CLH Clean Harbors Inc

• Posts 11% Q2 Revenue Increase to $1.55 Billion, Led by Environmental Services
• Generates 15% Q2 Net Income Growth to $133.3 Million, or EPS of $2.46
• Achieves 14% Growth in Q2 Adjusted EBITDA to $327.8 Million with Margin of 21.1%
• Raises Full-Year 2024 Adjusted EBITDA Guidance

Clean Harbors, Inc. (“Clean Harbors” or the “Company”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the second quarter ended June 30, 2024.

“The positive trends that have contributed to the growth of our business in recent years continued in the second quarter, fueling an excellent performance that exceeded our expectations,” said Mike Battles, Co-Chief Executive Officer. “We delivered record Q2 revenue and Adjusted EBITDA while improving our margin 50 basis points from the same period a year ago. Our Environmental Services (ES) segment benefited from strong organic growth and the late March acquisition of HEPACO. Safety-Kleen Sustainability Solutions (SKSS) rebounded sequentially from the first quarter on improved base oil and lubricant pricing momentum. Our safety results for the quarter were consistent with the prior year as we achieved a YTD Total Recordable Incident Rate (TRIR) of 0.70.”

Second-Quarter Results

Revenues grew 11% to $1.55 billion compared with $1.40 billion in the same period of 2023. Income from operations increased 14% to $215.5 million compared with $189.8 million in the second quarter of 2023.

Net income was $133.3 million, or $2.46 per diluted share, compared with $115.8 million, or $2.13 per diluted share, for the same period in 2023.

Adjusted EBITDA (see description and reconciliation below) grew 14% to $327.8 million compared with $287.5 million in the same period of 2023.

Q2 2024 Segment Review

“Our ES segment achieved a 12% increase in revenue and 18% growth in Adjusted EBITDA, leading to a 140-basis point year-over-year improvement in segment margin,” said Eric Gerstenberg, Co-Chief Executive Officer. “Field Services drove the revenue growth with a 64% increase, primarily reflecting the acquisition of HEPACO combined with strong organic growth in our legacy business. During the quarter, the HEPACO integration proceeded well, as evidenced by the HEPACO and legacy Field Services teams collaborating on several large emergency response events. Technical Services experienced 14% revenue growth compared to the second quarter of 2023 due to higher network volumes. Incineration utilization was 88% for the quarter, up from 84% in the same period a year ago. Average price in the incinerators was up 3%. Landfill tonnage increased 4% from Q2 2023, and the average landfill price per ton increased by 5%. Safety-Kleen Environmental Services continued its momentum with 11% revenue growth in the ES segment, driven by high demand for its core offerings. Our Industrial Services revenue declined by 10% due to reduced turnaround activity compared with Q2 of last year, particularly in the refinery space.”

“Within SKSS, we rebounded from a challenging Q1 with profitable growth on a sequential basis,” said Battles. “Revenue in this segment grew 8% from the second quarter of 2023, driven by a 3% increase in volumes sold and our acquisition of Noble Oil in March. Profitability was modestly lower than a year ago. Our plants performed well in the quarter, and waste oil collections increased 5% to a record 67 million gallons.”

Business Outlook and Financial Guidance

“We enter the second half of 2024 with healthy demand and momentum in our core disposal, recycling and service businesses,” Gerstenberg concluded. “Within Environmental Services, we believe that our record backlog, healthy project pipeline, upcoming incinerator opening and steady demand for our broad suite of services positions us well for continued success. Our new Kimball, Nebraska incinerator is on track to begin processing hazardous waste in the fourth quarter of 2024. We also expect the HEPACO acquisition, which is off to a terrific start, to further bolster our Field Services business and emergency response capabilities, while providing numerous synergy opportunities. Within our SKSS segment, we expect to see stable performance in the coming quarters, despite the current demand environment for base oil. We plan to capitalize on initiatives like Group III production, higher blended sales and our new partnership with Castrol for its MoreCircular offering, which has the potential to lower the carbon footprints of fleets in the years ahead. Overall, we continue to maintain a favorable outlook for the Company for the remainder of the year. We expect to deliver an outstanding financial performance to shareholders in 2024 and are on track to achieve our Vision 2027 goals.”

