Waste management services provider Clean Harbors, Inc. (CLH - Free Report) reported relatively modest second-quarter 2017 results with adjusted earnings of $13.7 million or 24 cents per share compared with $8.4 million or 15 cents per share in the prior-year quarter. The year-over-year improvement stemmed from higher revenues. Adjusted earnings for the reported quarter, however, missed the Zacks Consensus Estimate by 3 cents. Consequently, shares declined 7.3% post the earnings release to close at $53.38 yesterday.
GAAP earnings for the reported quarter were $25.9 million or 45 cents per share compared with $4.0 million or 7 cents per share in the year-earlier quarter. The year-over-year improvement was primarily due to healthy top-line growth and after-tax gains resulting from the divestiture of the transformer services business.
Net revenue was $752.8 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 $735 million. Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the reported quarter increased to $120.7 million from $110.4 million in the year-ago quarter, resulting in respective adjusted EBITDA margins of 16.0% and 15.8%. The improvement in adjusted EBITDA was largely driven by higher waste volumes, cost reductions and improved pricing, particularly in the lube oil business.
Technical Services accounted for 39.2% of the total revenue and improved 11.1% year over year to $294.9 million as the company benefited from the opening of a new incinerator in El Dorado, AR. Adjusted EBITDA improved to $73.1 million from $68.9 million in the prior-year period.
Industrial and Field Services’ revenues accounted for 21.1% of total revenue in the reported quarter. The segment’s revenues increased to $158.7 million from $156.4 million in the prior-year quarter. Adjusted EBITDA improved to $21.5 million from $20.0 million in the prior-year quarter.
Kleen Performance Products’ revenues increased to $271.3 million from $248.6 million in the prior-year quarter. Revenues were substantially up due to higher base oil and lubricant pricing, accretive acquisitions and ramp up of OilPlus closed loop offering. Adjusted EBITDA improved to $60.3 million from $55.2 million in the year-ago quarter.
Oil Gas and Lodging Services revenues increased 6.1% to $28.0 million due to higher occupancy rates in fixed lodges. Adjusted EBITDA was $0.3 million as against adjusted a negative EBITDA of $1.2 million in the year-ago quarter.
Balance Sheet and Cash Flow
At quarter end, cash and cash equivalents were $446.4 million while long-term debt was $1,626.5 million. Cash flow from operating activities for the first six months of 2017 was $116.9 million compared with $120.1 million in the year-ago period.
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 expects net income in the range of $24−$55 million while adjusted net income for 2017 is expected to be $30−$54 million.
Clean Harbors currently carries a Zacks Rank #3 (Hold). Better-ranked stocks in the industry include Stericycle, Inc. (SRCL - Free Report) , Gartner, Inc. (IT - Free Report) and NV5 Global, Inc. (NVEE - Free Report) , each carrying a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
Stericycle has a long-term earnings growth expectation of 9.1%. It pulled off a positive earnings surprise of 4.4% in the trailing four quarters.
Gartner has a long-term earnings growth expectation of 17.3%. It has a positive earnings history, beating estimates thrice in the trailing four quarters with an average earnings surprise of 4.6%.
NV5 Global has a long-term earnings growth expectation of 20%. It delivered a positive earnings surprise of 1.8% in the trailing four quarters.
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