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Clean Harbors (CLH) Up 4.2% Since Last Earnings Report: Can It Continue?
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A month has gone by since the last earnings report for Clean Harbors (CLH - Free Report) . Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Clean Harbors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Clean Harbors' fourth-quarter 2018 adjusted earnings per share came in at 24 cents compared with a loss of 6 cents in the year-ago quarter. Earnings beat the Zacks Consensus Estimate by 9 cents.
Total revenues of $858.20 million outpaced the consensus estimate by $39.5 million and increased 14.8% year over year.Veolia acquisition contributed $45.2 million of revenues in the reported quarter.
Revenues by Segment
Environmental Services revenues increased 14.9% year over year to $570.95 million. Growth was driven by higher profitability in the company’s disposal network and strength in the industrial, energy and field services businesses. The segment accounted for 64% of total revenues.
Safety-Kleen revenues increased 5.7% year over year to $287.99 million. The segment benefited from higher production volume, closed-lube initiative, and pricing and growth within the branch network's core lines of business. The segment contributed 36% to total revenues.
Profitability Performance
Adjusted EBITDA increased 19.7% year over year to $121.90 million on the back of higher-margin waste streams, improved pricing and strength across multiple businesses. Adjusted EBITDA margin increased 60 basis points (bps) year over year to 14.2%.
Segment wise, Environmental Services’ adjusted EBITDA was $107.82 million, up 35.1% year over year on the back of higher-margin waste streams, pricing gains and solid contribution from industrial services.
Safety-Kleen’s adjusted EBITDA of $67.57 million showed an improvement of 1.1% year over year due to pricing and core branch offerings, which offset the short-term spread compression faced by the company when base oil prices declined during the reported quarter.
Balance Sheet & Cash Flow
Clean Harbors exited fourth-quarter 2018 with cash and cash equivalents of $226.51 million compared with $215.49 million at the end of the prior quarter. Inventories and supplies were $199.47 million, up from $196.04 million in the prior quarter. Long-term debt was $1.56 billion compared with $1.62 billion at the end of the prior quarter.
The company generated $125.99 million in cash from operating activities in the reported quarter. Adjusted free cash flow was $92.7 million. CapEx (net of disposals) was $33.3 million.
Clean Harbors repurchased shares worth $11.5 million in the reported quarter.
Guidance
The company unveiled its guidance for 2019. It now expects adjusted EBITDA of $500-$540 million. Segment wise, adjusted EBITDA for Environmental Services is anticipated to increase in the mid to high-single-digit range. Safety-Kleen’s adjusted EBITDA is expected to grow in the low-single-digit range.
Net income is anticipated to be $70-$110 million. Adjusted free cash flow is expected to be $190-$220 million. Net cash from operating activities is projected between $380 million and $430 million. Adjusted effective tax rate is expected to be 28-31%.
For first-quarter 2019, the company expects adjusted EBITDA to register 10% year-over-year growth.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -50% due to these changes.
VGM Scores
At this time, Clean Harbors has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Clean Harbors has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Clean Harbors (CLH) Up 4.2% Since Last Earnings Report: Can It Continue?
A month has gone by since the last earnings report for Clean Harbors (CLH - Free Report) . Shares have added about 4.2% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Clean Harbors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important drivers.
Clean Harbors Beats Q4 Earnings & Revenues Estimates
Clean Harbors' fourth-quarter 2018 adjusted earnings per share came in at 24 cents compared with a loss of 6 cents in the year-ago quarter. Earnings beat the Zacks Consensus Estimate by 9 cents.
Total revenues of $858.20 million outpaced the consensus estimate by $39.5 million and increased 14.8% year over year. Veolia acquisition contributed $45.2 million of revenues in the reported quarter.
Revenues by Segment
Environmental Services revenues increased 14.9% year over year to $570.95 million. Growth was driven by higher profitability in the company’s disposal network and strength in the industrial, energy and field services businesses. The segment accounted for 64% of total revenues.
Safety-Kleen revenues increased 5.7% year over year to $287.99 million. The segment benefited from higher production volume, closed-lube initiative, and pricing and growth within the branch network's core lines of business. The segment contributed 36% to total revenues.
Profitability Performance
Adjusted EBITDA increased 19.7% year over year to $121.90 million on the back of higher-margin waste streams, improved pricing and strength across multiple businesses. Adjusted EBITDA margin increased 60 basis points (bps) year over year to 14.2%.
Segment wise, Environmental Services’ adjusted EBITDA was $107.82 million, up 35.1% year over year on the back of higher-margin waste streams, pricing gains and solid contribution from industrial services.
Safety-Kleen’s adjusted EBITDA of $67.57 million showed an improvement of 1.1% year over year due to pricing and core branch offerings, which offset the short-term spread compression faced by the company when base oil prices declined during the reported quarter.
Balance Sheet & Cash Flow
Clean Harbors exited fourth-quarter 2018 with cash and cash equivalents of $226.51 million compared with $215.49 million at the end of the prior quarter. Inventories and supplies were $199.47 million, up from $196.04 million in the prior quarter. Long-term debt was $1.56 billion compared with $1.62 billion at the end of the prior quarter.
The company generated $125.99 million in cash from operating activities in the reported quarter. Adjusted free cash flow was $92.7 million. CapEx (net of disposals) was $33.3 million.
Clean Harbors repurchased shares worth $11.5 million in the reported quarter.
Guidance
The company unveiled its guidance for 2019. It now expects adjusted EBITDA of $500-$540 million. Segment wise, adjusted EBITDA for Environmental Services is anticipated to increase in the mid to high-single-digit range. Safety-Kleen’s adjusted EBITDA is expected to grow in the low-single-digit range.
Net income is anticipated to be $70-$110 million. Adjusted free cash flow is expected to be $190-$220 million. Net cash from operating activities is projected between $380 million and $430 million. Adjusted effective tax rate is expected to be 28-31%.
For first-quarter 2019, the company expects adjusted EBITDA to register 10% year-over-year growth.
How Have Estimates Been Moving Since Then?
Fresh estimates followed a downward path over the past two months. The consensus estimate has shifted -50% due to these changes.
VGM Scores
At this time, Clean Harbors has a strong Growth Score of A, though it is lagging a lot on the Momentum Score front with a C. Following the exact same course, the stock was allocated a grade of C on the value side, putting it in the middle 20% 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.
Outlook
Clean Harbors has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.