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Exhibit 99.1

 

Press Release

 

Clean Harbors Reports Third-Quarter 2015 Financial Results

 

·            Announces Revenues of $893.4 Million and EPS of $0.69

 

·            Achieves 8% Increase in Adjusted EBITDA to a Record $165.6 Million on Strong Emergency Response Contribution

 

·            Posts Adjusted EBITDA Margin of 18.5%

 

·            Reduces 2015 Adjusted EBITDA Guidance Due to Ongoing Headwinds

 

·            Initiates $100 Million Cost Reduction Program for 2016 to Align With Market Conditions

 

Norwell, Mass. — November 4, 2015 — Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental, energy and industrial services throughout North America, today announced financial results for its fiscal third quarter ended September 30, 2015.

 

“Based on extensive emergency response activity and strong contributions from several businesses, Clean Harbors delivered the highest quarterly Adjusted EBITDA in our history,” said Alan S. McKim, Chairman and Chief Executive Officer. “Our third-quarter results, which were in line with our previously announced guidance, were achieved despite considerable headwinds. These include weakness in the energy sector, declines in base oil pricing and the effects of a strong U.S. dollar on some domestic customers who rely on exporting, as well as its impact on foreign currency translation.”

 

Revenues for the third quarter of 2015 were $893.4 million, up 5% from $851.5 million in the same period in 2014.  Income from operations was $94.0 million in the third quarter of 2015, compared with a loss from operations for the third quarter of 2014 of $42.7 million, which included a non-cash, pre-tax goodwill impairment charge of $123.4 million.  Excluding the impairment charge, the Company reported adjusted income from operations for the third quarter of 2014 of $80.7 million.

 

Third-quarter 2015 net income was $40.2 million, or $0.69 per diluted share, which includes $2.3 million of pre-tax integration and severance costs. This compares with a third-quarter 2014 net loss of $93.3 million, or $1.55 per share, which included the $123.4 million non-cash, pre-tax impairment charge, as well as $1.8 million of pre-tax integration and severance costs.  Excluding the impairment charge, the Company reported adjusted net income for the third quarter of 2014 of $27.4 million, or $0.45 per diluted share.

 

Adjusted EBITDA (see description below) in the third quarter of 2015 increased 8% to a record $165.6 million from $153.4 million in the same period of 2014.  Adjusted EBITDA margin rose 50 basis points to 18.5%, compared with 18.0% in the third quarter of 2014.

 

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 



 

Press Release

 

Clean Harbors Reports Third-Quarter 2015 Financial Results

 

Comments on the Third Quarter

 

“We generated nearly $145 million in emergency response work during the third quarter,” McKim said. “This sizeable emergency response revenue produced substantial growth in our Industrial and Field Services segment, which also benefited from an increase in turnaround activity at U.S. refineries.  SK Environmental Services again contributed to our growth in profitability, posting a 30% increase that reflected volume gains, as well as the addition of Thermo Fluids (TFI).  The growth in these segments more than offset the year-over-year decreases we experienced in our other businesses.

 

“Technical Services declined in both revenue and profitability from a year ago due to a reduction in oil and gas production waste streams, waste project deferrals, reduction in pricing of our recycled products and lower volumes from some key verticals, including Chemicals.  Landfill volumes were down 28% year-over-year.  However, increases in our drum volume and in some of our bulk business enabled us to achieve incineration utilization of 92% in the quarter compared to 90% a year ago.  Profitability in our recently rebranded Kleen Performance Products segment — formerly Oil Re-refining and Recycling — was down as multiple declines in base oil pricing compressed margins.  As expected, profitability in our Oil and Gas Field Services and Lodging Services segments fell as a result of the continued weakness in the energy market, particularly in the Oil Sands region.”

 

Business Outlook and Financial Guidance

 

“The external challenges we are facing this year may be with us for some time,” McKim said.  “As a result, we are taking aggressive action to reduce our operating expenses and realign our cost structure to succeed in an environment that has been materially changed by the low price of crude oil and resulting slowdown, particularly in Western Canada.  While we are not providing specific 2016 guidance at this time, as we enter our budgeting process, our goal will be to meet or exceed this year’s Adjusted EBITDA results in 2016.  In conjunction with that goal, we are setting a target of $100 million in cost takeouts that will be achieved over the course of the next year through reduced G&A spending, office and real estate consolidation, and gains in operational efficiencies.  We will carefully manage down costs throughout our organization. At the same time, we will continue to seek opportunities for profitable growth through strategic investments and selective acquisitions.

