EX-99.1 3 a05-13906_1ex99d1.htm EX-99.1

 

Exhibit 99.1

 

Press Release

Clean Harbors Announces Second-Quarter 2005 Financial Results

 

Revenue Growth of Eight Percent Drives Another Quarter of Increased Profitability

 

Braintree, MA – August 1, 2005 Clean Harbors, Inc. (“Clean Harbors”) (NASDAQ: CLHB), the leading provider of environmental and hazardous waste management services throughout North America, today announced financial results for the second quarter ended June 30, 2005.

 

Revenues increased eight percent to $173.9 million in the second quarter of 2005 from $161.6 million in the second quarter of 2004.  Income from operations for the second quarter of 2005 totaled $14.4 million, a 53 percent increase from $9.4 million for the second quarter of 2004.  The Company generated net income of $7.3 million, or $0.43 per diluted share, for the second quarter of 2005.  In the second quarter of 2004, the Company generated a net loss of $(12.1) million and a net loss attributable to common shareholders of $(22.9) million, or $(1.63) per share, which included a $10.8 million charge related to the redemption of the Company’s Series C preferred stock, a non-recurring charge of $6.9 million associated with an embedded derivative on the Series C preferred stock, $7.1 million of net direct refinancing expenses and $1.1 million in other one-time costs associated with the refinancing of the Company’s capital structure on June 30, 2004.  Clean Harbors’ Series C Preferred Stock was redeemed in June 2004, eliminating its bottom-line effect for future quarters.

 

EBITDA (see description below) increased by 25 percent to $24.2 million in the second quarter of 2005 from $19.4 million in the same period a year earlier.

 

Comments on the Second Quarter

 

“We extended our business momentum in the second quarter as we generated significant growth and solid cash flow,” stated Alan S. McKim, Chairman and Chief Executive Officer. “Our Site Services business was a key contributor in the second quarter, and we continued to extend the reach of that business through the addition of new branch offices.  We also benefited from several emergency response events, including continued contributions from the cleanup of the Delaware River oil spill.  The results of our Tech Services business, meanwhile, was mixed in the second quarter as utilization at our incinerators was relatively strong while our landfill business experienced some softness due to weather-related delays for some facilities projects.  Several of these projects are now underway, providing us with a good head start on the third quarter.”

 

“Our ability to narrow our cost structure remains a key value driver for the Company,” McKim said. “During the second quarter, we made measurable progress in further reducing costs, particularly in the area of outside transportation costs.  Even with our higher revenue level, outside transportation expenses in the second quarter were 15 percent lower than in the comparable period in 2004.  We also maintained our track record of carefully managing our environmental liabilities and related spending.”

 

McKim continued, “In the second quarter, Clean Harbors benefited from its continual investments in

 

1501 Washington Street PO Box 859048 Braintree, Massachusetts 02185-9048 800.282.0058 www.cleanharbors.com

 



 

technology.  The WIN platform that we recently installed throughout our U.S. locations drove increased operational efficiencies.  We began our planned rollout of the WIN system throughout our Canadian operations in the second quarter, and our first two locations came online in early July.  We expect the platform, which affords us greater flexibility and the ability to thoroughly analyze all elements of our operations, to be installed at most, if not all, of our Canadian locations by year-end.”

 

Non-GAAP Second-Quarter Results

 

Clean Harbors reports EBITDA results, which are non-GAAP, as a complement to results provided in accordance with generally accepted accounting principles in the United States (GAAP) and believes that such information provides an additional measurement of the Company’s performance.  The Company defines EBITDA in accordance with its outstanding credit agreement, as described in the following reconciliation showing the differences between reported income and EBITDA for 2005 and 2004 (in thousands):

 

 

 

For the three months ended:

 

For the six months ended:

 

 

 

June 30,
2005

 

June 30,
2004

 

June 30,
2005

 

June 30,
2004

 

 

 

 

 

 

 

 

 

 

 

Net Income(loss)

 

$

7,371

 

$

(12,127

)

$

12,212

 

$

(9,310

)

Accretion of environmental liabilities

 

2,616

 

2,619

 

5,250

 

5,207

 

Depreciation and amortization

 

7,145

 

6,256

 

14,354

 

11,661

 

Interest expense, net

 

5,946

 

5,443

 

11,907

 

10,801

 

Provision for income taxes

 

981

 

2,314

 

1,013

 

3,526

 

(Gain) loss on sale of fixed assets

 

85

 

(242

)

54

 

(486

)

Loss on refinancing

 

 

7,099

 

 

7,099

 

