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Clean Harbors (CLH) Lags Q2 Earnings Estimates, Stock Falls

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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.

Clean Harbors, Inc. Price, Consensus and EPS Surprise

 

Clean Harbors, Inc. Price, Consensus and EPS Surprise | Clean Harbors, Inc. Quote

Segmental Details

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.

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 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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