 

“For the fourth quarter of 2015, we expect ongoing market headwinds to continue, offsetting the progress we are achieving in several segments,” McKim said. “During the fourth quarter, we anticipate profitable year-over-year growth in SK Environmental Services, Kleen Performance Products and Industrial and Field Services.  Kleen Performance Products, in particular, will benefit from our ongoing efforts to lower our transportation costs and from the full quarter effect of the Charge-for-Oil (CFO) initiative we launched in

 

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 



 

Press Release

 

Clean Harbors Reports Third-Quarter 2015 Financial Results

 

September.  Our CFO program should help mitigate the significant decline in base oil pricing as we seek to manage the spread in our re-refining business.

 

“The weakness in our Chemical and Industrial verticals will continue to present a near-term challenge for Technical Services, which is still recovering from the effects of the reduced activity in the energy market, a declining commodities environment and unfavorable currency translation. Oil and Gas Field Services and Lodging Services should see a seasonal uptick in profitability in the fourth quarter as the winter drilling programs get underway in Western Canada.  Given the current state of oil and gas production, however, that increase will likely be somewhat muted, compared with prior years.  Our plan to carve out Oil and Gas Field Services and Lodging Services as a standalone public entity remains on track, but completion of that IPO during 2016 remains dependent on market conditions and Board approval,” McKim concluded.

 

Based on its year-to-date performance and current market conditions, Clean Harbors is revising its 2015 Adjusted EBITDA guidance range.  The Company now expects Adjusted EBITDA in the range of $507 million to $514 million, compared with its previous guidance of $530 million to $570 million.  A reconciliation of the Company’s Adjusted EBITDA guidance to net income guidance is included below.

 

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 three and nine months ended September 30, 2015 and 2014 (in thousands):

 

 

 

For the Three Months Ended:

 

For the Nine Months Ended:

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

40,228

 

$

(93,337

)

$

43,534

 

$

(55,705

)

Accretion of environmental liabilities

 

2,577

 

2,642

 

7,795

 

7,975

 

Depreciation and amortization

 

69,060

 

70,049

 

205,189

 

205,480

 

Goodwill impairment charge

 

 

123,414

 

31,992

 

123,414

 

Other expense (income)

 

139

 

(613

)

390

 

(4,136

)

Interest expense, net

 

19,017

 

19,494

 

57,704

 

58,430

 

Provision for income taxes

 

34,586

 

31,708

 

60,402

 

55,684

 

Adjusted EBITDA

 

$

165,607

 

$

153,357

 

$

407,006

 

$

391,142

 

 

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 



 

Press Release

 

Clean Harbors Reports Third-Quarter 2015 Financial Results

 

This press release includes a discussion of income from operations, net income and earnings per share amounts adjusted for the goodwill impairment charge 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 income (loss) from operations to adjusted income from operations, net income (loss) to adjusted net income and earnings (loss) per share to adjusted earnings per share for the three and nine months ended September 30, 2015 and 2014 (in thousands, except per share amounts):

 

 

 

For the Three Months Ended:

 

For the Nine Months Ended:

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

Adjusted income from operations

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Income (loss) from operations

 

$

93,970

 

$

(42,748

)

$

162,030

 

$

54,273

 

Goodwill impairment charge

 

 

123,414

 

31,992

 

123,414

 

Adjusted income from operations

 

$

93,970

 

$

80,666

 

$

194,022

 

$

177,687

 

 

 

 

 

 

 

 

 

 

 

Adjusted net income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

40,228

 

$

(93,337

)

$

43,534

 

$

(55,705

)

Goodwill impairment charge, net of tax

 

 

120,750

 

31,992

 

120,750

 

Adjusted net income

 

$

40,228

 

$

27,413

 

$

75,526

 

$

65,045

 

 

 

 

 

 

 

 

 

 

 

Adjusted earnings per share

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share

 

$

0.69

 

$

(1.55

)

$

0.74

 

$

(0.92

)

Goodwill impairment charge, net of tax

 

 

2.00

 

0.54

 

1.99

 

Adjusted earnings per share

 

$

0.69

 

$

0.45

 

$

1.28

 

$

1.07

 

 

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 



 

Press Release

 

Clean Harbors Reports Third-Quarter 2015 Financial Results

 

Adjusted EBITDA Guidance Reconciliation

 

An itemized reconciliation between projected net income and projected Adjusted EBITDA is as follows:

 

 

 

For the Year Ending
December 31, 2015

 

 

 

Amount

 

 

 

(In millions)

 

Projected GAAP net income

 

$48

 

to

 

$57

 

Adjustments:

 

 

