EX-99.1 2 a13-18152_1ex99d1.htm EX-99.1

Exhibit 99.1

 

Press Release

 

Clean Harbors Reports Second-Quarter 2013 Financial Results

 

·            Flood Conditions in Canada and Multiple Headwinds Result in Lower-Than-Expected Revenue of $860.5 Million, EPS of $0.38 and Adjusted EBITDA of $123.6 Million

·            Weakness in Oil & Gas and Oil Re-refining Expected to Continue Near-term

·            Safety-Kleen Integration Remains on Track

·            Company Reduces 2013 Revenue and Adjusted EBITDA Guidance

 

Norwell, Mass. — August 7, 2013 — Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental, energy and industrial services throughout North America, today announced financial results for the second quarter ended June 30, 2013.

 

Results for 2013 reflect the December 2012 acquisition of Safety-Kleen.  Revenues for the second quarter of 2013 increased 64% to $860.5 million, compared with $523.1 million in the same period in 2012.  Income from operations in the second quarter of 2013 increased 12% to $53.2 million from $47.5 million in the same period of 2012, which includes a 75% increase in depreciation and amortization expense.

 

Second-quarter 2013 net income was $22.9 million, or $0.38 per diluted share, compared with $23.4 million, or $0.44 per diluted share, in the second quarter of 2012.  The Company’s second-quarter 2013 net income includes approximately $6.8 million in pre-tax integration and severance costs.  The effective tax rate in the second quarter of 2013 was 35.1%, compared with 35.8% in the same period of last year.

 

Adjusted EBITDA (see description below) in the second quarter of 2013 increased 39% to $123.6 million, compared with $88.7 million in the same period of 2012. Second-quarter 2013 Adjusted EBITDA includes the $6.8 million in pre-tax integration and severance costs.

 

Comments on the Second Quarter

 

“We delivered disappointing results for the second quarter as we experienced challenging conditions and weakness within our Oil Re-refining and Recycling segment and Oil and Gas Field Services segment,” said Alan S. McKim, Chairman and Chief Executive Officer. “Our second-quarter performance reflects a combination of factors that limited our revenue and Adjusted EBITDA including historic flooding in Western Canada, a lower percentage of blended lubricant sales within our re-refinery business, an unplanned three-week shutdown at our largest incinerator and delays in some customer plant turnarounds.”

 

“The flooding in Canada affected both our Industrial and Field Services segment and Oil and Gas Field Services segment with activity limited at certain customer sites and a slowdown in near-term Western Canadian drilling activity.  Within our Oil Re-refining and Recycling segment, we sold a lower percentage of blended products, which reduced the segment’s Adjusted EBITDA contribution,” McKim said.  “The highlight of the quarter was our Technical Services segment, which continued to demonstrate the benefits of

 

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42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 


 

Press Release

 

Clean Harbors Reports Second-Quarter 2013 Financial Results

 

our Safety-Kleen acquisition.  Our incineration facilities achieved utilization for the quarter of 92.3% — despite the lengthy shutdown at our Deer Park facility — and landfill volumes increased 17% as a result of large-scale project work.”

 

“The Safety-Kleen integration proceeded largely on schedule in the second quarter,” McKim said. “We remain confident that we can achieve our targeted range for cost synergies in 2013 of $70 million to $75 million, which would keep us on track to realize $100 million of annualized cost synergies in 2014.”

 

Business Outlook and Financial Guidance

 

“We continue to anticipate a stronger second half of 2013,” McKim said. “We are confident that our disposal facilities will continue to run at high levels of utilization as we enter the strongest operating season for Technical Services.  We expect SK Environmental Services to extend its recent growth into the second half of the year.  Within Oil Re-refining and Recycling, we are working to revive our growth in blended volumes while continuing to reduce our input costs going forward.  Trends within our Industrial and Field Services segment are also positive with a strong pipeline of available projects, conditions normalizing in Canada, and our Ruth Lake lodge coming online later this month.  In Western Canada, drilling activity is now increasing, and our Oil and Gas Field Services segment is achieving success in expanding its presence in U.S. shale plays.”

 

“Despite these positive trends, our expected second-half results will not be enough to enable us to achieve our full-year revenue and Adjusted EBITDA targets.  As a result, we are lowering our 2013 guidance to reflect our second-quarter results and the delays that we experienced in several areas due to weather and certain market conditions.  On the margin side, we have taken a significant amount of costs out of our combined organization and are continuing our efforts to better leverage Safety-Kleen.  Overall, we believe our Company will deliver a solid finish to the year and will be well-positioned for success entering 2014,” McKim concluded.