In the third quarter of 2024, Clean Harbors expects Adjusted EBITDA to grow 20% to 24% from the third quarter of 2023. For full-year 2024, Clean Harbors now expects:

• Adjusted EBITDA in the range of $1.125 billion to $1.165 billion or a midpoint of $1.145 billion, which represents 13% growth year-over-year. This Adjusted EBITDA range is based on anticipated GAAP net income in the range of $391 million to $426 million.
• Adjusted free cash flow in the range of $350 million to $390 million, or a midpoint of $370 million, which includes approximately $65 million of spending related to the Kimball incinerator and $20 million for the Company’s Baltimore expansion. This range is based on anticipated net cash from operating activities in the range of $750 million to $820 million.

Non-GAAP Results

Clean Harbors reports Adjusted EBITDA, which is a non-GAAP financial measure and should not be considered an alternative to net income or other measurements under generally accepted accounting principles (GAAP) but viewed only as a supplement to those measurements. Adjusted EBITDA is not calculated identically by all companies, and therefore the Company’s measurement of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Clean Harbors believes that Adjusted EBITDA provides additional useful information to investors because the Company’s management routinely evaluates the performance of its businesses based upon levels of Adjusted EBITDA, which excludes certain expenses relating to transactions not reflective of our core operations, and because the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved. The Company defines Adjusted EBITDA consistent with its existing revolving credit agreement, as described in the following reconciliation showing the differences between reported GAAP net income and Adjusted EBITDA for the three and six months ended June 30, 2024 and 2023 (in thousands, except percentages):

 

Three Months Ended

 

Six Months Ended

 

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Net income

$

133,280

 

 

$

115,766

 

 

$

203,112

 

 

$

188,167

 

Accretion of environmental liabilities

 

3,304

 

 

 

3,486

 

 

 

6,521

 

 

 

6,893

 

Stock-based compensation

 

8,515

 

 

 

4,500

 

 

 

14,853

 

 

 

10,518

 

Depreciation and amortization

 

100,504

 

 

 

89,697

 

 

 

195,569

 

 

 

174,455

 

Other expense, net

 

167

 

 

 

1,283

 

 

 

1,308

 

 

 

1,167

 

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

2,362

 

Interest expense, net of interest income

 

36,449

 

 

 

30,072

 

 

 

64,988

 

 

 

50,704

 

Provision for income taxes

 

45,597

 

 

 

42,702

 

 

 

71,560

 

 

 

68,378

 

Adjusted EBITDA

$

327,816

 

 

$

287,506

 

 

$

557,911

 

 

$

502,644

 

Adjusted EBITDA Margin

 

21.1

%

 

 

20.6

%

 

 

19.0

%

 

 

18.6

%

Adjusted Free Cash Flow Reconciliation

Clean Harbors reports adjusted free cash flow, which is a non-GAAP financial measure that should not be considered an alternative to net cash from operating activities or other measurements under GAAP. The Company considers adjusted free cash flow to be a measurement of liquidity that provides useful information to investors about its ability to generate cash. The Company defines adjusted free cash flow as net cash from operating activities excluding cash impacts of items derived from non-operating activities, less additions to property, plant and equipment plus proceeds from sale and disposal of fixed assets. Adjusted free cash flow is not calculated identically by all companies, and therefore the Company’s measurement of adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

An itemized reconciliation between reported GAAP net cash from operating activities and adjusted free cash flow is as follows for the three and six months ended June 30, 2024 and 2023 (in thousands):

 

Three Months Ended

 

Six Months Ended

 

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Adjusted free cash flow

 

 

 

 

 

 

 

Net cash from operating activities

$

216,045

 

 

$

207,565

 

 

$

234,594

 

 

$

235,573

 

Additions to property, plant and equipment

 

(135,110

)

 

 

(122,612

)

 

 

(273,023

)

 

 

(204,298

)

Proceeds from sale and disposal of fixed assets

 

3,287

 

 

 

1,089

 

 

 

4,295

 

 

 

2,944

 

Adjusted free cash flow

$

84,222

 

 

$

86,042

 

 

$

(34,134

)

 

$

34,219

 

Adjusted EBITDA Guidance Reconciliation

An itemized reconciliation between projected GAAP net income and projected Adjusted EBITDA is as follows (in millions):

 

For the Year Ending December 31, 2024

Projected net income

$391

to

$426

Adjustments:

 

 

 

