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Clean Harbors (CLH) Q1 Loss Misses Estimates, View Affirmed
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Waste management services provider Clean Harbors, Inc. (CLH - Free Report) reported relatively modest first-quarter 2017 results with adjusted loss of $10.9 million or loss of 19 cents per share, compared with adjusted loss of $13.0 million or loss of 22 cents per share in the prior-year quarter. The year-over-year improvement stemmed from higher revenues. Adjusted loss for the reported quarter missed the Zacks Consensus Estimate by a penny while shares remained flat to close at $58.37 post the earnings release.
GAAP loss for the reported quarter was $21.4 million or loss of 37 cents per share compared with loss of $20.9 million or loss of 36 cents per share in the year-earlier quarter. Despite higher revenues, the deterioration was primarily due to higher operating and interest expenses.
Net revenue was $688.9 million, up 8% from the prior-year period owing to operating leverage in the business model and gradual uptick in customer activity. Revenues beat the Zacks Consensus Estimate of $659 million. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the reported quarter increased to $80.1 million from $67.3 million in the year-ago quarter, resulting in respective adjusted EBITDA margins of 11.6% and 10.6%. The improvement in adjusted EBITDA was largely driven by higher waste volumes, cost reductions and improved pricing, particularly in the lube oil business.
Segmental Details
Technical Services accounted for 39.3% of the total revenue and improved 6.6% year over year to $271 million as the company benefited from the opening of a new incinerator in El Dorado, AR. Adjusted EBITDA declined 3.1% year over year to $58.5 million.
Industrial and Field Services’ revenues accounted for 18.2% of total revenue in the reported quarter. The segment’s revenues increased to $125.3 million from $123.5 million in the prior-year quarter, as double-digit growth in Field Services was partially offset by lower revenues in Industrial Services. Adjusted EBITDA improved significantly to $1.9 million from $0.4 million in the prior-year quarter.
Kleen Performance Products’ revenues increased to $260.8 million from $218.8 million in the prior-year quarter. Revenues were substantially up due to higher base oil and lubricant pricing, accretive acquisitions and launch of OilPlus closed loop offering. Adjusted EBITDA improved to $52.4 million from $40.1 million in the year-ago quarter.
Oil Gas and Lodging Services revenues declined 17.5% to $32.6 million due to slowdown in energy markets, both in the U.S. and Canada. Future price uncertainty resulted in lower activity levels which are negatively impacting the business' results. A major part of the segment's operations are in Canada, and therefore U.S. to Canadian dollar foreign currency translation significantly affects the segment's results. The company incurred a negative adjusted EBITDA of $0.2 million as against adjusted EBITDA of $1.3 million in the year-ago quarter due to lower revenues, margin pressure and the effect of currency translation.
Clean Harbors, Inc. Price, Consensus and EPS Surprise
At quarter end, cash and cash equivalents were $297.4 million while long-term debt was $1,634.0 million. Cash flow from operating activities for the reported quarter was $57.1 million compared with $39.3 million in the year-ago period. Clean Harbors repurchased 6.8 million shares for approximately $7 million while it still has about $93 million remaining under its existing $300 million plan.
Guidance Reiterated
Clean Harbors reiterated its earlier guidance for 2017 and continues to expect adjusted EBITDA in the range of $435−$475 million. On a GAAP basis, the company continues to expect net income in the range of $4−$35 million while adjusted net income for 2017 is expected in the range of $24 −$48 million.
Republic Services has a long-term earnings growth expectation of 9.2%. It posted a positive earnings surprise of 3.6% in the trailing four quarters.
Waste Connections has a long-term earnings growth expectation of 15.8%. It posted a positive earnings surprise of 8.2% in the trailing four quarters.
CBIZ topped estimates twice in the trailing four quarters with an average earnings surprise of 18.4%.
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Clean Harbors (CLH) Q1 Loss Misses Estimates, View Affirmed
Waste management services provider Clean Harbors, Inc. (CLH - Free Report) reported relatively modest first-quarter 2017 results with adjusted loss of $10.9 million or loss of 19 cents per share, compared with adjusted loss of $13.0 million or loss of 22 cents per share in the prior-year quarter. The year-over-year improvement stemmed from higher revenues. Adjusted loss for the reported quarter missed the Zacks Consensus Estimate by a penny while shares remained flat to close at $58.37 post the earnings release.
