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Clean Harbors (CLH) Beats on Q2 Earnings, Revises '19 View

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Clean Harbors, Inc. (CLH - Free Report) reported mixed second-quarter 2019 results, wherein the company’s earnings surpassed the Zacks Consensus Estimate but revenues missed the same.

Adjusted earnings per share of 66 cents beat the consensus mark by 4 cents and improved 22.2% year over year. Total revenues of $868.7 million lagged the consensus estimate by $6.8 million but increased 2.3% year over year.

During the reported quarter, the company acquired an environmental services firm based in the Pacific Northwest for nearly $15 million. The buyout is expected to enhance the Environmental Services segment in the Western region.

So far this year, shares of Clean Harbors have gained 54% compared with 26.1% rise of the industry it belongs to.

 

Let’s check out the numbers in detail.

Revenues by Segment

Environmental Services revenues of $563.08 million increased 1.5% year over year on the back of robust growth in facilities group, which more than offset lower industrial turnaround activities. The segment accounted for 65% of total revenues.

Safety-Kleen revenues of $305.98 million increased 3.9% year over year due to growth in the majority of core branch offerings, pricing initiatives and higher production levels at the re-refineries. The segment contributed 35% to total revenues.

Clean Harbors, Inc. Revenue (TTM)

 

Clean Harbors, Inc. Revenue (TTM)

Clean Harbors, Inc. revenue-ttm | Clean Harbors, Inc. Quote

Profitability Performance

Adjusted EBITDA increased 7.4% year over year to $149.83 million on strength across both Environmental Services and Safety-Kleen segments. Adjusted EBITDA margin increased 80 basis points (bps) year over year to 17.2%, reflecting the highest margin in roughly three years.

Clean Harbors, Inc. Price, Consensus and EPS Surprise

 

Clean Harbors, Inc. Price, Consensus and EPS Surprise

Clean Harbors, Inc. price-consensus-eps-surprise-chart | Clean Harbors, Inc. Quote

Segment wise, Environmental Services’ adjusted EBITDA was $117.87 million, up 7.9% year over year on the back of higher pricing in disposal network, high-value waste streams, cost-reduction initiatives and operational efficiencies. Focus on driving higher-margin volumes helped the company in partially offsetting the decline in utilization.

Safety-Kleen’s adjusted EBITDA of $79.46 million improved 8.7% year over year and adjusted EBITDA margins improved 120 bps to 26%. The overall improvement can be attributed to higher revenues, ongoing pricing improvement programs and cost-reduction initiatives within the branches. The company also benefited from investments (made in 2017) in Safety-Kleen's national customer care center.

Balance Sheet & Cash Flow

Clean Harbors exited second-quarter 2019 with cash and cash equivalents of $204.46 million compared with $167.37 million at the end of the prior quarter. Inventories and supplies were $203.33 million, up from $200.81 million in the prior quarter. Long-term debt of $1.56 billion was flat sequentially.

The company generated $108.73 million in cash from operating activities in the reported quarter. Adjusted free cash flow was $52.37 million.

During the reported quarter, the company repurchased 74,000 shares for average price of slightly less than $67 per share for a total of $4.9 million.

Guidance

The company updated its guidance for 2019. It now expects adjusted EBITDA of $520-550 million compared with the prior guided range of $510-$540 million. Segment wise, adjusted EBITDA for Environmental Services is anticipated to increase in low-teens percentage. Safety-Kleen’s adjusted EBITDA is expected to grow in low single-digit range.

Net income is now anticipated in the range of $82-$115 million compared with the previously guided range of $77-$110 million.

Adjusted free cash flow is now expected between $200-220 million compared with the previously guided range of $190-$220 million. Net cash from operating activities is now projected between $390 million and $430 million compared with the prior guided range of $380-$430 million. Adjusted effective tax rate is expected to be in the range of 28-31%.

Zacks Rank & Upcoming Releases

Currently, Clean Harbors carries a Zacks Rank #4 (Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Investors interested in the broader Zacks Business Services sector are awaiting second-quarter 2019 earnings of key players like Genpact (G - Free Report) , Green Dot (GDOT - Free Report) and Navigant Consulting (NCI - Free Report) . While Genpact and Green Dot are slated to report on Aug 7, Navigant Consulting is scheduled to release results on Aug 8.

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