 

Based on its second-quarter performance and current market conditions, Clean Harbors is lowering its previously announced 2013 annual revenue and Adjusted EBITDA guidance. The Company currently expects 2013 revenues in the range of $3.50 billion to $3.55 billion, compared with its previous revenue guidance of $3.62 billion to $3.67 billion. In addition, the Company currently expects Adjusted EBITDA in the range of $535 million to $545 million, compared with its previous guidance of $605 million to $620 million. A reconciliation of the Company’s Adjusted EBITDA guidance to net income guidance is included below.

 

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42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 


 

Press Release

 

Clean Harbors Reports Second-Quarter 2013 Financial Results

 

Non-GAAP Results

 

Clean Harbors reports Adjusted EBITDA results, which is a non-GAAP financial measure, as a complement to results provided in accordance with accounting principles generally accepted in the United States (GAAP).  The Company believes that Adjusted EBITDA provides additional useful information to investors since the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved.  The Company defines Adjusted EBITDA in accordance with its existing credit agreement, as described in the following reconciliation showing the differences between reported net income and Adjusted EBITDA for the second quarter and first six months of 2013 and 2012 (in thousands):

 

 

 

For the Three Months Ended:

 

For the Six Months Ended:

 

 

 

June 30, 2013

 

June 30, 2012

 

June 30, 2013

 

June 30, 2012

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

22,902

 

$

23,426

 

$

33,404

 

$

55,441

 

Accretion of environmental liabilities

 

2,879

 

2,505

 

5,714

 

4,921

 

Depreciation and amortization

 

67,468

 

38,663

 

127,474

 

75,494

 

Other (income) expense

 

(1,655

)

75

 

(2,180

)

374

 

Interest expense, net

 

19,585

 

10,968

 

39,458

 

22,240

 

Pre-tax, non-cash acquisition accounting adjustments

 

—

 

—

 

13,559

 

—

 

Provision for income taxes

 

12,411

 

13,064

 

17,389

 

31,179

 

Adjusted EBITDA

 

$

123,590

 

$

88,701

 

$

234,818

 

$

189,649

 

 

Adjusted EBITDA Guidance Reconciliation

 

An itemized reconciliation between projected net income and projected Adjusted EBITDA is as follows:

 

 

 

For the Year Ending December 31, 2013

 

 

 

Amount

 

Margin % (1)

 

 

 

(In millions)

 

 

 

Projected GAAP net income

 

$

105

 

to

$

121

 

3.0%

 

 to

3.4%

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

Pre-tax, non-cash acquisition accounting adjustments

 

14

 

to

14

 

0.4%

 

 to

0.4%

 

Accretion of environmental liabilities

 

13

 

to

11

 

0.4%

 

 to

0.3%

 

Depreciation and amortization

 

265

 

to

255

 

7.5%

 

 to

7.2%

 

Interest expense, net

 

79

 

to

78

 

2.3%

 

 to

2.2%

 

Provision for income taxes

 

59

 

to

66

 

1.7%

 

 to

1.9%

 

Projected Adjusted EBITDA

 

$

535

 

to

$

545

 

15.3%

 

 to

15.4%

 

 

 

 

 

 

 

 

 

 

 

Revenues (In millions)

 

$

3,500

 

to

$

3,550

 

 

 

 

 

GRAPHIC

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 


 

Press Release

 

Clean Harbors Reports Second-Quarter 2013 Financial Results

 

(1)   The Margin % indicates the percentage that the line-item represents to total revenues for the respective reporting period, calculated by dividing the dollar amount for the line-item by total revenues for the reporting period.

 

Conference Call Information

 

Clean Harbors will conduct a conference call for investors today at 9:00 a.m. (ET) to discuss the information contained in this press release.  On the call, management will discuss Clean Harbors’ financial results, business outlook and growth strategy.

 

Investors who wish to listen to the webcast should visit the Investor Relations section of the Company’s website at www.cleanharbors.com. The live call also can be accessed by dialing 201.689.8881 or 877.709.8155 prior to the start of the call. If you are unable to listen to the live call, the webcast will be archived on the Company’s website.

 

About Clean Harbors

 

Clean Harbors (NYSE: CLH) is the leading provider of environmental, energy and industrial services throughout North America. The Company serves a diverse customer base, including a majority of the Fortune 500 companies, thousands of smaller private entities and numerous federal, state, provincial and local governmental agencies. Through its Safety-Kleen subsidiary, Clean Harbors also is a premier provider of used oil recycling and re-refining, parts washers and environmental services for the small quantity generator market.