GAAP loss for the reported quarter was $21.4 million or loss of 37 cents per share compared with loss of $20.9 million or loss of 36 cents per share in the year-earlier quarter. Despite higher revenues, the deterioration was primarily due to higher operating and interest expenses.
Net revenue was $688.9 million, up 8% from the prior-year period owing to operating leverage in the business model and gradual uptick in customer activity. Revenues beat the Zacks Consensus Estimate of $659 million. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the reported quarter increased to $80.1 million from $67.3 million in the year-ago quarter, resulting in respective adjusted EBITDA margins of 11.6% and 10.6%. The improvement in adjusted EBITDA was largely driven by higher waste volumes, cost reductions and improved pricing, particularly in the lube oil business.
Segmental Details
Technical Services accounted for 39.3% of the total revenue and improved 6.6% year over year to $271 million as the company benefited from the opening of a new incinerator in El Dorado, AR. Adjusted EBITDA declined 3.1% year over year to $58.5 million.
Industrial and Field Services’ revenues accounted for 18.2% of total revenue in the reported quarter. The segment’s revenues increased to $125.3 million from $123.5 million in the prior-year quarter, as double-digit growth in Field Services was partially offset by lower revenues in Industrial Services. Adjusted EBITDA improved significantly to $1.9 million from $0.4 million in the prior-year quarter.
Kleen Performance Products’ revenues increased to $260.8 million from $218.8 million in the prior-year quarter. Revenues were substantially up due to higher base oil and lubricant pricing, accretive acquisitions and launch of OilPlus closed loop offering. Adjusted EBITDA improved to $52.4 million from $40.1 million in the year-ago quarter.
Oil Gas and Lodging Services revenues declined 17.5% to $32.6 million due to slowdown in energy markets, both in the U.S. and Canada. Future price uncertainty resulted in lower activity levels which are negatively impacting the business' results. A major part of the segment's operations are in Canada, and therefore U.S. to Canadian dollar foreign currency translation significantly affects the segment's results. The company incurred a negative adjusted EBITDA of $0.2 million as against adjusted EBITDA of $1.3 million in the year-ago quarter due to lower revenues, margin pressure and the effect of currency translation.
Clean Harbors, Inc. Price, Consensus and EPS Surprise
Clean Harbors, Inc. Price, Consensus and EPS Surprise | Clean Harbors, Inc. Quote
Balance Sheet and Cash Flow
At quarter end, cash and cash equivalents were $297.4 million while long-term debt was $1,634.0 million. Cash flow from operating activities for the reported quarter was $57.1 million compared with $39.3 million in the year-ago period. Clean Harbors repurchased 6.8 million shares for approximately $7 million while it still has about $93 million remaining under its existing $300 million plan.
Guidance Reiterated
Clean Harbors reiterated its earlier guidance for 2017 and continues to expect adjusted EBITDA in the range of $435−$475 million. On a GAAP basis, the company continues to expect net income in the range of $4−$35 million while adjusted net income for 2017 is expected in the range of $24 −$48 million.
Clean Harbors currently carries a Zacks Rank #2 (Buy). Some other stocks worth considering in the industry include Republic Services, Inc. (RSG - Free Report) , Waste Connections, Inc. (WCN - Free Report) and CBIZ, Inc. (CBZ - Free Report) , each carrying a Zacks Rank #2. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Republic Services has a long-term earnings growth expectation of 9.2%. It posted a positive earnings surprise of 3.6% in the trailing four quarters.
Waste Connections has a long-term earnings growth expectation of 15.8%. It posted a positive earnings surprise of 8.2% in the trailing four quarters.
CBIZ topped estimates twice in the trailing four quarters with an average earnings surprise of 18.4%.
Will You Make a Fortune on the Shift to Electric Cars?
Here's another stock idea to consider. Much like petroleum 150 years ago, lithium power may soon shake the world, creating millionaires and reshaping geo-politics. Soon electric vehicles (EVs) may be cheaper than gas guzzlers. Some are already reaching 265 miles on a single charge.
With battery prices plummeting and charging stations set to multiply, one company stands out as the #1 stock to buy according to Zacks research.
It's not the one you think.
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