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Why Is Clean Harbors (CLH) Up 1.6% Since Its Last Earnings Report?
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It has been about a month since the last earnings report for Clean Harbors, Inc. (CLH - Free Report) . Shares have added about 1.6% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is CLH due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Clean Harbors Q4 Earnings Miss Estimates
Waste management services provider Clean Harbors, Inc. reported decent fourth-quarter 2017 results with adjusted earnings of 1 cent per share, owing to one-time gains and costs against a loss of 6 cents in the prior-year quarter. The year-over-year improvement stemmed from well-executed top-line strategy, improving macroeconomic environment and favorable industry trends. Adjusted earnings for the quarter, however, missed the Zacks Consensus Estimate by 4 cents.
GAAP earnings for the reported quarter were $84.2 million or $1.48 per share against a loss of $12.7 million or loss of 22 cents per share in the year-earlier quarter. GAAP earnings for full-year 2017 were $100.7 million or $1.76 per share against a loss of $39.9 million or loss of 69 cents per share in the prior year. The improvement was primarily due to healthy top-line growth and significant net benefit from tax law changes.
Revenues for the fourth quarter were $747.4 million, up 8% from the prior-year quarter owing to successful execution of top-line strategy resulting in growth across all four reporting segments. Also, the top line beat the Zacks Consensus Estimate of $724 million. Revenues for 2017 were $2,945 million, up 7% from $2,755.2 million a year ago.
Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the fourth-quarter increased 6% to $101.8 million from $95.9 million in the year-ago quarter. The improvement was largely driven by higher waste volumes, cost reductions and improved pricing.
Segmental Performance
Technical Services accounted for 38.8% of total revenues in the reported quarter and improved 9.3% year-over-year to $289.9 million as landfill volumes improved 18% due to higher base business and enhanced project work. Adjusted EBITDA for the quarter improved to $72.7 million from $69.6 million in the prior-year period.
Industrial and Field Services revenues accounted for 20.9% of total revenues in the reported quarter. The segment’s revenues increased to $156.1 million from $141 million in the prior-year quarter. Adjusted EBITDA decreased to $6.4 million from $12.6 million due to customer pricing pressures and some one-time costs.
Safety-Kleen revenues increased to $272.5 million from $260.3 million in the prior-year quarter owing to rollout of closed loop offering, selling and delivering lubricants directly to more than 15,000 unique customers. Adjusted EBITDA improved to $66.8 million from $54.2 million in the year-ago quarter due to increase in base oil and blended pricing supported by spread management in the re-refining business and cost reductions associated particularly with the national customer care center.
Oil, Gas and Lodging Services revenues increased 10.9% to $28.2 million due to higher occupancy rates in fixed lodges. Adjusted EBITDA was $0.7 million as against a negative EBITDA of $3.4 million in the year-ago quarter owing to higher number of rigs serviced.
Acquisition
In the quarter, Clean Harbors completed acquisition of Veolia North America’s U.S. Industrial Cleaning Services Division for $120 million. The acquired business generated revenues approximately $210 million in 2017, employs roughly 1,300 employees and maintains an extensive fleet of vehicles and equipment at more than 60 operating locations across the United States. Clean Harbors will enjoy numerous benefits from this buyout. The company intends to pass on the benefits to their customers, shareholders and industrial services employees. It will provide significant scale and industrial services capabilities for the company while doubling the size of existing U.S. Industrial Services business. The acquired business’ operational footprint particularly its strong presence in the Midwest will complement Clean Harbors’ existing network of locations. An addition of this business will create new cross-selling opportunities and drive incremental volumes into waste disposal network. The company aims to enhance long-term shareholder value and support profitable growth momentum in 2018 and beyond.
Balance Sheet and Cash Flow
At year-end 2017, cash and cash equivalents were $319.4 million while long-term debt was $1,625.5 million compared with the respective tallies of $307 million and $1,633.3 million in the prior-year. Cash flow from operating activities was $285.7 million compared with $259.6 million a year ago. For 2017, adjusted free cash flow totaled $140.2 million compared with $61 million in the prior-year.
2018 Guidance
Clean Harbors gave a bullish outlook for 2018 with adjusted EBITDA in the range of $440−$480 million. On a GAAP basis, the company anticipates net income in the range of $17−$56 million. For the year, Clean Harbors expects net cash from operating activities between $295 million and $345 million. Adjusted free cash flow is expected to be in the range of $125 million to $155 million. Clean Harbors is focused on enhancing operating margins through better pricing, improving revenue mix, increasing efficiencies and capitalizing on growth initiatives. It expects Tech Services to deliver higher earnings due to new incinerator’s second full year of operation and the strength of the industrial economy, particularly expansion in the chemical space.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. Last month, the consensus estimate has shifted by 12.5% due to these changes.
At this time, CLH has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was also allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revision looks promising. Notably, CLH has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.
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Why Is Clean Harbors (CLH) Up 1.6% Since Its Last Earnings Report?
It has been about a month since the last earnings report for Clean Harbors, Inc. (CLH - Free Report) . Shares have added about 1.6% in that time frame.
Will the recent positive trend continue leading up to its next earnings release, or is CLH due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.