 

Headquartered in Massachusetts, Clean Harbors has waste disposal facilities and service locations throughout the United States and Canada, as well as 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. These forward-looking statements are generally identifiable by use of the words “believes,” “expects,” “intends,” “anticipates,” “plans to,” “estimates,” “projects,” or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, the expected Safety-Kleen synergies and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors’ management as of this date only and are subject to certain risks and uncertainties that could cause actual results to differ materially, including, without limitation, those items identified as “risk factors” in Clean Harbors’ most recently filed Form 10-K and Form 10-Q. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. Clean Harbors undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements other than through its filings with the

 

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42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 


 

Press Release

 

Clean Harbors Reports Second-Quarter 2013 Financial Results

 

Securities and Exchange Commission, which may be viewed in the “Investors” section of Clean Harbors’ website at www.cleanharbors.com.

 

Contacts:

 

 

 

James M. Rutledge

Jim Buckley

Vice Chairman, President and CFO

SVP Investor Relations and Corporate Communications

Clean Harbors, Inc.

Clean Harbors, Inc.

781.792.5100

781.792.5100

InvestorRelations@cleanharbors.com

Buckley.James@cleanharbors.com

 

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42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 


 

Press Release

 

Clean Harbors Reports Second-Quarter 2013 Financial Results

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME

(in thousands except per share amounts)

 

 

 

For the Three Months Ended:

 

For the Six Months Ended:

 

 

 

June 30,

 

June 30,

 

June 30,

 

June 30,

 

 

 

2013

 

2012

 

2013

 

2012

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

860,528

 

$

523,118

 

$

1,722,691

 

$

1,095,140

 

Cost of revenues (exclusive of items shown separately below)

 

614,326

 

367,623

 

1,250,350

 

767,938

 

Selling, general and administrative expenses

 

122,612

 

66,794

 

251,082

 

137,553

 

Accretion of environmental liabilities

 

2,879

 

2,505

 

5,714

 

4,921

 

Depreciation and amortization

 

67,468

 

38,663

 

127,474

 

75,494

 

Income from operations

 

53,243

 

47,533

 

88,071

 

109,234

 

Other income (expense)

 

1,655

 

(75

)

2,180

 

(374

)

Interest (expense), net

 

(19,585

)

(10,968

)

(39,458

)

(22,240

)

Income before provision for income taxes

 

35,313

 

36,490

 

50,793

 

86,620

 

Provision for income taxes

 

12,411

 

13,064

 

17,389

 

31,179

 

Net income

 

$

22,902

 

$

23,426

 

$

33,404

 

$

55,441

 

Earnings per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.38

 

$

0.44

 

$

0.55

 

$

1.04

 

Diluted

 

$

0.38

 

$

0.44

 

$

0.55

 

$

1.04

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

60,550

 

53,308

 

60,507

 

53,268

 

Weighted average common shares outstanding plus potentially dilutive common shares

 

60,687

 

53,505

 

60,658

 

53,497

 

 

GRAPHIC

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 


 

Press Release

 

Clean Harbors Reports Second-Quarter 2013 Financial Results

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

ASSETS

(in thousands)

 

 

 

June 30,
2013

 

December 31,
2012

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

263,478

 

$

229,836

 

Marketable securities

 

10,339

 

11,778

 

Accounts receivable, net

 

549,909

 

541,423

 

Unbilled accounts receivable

 

34,277

 

27,072

 

Deferred costs

 

17,255

 

6,888

 

Prepaid expenses and other current assets

 

53,471

 

75,778

 

Inventories and supplies

 

155,538

 

171,441

 

Deferred tax assets

 

20,924

 

22,577

 

Total current assets

 

1,105,191

 

1,086,793

 

 

 

 

 

 

 

Property, plant and equipment, net

 

1,554,972

 

1,531,763

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Long-term investments

 

4,352

 

4,354

 

Deferred financing costs

 

22,410

 

21,657

 

Goodwill

 

575,275

 

593,771

 

Permits and other intangibles, net

 

555,422

 

572,817

 

Other

 

14,491

 

14,651

 

Total other assets

 

1,171,950

 

1,207,250

 

Total assets

 

$

3,832,113

 

$

3,825,806

 

 

GRAPHIC

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 


 

Press Release

 

Clean Harbors Reports Second-Quarter 2013 Financial Results

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

(in thousands)

 

 

 

June 30,
2013

 

December 31,
2012

 

Current liabilities:

 

 

 

 

 

Current portion of capital lease obligations

 

$

2,923

 

$

5,092

 

Accounts payable

 

273,058

 

256,468

 

Deferred revenue

 

63,374

 

50,942

 

Accrued expenses

 

242,362

 

232,429

 

Current portion of closure, post-closure and remedial liabilities

 

22,470

 

24,121

 

Total current liabilities

 

604,187

 

569,052

 

Other liabilities:

 

 

 

 

 

Closure and post-closure liabilities, less current portion

 

40,896

 

45,457

 

Remedial liabilities, less current portion

 

154,983

 

151,890

 

Long-term obligations

 

1,400,000

 

1,400,000

 

Capital lease obligations, less current portion

 

2,140

 

2,879

 