 

 

 

 

 

Accretion of environmental liabilities

 

11

 

to

 

10

 

Depreciation and amortization

 

274

 

to

 

270

 

Goodwill impairment charge

 

32

 

to

 

32

 

Interest expense, net

 

76

 

to

 

76

 

Provision for income taxes

 

66

 

to

 

69

 

Projected Adjusted EBITDA

 

$507

 

to

 

$514

 

 

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 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 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 North America’s leading provider of environmental, energy and industrial services. The Company serves a diverse customer base, including a majority of the Fortune 500, across the chemical, energy, manufacturing and additional markets, 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

 

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 



 

Press Release

 

Clean Harbors Reports Third-Quarter 2015 Financial Results

 

customers. Founded in 1980 and based in Massachusetts, Clean Harbors operates throughout the United States, Canada, 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 future financial and operating results, the Company’s planned carve-out 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.

 

Contacts:

 

James M. Rutledge

Eric Kraus

Jim Buckley

Vice Chairman, President and CFO

EVP Corporate Communications

SVP Investor Relations

Clean Harbors, Inc.

& Public Affairs

Clean Harbors, Inc.

781.792.5100

Clean Harbors, Inc.

781.792.5100

InvestorRelations@cleanharbors.com

781.792.5100

Buckley.James@cleanharbors.com

 

Kraus.Eric@cleanharbors.com

 

 

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 



 

Press Release

 

Clean Harbors Reports Third-Quarter 2015 Financial Results

 

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,
2015

 

September 30,
2014

 

September 30,
2015

 

September 30,
2014

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

893,366

 

$

851,465

 

$

2,562,093

 

$

2,556,612

 

Cost of revenues (exclusive of items shown separately below)

 

634,646

 

598,407

 

1,833,841

 

1,831,076

 

Selling, general and administrative expenses

 

93,113

 

99,701

 

321,246

 

334,394

 

Accretion of environmental liabilities

 

2,577

 

2,642

 

7,795

 

7,975

 

Depreciation and amortization

 

69,060

 

70,049

 

205,189

 

205,480

 

Goodwill impairment charge

 

 

123,414

 

31,992

 

123,414

 

Income (loss) from operations

 

93,970

 

(42,748

)

162,030

 

54,273

 

Other (expense) income

 

(139

)

613

 

(390

)

4,136

 

Interest expense, net

 

(19,017

)

(19,494

)

(57,704

)

(58,430

)

Income (loss) before provision for income taxes

 

74,814

 

(61,629

)

103,936

 

(21

)

Provision for income taxes

 

34,586

 

31,708

 

60,402

 

55,684

 

Net income (loss)

 

$

40,228

 

$

(93,337

)

$

43,534

 

$

(55,705

)

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.69

 

$

(1.55

)

$

0.74

 

$

(0.92

)

Diluted

 

$

0.69

 

$

(1.55

)

$

0.74

 

$

(0.92

)

 

 

 

 

 

 

 

 

 

 

Shares used to compute earnings (loss) per share — Basic

 

58,161

 

60,369

 

58,799

 

60,585

 

Shares used to compute earnings (loss) per share — Diluted

 

58,268

 

60,369

 

58,898

 

60,585

 

 

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 



 

Press Release

 

Clean Harbors Reports Third-Quarter 2015 Financial Results

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

 

September 30, 2015

 

December 31, 2014

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

179,191

 

$

246,879

 

Accounts receivable, net

 

600,283

 

557,131

 

Unbilled accounts receivable

 

41,562

 

40,775

 

Deferred costs

 

19,096

 

19,018

 

Inventories and supplies

 

150,255

 

168,663

 

Prepaid expenses and other current assets

 

44,880

 

57,435

 

Deferred tax assets

 

37,288

 

36,532

 

Total current assets

 

1,072,555

 

1,126,433

 

Property, plant and equipment, net

 

1,531,548

 

1,558,834

 

Other assets:

 

 

 

 

 

Deferred financing costs

 

15,121

 

17,580

 

Goodwill

 

447,918

 

452,669

 

Permits and other intangibles, net

 

518,995

 

530,080

 

Other

 

13,724

 

18,682

 

Total other assets

 

995,758

 

1,019,011

 

Total assets

 

$

3,599,861

 

$

3,704,278

 

Current liabilities:

 

 

 

 

 

Current portion of capital lease obligations

 

$

11

 

$

536

 

Accounts payable

 

295,476

 

267,329

 

Deferred revenue

 

62,837

 

62,966

 

Accrued expenses

 

244,790

 

219,549

 

