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Clean Harbors (CLH) Lags Q4 Earnings & Revenue Estimates

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Clean Harbors, Inc.CLH reported disappointing fourth-quarter 2019 results wherein both earnings and revenues lagged the Zacks Consensus Estimate.

Adjusted earnings per share of 42 cents lagged the consensus mark by 8.7% but improved 75% year over year. Total revenues of $871 million missed the consensus estimate by 1.5% but increased 1.5% year over year.

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

Revenues by Segment

Environmental Services revenues of $578.09 million increased 1.2% year over year. Safety-Kleen revenues of $293.52 million increased 1.9% year over year.

Profitability Performance

Adjusted EBITDA of $132.22 million increased 8.5% year over year. Adjusted EBITDA margin increased 100 basis points (bps) year over year to 15.2%.

Segment wise, Environmental Services’ adjusted EBITDA was $117.25 million, up 8.7% year over year and adjusted EBITDA margins improved 140 bps.

Safety-Kleen’s adjusted EBITDA of $66.8 million declined 1.1% year over year and adjusted EBITDA margins declined 70 bps.

Balance Sheet & Cash Flow

Clean Harbors exited fourth-quarter 2019 with cash and cash equivalents of $371.99 million compared with $282.23 million at the end of the prior quarter. Inventories and supplies were $214.74 million, up from $210.83 million in the prior quarter. Long-term debt was $1.55 billion compared with $1.56 billion in the prior quarter.

The company generated $128.5 million in cash from operating activities in the reported quarter. Adjusted free cash flow was $89.4 million.

During the reported quarter, the company repurchased 59,000 shares for an average price of $84.28 per share for a total of $5 million.

2020 Guidance

Clean Harbors unveiled its 2020 guidance. The company expects adjusted EBITDA of $545-$585 million. Segment wise, adjusted EBITDA for Environmental Services is anticipated to increase in low single-digit percentage. Safety-Kleen’s adjusted EBITDA is expected to grow in the mid to high single-digit range.

Net income is anticipated to be $104-$147 million. Adjusted free cash flow is expected between $210 million and $240 million. Net cash from operating activities is projected between $405 million and $455 million.

Zacks Rank & Stocks to Consider

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

Some better-ranked stocks in the broader Zacks Business Services sector are Interpublic IPG, Omnicom OMC and Genpact G, each carrying a Zacks Rank #2 (Buy).  You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Long-term expected EPS (three to five years) growth rate for Interpublic, Omnicom and Genpact is 4.5%, 5.6% and 11.9%, respectively.

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