

Revenues

Environmental Services

$498,183

$29,787

$527,970

$550,122

$36,750

$586,872

Safety-Kleen

281,089

(29,449)

251,640

341,417

(35,272)

306,145

Corporate Items

72

(338)

(266)

129

(1,478)

(1,349)

Total

$779,344

$—

$779,344

$891,668

$—

$891,668

For the Nine Months Ended:

Revenue

September 30, 2020

September 30, 2019

Third Party

Revenues

Intersegment

Revenues

(Expense),

net

Direct

Revenues

Third

Party

Revenues

Intersegment

Revenues

(Expense),

net

Direct

Revenues

Environmental Services

$1,490,641

$100,605

$1,591,246

$1,550,114

$108,856

$1,658,970

Safety-Kleen

857,048

(97,640)

759,408

990,146

(105,540)

884,606

Corporate Items

218

(2,965)

(2,747)

925

(3,316)

(2,391)

Total

$2,347,907

$—

$2,347,907

$2,541,185

$—

$2,541,185

Contacts

Michael L. Battles

EVP and Chief Financial Officer

Clean Harbors, Inc.

781.792.5100

[email protected]

Jim Buckley

SVP Investor Relations

Clean Harbors, Inc.

781.792.5100

[email protected]

Read full story here

< Previous

Global Benzyl Alcohol Markets, 2020-2025: Intensification of Nitrobenzaldehydes Synthesis from Benzyl Alcohol in a Micro-reactor – ResearchAndMarkets.com

Abraxas Petroleum Regains Compliance with Nasdaq Continued Listing Standards