Current portion of closure, post-closure and remedial liabilities

 

21,902

 

22,091

 

Total current liabilities

 

625,016

 

572,471

 

Other liabilities:

 

 

 

 

 

Closure and post-closure liabilities, less current portion

 

47,861

 

45,702

 

Remedial liabilities, less current portion

 

126,816

 

138,029

 

Long-term obligations

 

1,395,000

 

1,395,000

 

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

 

282,447

 

290,205

 

Total other liabilities

 

1,852,124

 

1,868,936

 

Total stockholders’ equity, net

 

1,122,721

 

1,262,871

 

Total liabilities and stockholders’ equity

 

$

3,599,861

 

$

3,704,278

 

 

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 



 

Press Release

 

Clean Harbors Reports Third-Quarter 2015 Financial Results

 

Supplemental Segment Data (in thousands)

 

 

 

For the Three Months Ended:

 

 

 

September 30, 2015

 

September 30, 2014

 

 

 

Third Party
Revenues

 

Intersegment
Revenues
(Expense), net

 

Direct
Revenues

 

Third Party
Revenues

 

Intersegment
Revenues
(Expense), net

 

Direct
Revenues

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technical Services

 

$

253,069

 

$

35,325

 

$

288,394

 

$

272,478

 

$

40,924

 

$

313,402

 

Industrial and Field Services

 

307,226

 

(7,286

)

299,940

 

163,582

 

(9,205

)

154,377

 

Kleen Performance Products

 

100,827

 

(23,750

)

77,077

 

140,345

 

(52,606

)

87,739

 

SK Environmental Services

 

171,832

 

(5,945

)

165,887

 

170,980

 

21,212

 

192,192

 

Lodging Services

 

13,507

 

773

 

14,280

 

36,582

 

723

 

37,305

 

Oil and Gas Field Services

 

46,788

 

1,194

 

47,982

 

67,370

 

639

 

68,009

 

Corporate Items

 

117

 

(311

)

(194

)

128

 

(1,687

)

(1,559

)

Total

 

$

893,366

 

$

 

$

893,366

 

$

851,465

 

$

 

$

851,465

 

 

 

 

For the Nine Months Ended:

 

 

 

September 30, 2015

 

September 30, 2014

 

 

 

Third Party
Revenues

 

Intersegment
Revenues
(Expense), net

 

Direct
Revenues

 

Third Party
Revenues

 

Intersegment
Revenues
(Expense), net

 

Direct
Revenues

 

Revenue

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Technical Services

 

$

741,419

 

$

110,923

 

$

852,342

 

$

766,057

 

$

119,617

 

$

885,674

 

Industrial and Field Services

 

807,423

 

(25,400

)

782,023

 

510,696

 

(31,819

)

478,877

 

Kleen Performance Products

 

296,738

 

(63,437

)

233,301

 

413,282

 

(155,588

)

257,694

 

SK Environmental Services

 

508,392

 

(26,326

)

482,066

 

503,692

 

64,418

 

568,110

 

Lodging Services

 

68,782

 

2,026

 

70,808

 

136,148

 

2,043

 

138,191

 

Oil and Gas Field Services

 

138,992

 

4,729

 

143,721

 

226,319

 

4,337

 

230,656

 

Corporate Items

 

347

 

(2,515

)

(2,168

)

418

 

(3,008

)

(2,590

)

Total

 

$

2,562,093

 

$

 

$

2,562,093

 

$

2,556,612

 

$

 

$

2,556,612

 

 

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 



 

Press Release

 

Clean Harbors Reports Third-Quarter 2015 Financial Results

 

Non-GAAP Segment 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 Nine Months Ended:

 

 

 

September 30, 2015

 

September 30, 2014

 

September 30, 2015

 

September 30, 2014

 

Adjusted EBITDA

 

 

 

 

 

 

 

 

 

Technical Services

 

$

79,048

 

$

86,928

 

$

219,257

 

$

233,402

 

Industrial and Field Services

 

62,460

 

20,303

 

145,850

 

67,391

 

Kleen Performance Products

 

12,123

 

21,473

 

23,471

 

49,252

 

SK Environmental Services

 

40,096

 

30,853

 

108,540

 

84,985

 

Lodging Services

 

1,827

 

15,972

 

12,589

 

49,196

 

Oil and Gas Field Services

 

1,579

 

9,545

 

800

 

27,688

 

Corporate Items

 

(31,526

)

(31,717

)

(103,501

)

(120,772

)

Total

 

$

165,607

 

$

153,357

 

$

407,006

 

$

391,142

 

 

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com