Refinancing transaction costs

 

 

1,126

 

 

1,126

 

Change in value of embedded derivative

 

 

6,877

 

 

1,590

 

Non-recurring severance charges

 

 

 

 

16

 

Other income

 

24

 

 

(564

)

 

EBITDA

 

$

24,168

 

$

19,365

 

$

44,226

 

$

31,230

 

 

Business Outlook & Financial Guidance

 

“Our strategy remains unchanged for the second half of 2005,” said McKim. “We will focus on projects that drive large volumes to our disposal facilities.  We will continue opening Site Services locations to fuel our organic growth.  We also will continue to evaluate acquisitions that can accelerate our growth rate longer term.  At the same time, we will continue to target increased operational efficiencies and further reduction of our cost structure.  In doing so, we believe Clean Harbors will be able to post strong year-over-year gains in the third quarter.”

 

For the third quarter of 2005, the Company expects to grow revenue by 5 to 6 percent year-over-year and generate EBITDA in the range of $22 million to $24 million.

 



 

Conference Call Information

 

Clean Harbors will conduct a conference call for investors to discuss the information contained in this news release today, August 1, at 9:00 a.m. (ET).  Investors who want to hear a webcast of the call should log onto www.cleanharbors.com and select “Investor Relations.”  In addition, if you are unable to listen to the live webcast, the call will be archived on the investor section of the website.

 

About Clean Harbors, Inc.

 

Clean Harbors, Inc. is North America’s leading provider of environmental and hazardous waste management services.  With an unmatched infrastructure of 48 waste management facilities, including nine landfills, five incineration locations and seven wastewater treatment centers, the Company provides essential services to over 45,000 customers, including more than 175 Fortune 500 companies, thousands of smaller private entities and numerous federal, state and local governmental agencies.  Headquartered in Braintree, Massachusetts, Clean Harbors has more than 100 locations strategically positioned throughout North America in 36 U.S. states, six Canadian provinces, Mexico and Puerto Rico.  For more information, visit www.cleanharbors.com.

 

Safe Harbor Statement

 

Any statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, and involve risks and uncertainties.  These forward-looking statements are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or similar expressions.  These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements.  Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management’s opinions only as of the date hereof.  The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements.  Furthermore, all financial information in this press release is unaudited, and may change materially upon completion of the audit of the Company’s financial statements.  A variety of factors beyond the control of the Company affect the Company’s performance, including, but not limited to:

 

                  The effects of general economic conditions in the United States, Canada and other territories and countries where the Company does business;

 

                  The effect of economic forces and competition in specific marketplaces where the Company competes;

 

                  The possible impact of new regulations or laws pertaining to all activities of the Company’s operations;

 

                  The outcome of litigation or threatened litigation or regulatory actions;

 

                  The effect of commodity pricing on overall revenues and profitability;

 



 

                  Possible fluctuations in quarterly or annual results or adverse impacts on the Company’s results caused by the adoption of new accounting standards or interpretations or regulatory rules and regulations;

 

                  The effect of weather conditions or other aspects of the forces of nature on field or facility operations;

 

                  The effects of industry trends in the environmental services and waste handling marketplace;

 

                  The effects of conditions in the financial services industry on the availability of capital and financing;

 

                  The Company’s ability to manage the significant environmental liabilities, which it assumed in connection with the CSD acquisition; and

 

                  The availability and costs of liability insurance and financial assurance required by governmental entities relating to our facilities.

 

Any of the above factors and numerous others not listed nor foreseen may adversely impact the Company’s financial performance.  Additional information on the potential factors that could affect the Company’s actual results of operations is included in its filings with the Securities and Exchange Commission, including but not limited to its Annual Report on Form 10-K/A, in its entirety and specifically Factors That May Affect Future Results under Item 7, for the fiscal year ended December 31, 2004, which was filed with the SEC on April 29, 2005, its Form 10-Q for the quarter ended March 31, 2005, which was filed on May 10, 2005 and Form 10-Q for the quarter ended June 30, 2005, which the Company plans to file on August 9, 2005.

 

Contacts:

 

 

Bill Geary

 

Jason Fredette

Executive Vice President and General Counsel

 

Associate Vice President

Clean Harbors, Inc.

 

Sharon Merrill Associates, Inc.