Clean Harbors Q4 Earnings Miss Estimates
Waste management services provider Clean Harbors, Inc. reported decent fourth-quarter 2017 results with adjusted earnings of 1 cent per share, owing to one-time gains and costs against a loss of 6 cents in the prior-year quarter. The year-over-year improvement stemmed from well-executed top-line strategy, improving macroeconomic environment and favorable industry trends. Adjusted earnings for the quarter, however, missed the Zacks Consensus Estimate by 4 cents.
GAAP earnings for the reported quarter were $84.2 million or $1.48 per share against a loss of $12.7 million or loss of 22 cents per share in the year-earlier quarter. GAAP earnings for full-year 2017 were $100.7 million or $1.76 per share against a loss of $39.9 million or loss of 69 cents per share in the prior year. The improvement was primarily due to healthy top-line growth and significant net benefit from tax law changes.
Revenues for the fourth quarter were $747.4 million, up 8% from the prior-year quarter owing to successful execution of top-line strategy resulting in growth across all four reporting segments. Also, the top line beat the Zacks Consensus Estimate of $724 million. Revenues for 2017 were $2,945 million, up 7% from $2,755.2 million a year ago.
Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) for the fourth-quarter increased 6% to $101.8 million from $95.9 million in the year-ago quarter. The improvement was largely driven by higher waste volumes, cost reductions and improved pricing.
Segmental Performance
Technical Services accounted for 38.8% of total revenues in the reported quarter and improved 9.3% year-over-year to $289.9 million as landfill volumes improved 18% due to higher base business and enhanced project work. Adjusted EBITDA for the quarter improved to $72.7 million from $69.6 million in the prior-year period.
Industrial and Field Services revenues accounted for 20.9% of total revenues in the reported quarter. The segment’s revenues increased to $156.1 million from $141 million in the prior-year quarter. Adjusted EBITDA decreased to $6.4 million from $12.6 million due to customer pricing pressures and some one-time costs.
Safety-Kleen revenues increased to $272.5 million from $260.3 million in the prior-year quarter owing to rollout of closed loop offering, selling and delivering lubricants directly to more than 15,000 unique customers. Adjusted EBITDA improved to $66.8 million from $54.2 million in the year-ago quarter due to increase in base oil and blended pricing supported by spread management in the re-refining business and cost reductions associated particularly with the national customer care center.
Oil, Gas and Lodging Services revenues increased 10.9% to $28.2 million due to higher occupancy rates in fixed lodges. Adjusted EBITDA was $0.7 million as against a negative EBITDA of $3.4 million in the year-ago quarter owing to higher number of rigs serviced.
Acquisition
In the quarter, Clean Harbors completed acquisition of Veolia North America’s U.S. Industrial Cleaning Services Division for $120 million. The acquired business generated revenues approximately $210 million in 2017, employs roughly 1,300 employees and maintains an extensive fleet of vehicles and equipment at more than 60 operating locations across the United States. Clean Harbors will enjoy numerous benefits from this buyout. The company intends to pass on the benefits to their customers, shareholders and industrial services employees. It will provide significant scale and industrial services capabilities for the company while doubling the size of existing U.S. Industrial Services business. The acquired business’ operational footprint particularly its strong presence in the Midwest will complement Clean Harbors’ existing network of locations. An addition of this business will create new cross-selling opportunities and drive incremental volumes into waste disposal network. The company aims to enhance long-term shareholder value and support profitable growth momentum in 2018 and beyond.
Balance Sheet and Cash Flow
At year-end 2017, cash and cash equivalents were $319.4 million while long-term debt was $1,625.5 million compared with the respective tallies of $307 million and $1,633.3 million in the prior-year. Cash flow from operating activities was $285.7 million compared with $259.6 million a year ago. For 2017, adjusted free cash flow totaled $140.2 million compared with $61 million in the prior-year.
2018 Guidance
Clean Harbors gave a bullish outlook for 2018 with adjusted EBITDA in the range of $440−$480 million. On a GAAP basis, the company anticipates net income in the range of $17−$56 million. For the year, Clean Harbors expects net cash from operating activities between $295 million and $345 million. Adjusted free cash flow is expected to be in the range of $125 million to $155 million. Clean Harbors is focused on enhancing operating margins through better pricing, improving revenue mix, increasing efficiencies and capitalizing on growth initiatives. It expects Tech Services to deliver higher earnings due to new incinerator’s second full year of operation and the strength of the industrial economy, particularly expansion in the chemical space.
How Have Estimates Been Moving Since Then?
In the past month, investors have witnessed an upward trend in fresh estimates. There has been one revision higher for the current quarter. Last month, the consensus estimate has shifted by 12.5% due to these changes.
Clean Harbors, Inc. Price and Consensus
Clean Harbors, Inc. Price and Consensus | Clean Harbors, Inc. Quote
VGM Scores
At this time, CLH has a nice Growth Score of B, a grade with the same score on the momentum front. Following the exact same course, the stock was also allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.
Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.
Based on our scores, the stock is equally suitable for value, growth, and momentum investors.
Outlook
Estimates have been trending upward for the stock and the magnitude of this revision looks promising. Notably, CLH has a Zacks Rank #4 (Sell). We expect a below average return from the stock in the next few months.