Deferred taxes, unrecognized tax benefits and other long-term liabilities

 

215,187

 

224,456

 

Total other liabilities

 

1,813,206

 

1,824,682

 

Total stockholders’ equity, net

 

1,414,720

 

1,432,072

 

Total liabilities and stockholders’ equity

 

$

3,832,113

 

$

3,825,806

 

 

GRAPHIC

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 


 

Press Release

 

Clean Harbors Reports Second-Quarter 2013 Financial Results

 

Supplemental Segment Data (in thousands)

 

 

 

For the Three Months Ended:

 

 

 

June 30, 2013

 

June 30, 2012

 

Revenue

 

Third Party
Revenues

 

Intersegment
Revenues, net

 

Direct
Revenues

 

Third Party
Revenues

 

Intersegment
Revenues, net

 

Direct
Revenues

 

Technical Services

 

$

256,262

 

$

27,128

 

$

283,390

 

$

243,321

 

$

8,865

 

$

252,186

 

Oil Re-refining and Recycling

 

139,695

 

(64,574

)

75,121

 

—

 

—

 

—

 

SK Environmental Services

 

149,835

 

48,520

 

198,355

 

—

 

—

 

—

 

Industrial and Field Services

 

244,495

 

(11,665

)

232,830

 

202,618

 

(11,212

)

191,406

 

Oil and Gas Field Services

 

69,860

 

1,854

 

71,714

 

76,849

 

2,869

 

79,718

 

Corporate Items

 

381

 

(1,263

)

(882

)

330

 

(522

)

(192

)

Total

 

$

860,528

 

$

—

 

$

860,528

 

$

523,118

 

$

—

 

$

523,118

 

 

 

 

For the Six Months Ended:

 

 

 

June 30, 2013

 

June 30, 2012

 

Revenue

 

Third Party
Revenues

 

Intersegment
Revenues, net

 

Direct
Revenues

 

Third Party
Revenues

 

Intersegment
Revenues, net

 

Direct
Revenues

 

Technical Services

 

$

490,201

 

$

52,399

 

$

542,600

 

$

464,958

 

$

18,424

 

$

483,382

 

Oil Re-refining and Recycling

 

286,626

 

(121,135

)

165,491

 

—

 

—

 

—

 

SK Environmental Services

 

302,790

 

90,009

 

392,799

 

—

 

—

 

—

 

Industrial and Field Services

 

465,913

 

(24,883

)

441,030

 

405,397

 

(22,421

)

382,976

 

Oil and Gas Field Services

 

186,556

 

5,796

 

192,352

 

223,754

 

4,792

 

228,546

 

Corporate Items (1)

 

(9,395

)

(2,186

)

(11,581

)

1,031

 

(795

)

236

 

Total

 

$

1,722,691

 

$

—

 

$

1,722,691

 

$

1,095,140

 

$

—

 

$

1,095,140

 

 

(1)   Corporate Items revenue for the six months ended June 30, 2013 includes one-time, non-cash reductions of approximately $10.2 million due to the impact of fair value acquisition accounting adjustments on Safety-Kleen’s historical deferred revenue at December 31, 2012. Revenue for the five reportable segments for the six months ended June 30, 2013 excludes such adjustments to maintain comparability with future operating results and reflect how the Company manages the business.

 

GRAPHIC

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com

 


 

Press Release

 

Clean Harbors Reports Second-Quarter 2013 Financial Results

 

Non-GAAP Segment Results

 

Clean Harbors reports Adjusted EBITDA results, which is a non-GAAP financial measure, as a complement to results provided in accordance with accounting principles generally accepted in the United States (GAAP) and believes that such information provides additional useful information to investors since the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved.  The Company defines Adjusted EBITDA in accordance with its existing credit agreement.  See “Non-GAAP Results” for a reconciliation of the Company’s total Adjusted EBITDA to GAAP net income.

 

 

 

For the Three Months Ended:

 

For the Six Months Ended:

 

Adjusted EBITDA

 

June 30, 2013

 

June 30, 2012

 

June 30, 2013

 

June 30, 2012

 

 

 

 

 

 

 

 

 

 

 

Technical Services

 

$

69,390

 

$

68,521

 

$

129,435

 

$

120,432

 

Oil Re-refining and Recycling

 

12,657

 

—

 

27,969

 

—

 

SK Environmental Services

 

34,171

 

—

 

61,211

 

—

 

Industrial and Field Services

 

54,196

 

40,558

 

90,542

 

74,636

 

Oil and Gas Field Services

 

3,967

 

7,971

 

31,518

 

48,167

 

Corporate Items

 

(50,791

)

(28,349

)

(105,857

)

(53,586

)

Total

 

$

123,590

 

$

88,701

 

$

234,818

 

$

189,649

 

 

GRAPHIC

 

42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com