781-849-1800

 

617-542-5300

InvestorRelations@cleanharbors.com

 

clhb@investorrelations.com

 



 

CLEAN HARBORS, INC. AND SUBSIDIARIES

 

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(in thousands except per share amounts)

 

 

 

Three Months Ended
June 30,

 

Six Months Ended
June 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

Revenues

 

$

173,910

 

$

161,631

 

$

338,876

 

$

304,388

 

Cost of revenues

 

124,434

 

115,842

 

244,981

 

223,302

 

Selling, general and administrative expenses

 

25,308

 

27,550

 

49,669

 

50,998

 

Accretion of environmental liabilities

 

2,616

 

2,619

 

5,250

 

5,207

 

Depreciation and amortization

 

7,145

 

6,256

 

14,354

 

11,661

 

Income from operations

 

14,407

 

9,364

 

24,622

 

13,220

 

Other income (expense)

 

(109

)

(6,635

)

510

 

(1,104

)

Loss on refinancing

 

 

(7,099

)

 

(7,099

)

Interest (expense), net

 

(5,946

)

(5,443

)

(11,907

)

(10,801

)

Income (loss) before provision for income taxes

 

8,352

 

(9,813

)

13,225

 

(5,784

)

Provision for income taxes

 

981

 

2,314

 

1,013

 

3,526

 

Net income (loss)

 

7,371

 

(12,127

)

12,212

 

(9,310

)

Redemption of Series C preferred stock and dividends and accretion on preferred stock

 

70

 

10,761

 

140

 

11,616

 

Net income (loss) attributable to common shareholders

 

$

7,301

 

$

(22,888

)

$

12,072

 

$

(20,926

)

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

Basic earnings (loss) attributable to common shareholders

 

$

0.48

 

$

(1.63

)

$

0.81

 

$

(1.49

)

Diluted earnings (loss) attributable to common shareholders

 

$

0.43

 

$

(1.63

)

$

0.71

 

$

(1.49

)

Weighted average common shares outstanding

 

15,213

 

14,044

 

14,913

 

14,002

 

Weighted average common shares outstanding plus potentially dilutive common shares

 

17,253

 

14,044

 

17,142

 

14,002

 

 



 

CLEAN HARBORS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

(in thousands)

 

 

 

June 30,

 

December 31,

 

 

 

2005

 

2004

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

50,248

 

$

31,081

 

Marketable securities

 

 

16,800

 

Accounts receivable, net

 

122,460

 

120,886

 

Unbilled accounts receivable

 

6,894

 

5,377

 

Deferred costs

 

3,953

 

4,923

 

Prepaid expenses

 

10,473

 

13,407

 

Supplies inventories

 

11,143

 

10,318

 

Deferred tax asset

 

184

 

188

 

Income tax receivable

 

1,444

 

 

Properties held for sale

 

8,633

 

8,849

 

Total current assets

 

215,432

 

211,829

 

 

 

 

 

 

 

Property, plant and equipment, net

 

178,944

 

180,526

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Deferred financing costs

 

8,298

 

8,950

 

Goodwill

 

19,032

 

19,032

 

Permits and other intangibles, net

 

78,086

 

80,463

 

Deferred tax asset

 

480

 

488

 

Other

 

3,498

 

3,414

 

 

 

109,394

 

112,347

 

Total assets

 

$

503,770

 

$

504,702

 

 



 

CLEAN HARBORS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

(in thousands)

 

 

 

June 30,

 

December 31,

 

 

 

2005

 

2004

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

Current liabilities:

 

 

 

 

 

Uncashed checks

 

$

4,609

 

$

6,542

 

Current portion of capital lease obligations

 

1,625

 

1,522

 

Accounts payable

 

66,794

 

70,363

 

Accrued disposal costs

 

2,841

 

3,032

 

Deferred revenue

 

17,697

 

22,060

 

Other accrued expenses

 

42,272

 

41,054

 

Current portion of closure, post-closure and remedial liabilities

 

13,886

 

14,258

 

Income taxes payable

 

736

 

2,302

 

Total current liabilities

 

150,460

 

161,133

 

 

 

 

 

 

 

Other liabilities:

 

 

 

 

 

 

 

 

 

 

 

Closure and post-closure liabilities, less current portion

 

23,888

 

22,721

 

Remedial liabilities, less current portion

 

137,616

 

144,289

 

Long-term obligations, less current maturities

 

148,204

 

148,122

 

Capital lease obligations, less current portion

 

3,585

 

3,485

 

Other long-term liabilities

 

13,057

 

13,298

 

Accrued pension cost

 

598

 

616

 

Total other liabilities

 

326,948

 

332,531

 

Total stockholders’ equity, net

 

26,362

 

11,038

 

Total liabilities and stockholders’ equity

 

$

503,770

 

$

504,702