Accretion of environmental liabilities

15

to

14

Stock-based compensation

27

to

30

Depreciation and amortization

405

to

395

Interest expense, net

145

to

140

Provision for income taxes

142

to

160

Projected Adjusted EBITDA

$1,125

to

$1,165

Adjusted Free Cash Flow Guidance Reconciliation

An itemized reconciliation between projected GAAP net cash from operating activities and projected adjusted free cash flow is as follows (in millions):

 

For the Year Ending December 31, 2024

Projected net cash from operating activities

$750

to

$820

Additions to property, plant and equipment

(410)

to

(440)

Proceeds from sale and disposal of fixed assets

10

to

10

Projected adjusted free cash flow

$350

to

$390

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. During the call, management will discuss Clean Harbors’ financial results, business outlook and growth strategy. Investors who wish to listen to the webcast and view the accompanying slides should visit the Investor Relations section of the Company’s website at www.cleanharbors.com. The live call also can be accessed by dialing 877.709.8155 or 201.689.8881 prior to the start time. If you are unable to listen to the live conference call, the webcast will be archived on the Company’s website.

About Clean Harbors

Clean Harbors (NYSE: CLH) is North America’s leading provider of environmental and industrial services. The Company serves a diverse customer base, including a majority of Fortune 500 companies. Its customer base spans a number of industries, including chemical, manufacturing and refining, as well as numerous government agencies. These customers rely on Clean Harbors to deliver a broad range of services such as end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services. Through its Safety-Kleen subsidiary, Clean Harbors also is a leading provider of parts washers and environmental services to commercial, industrial and automotive customers, as well as North America’s largest re-refiner and recycler of used oil. Founded in 1980 and based in Massachusetts, Clean Harbors operates in the United States, Canada, Mexico, Puerto Rico and India. 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,” “seeks,” “should,” “estimates,” “projects,” “may,” “likely,” “potential” or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors’ management as of the date of this press release 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 reports on Form 10-K and Form 10-Q. Forward-looking statements are neither historical facts nor assurances of future performance. 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 Securities and Exchange Commission, which may be viewed in the “Investors” section of Clean Harbors’ website at www.cleanharbors.com.

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

 

Three Months Ended

 

Six Months Ended

 

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Revenues

$

1,552,719

 

 

$

1,397,900

 

 

$

2,929,414

 

 

$

2,705,287

 

Cost of revenues: (exclusive of items shown separately below)

 

1,035,542

 

 

 

947,512

 

 

 

2,006,612

 

 

 

1,879,026

 

Selling, general and administrative expenses

 

197,876

 

 

 

167,382

 

 

 

379,744

 

 

 

334,135

 

Accretion of environmental liabilities

 

3,304

 

 

 

3,486

 

 

 

6,521

 

 

 

6,893

 

Depreciation and amortization

 

100,504

 

 

 

89,697

 

 

 

195,569

 

 

 

174,455

 

Income from operations

 

215,493

 

 

 

189,823

 

 

 

340,968

 

 

 

310,778

 

Other expense, net

 

(167

)

 

 

(1,283

)

 

 

(1,308

)

 

 

(1,167

)

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,362

)

Interest expense, net

 

(36,449

)

 

 

(30,072

)

 

 

(64,988

)

 

 

(50,704

)

Income before provision for income taxes

 

178,877

 

 

 

158,468

 

 

 

274,672

 

 

 

256,545

 

Provision for income taxes

 

45,597

 

 

 

42,702

 

 

 

71,560

 

 

 

68,378

 

Net income

$

133,280

 

 

$

115,766

 

 

$

203,112

 

 

$

188,167

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

2.47

 

 

$

2.14

 

 

$

3.77

 

 

$

3.48

 

Diluted

$

2.46

 

 

$

2.13

 

 

$

3.75

 

 

$

3.46

 

Shares used to compute earnings per share - Basic

 

53,932

 

 

 

54,092

 

 

 

53,931

 

 

 

54,084

 

Shares used to compute earnings per share - Diluted

 

54,248

 

 

 

54,448

 

 

 

54,231

 

 

 

54,422

 

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

June 30, 2024

 

December 31, 2023

Current assets:

 

 

 

Cash and cash equivalents

$

401,992

 

$

444,698

Short-term marketable securities

 

91,294

 

 

106,101

Accounts receivable, net

 

1,089,832

 

 

983,111

Unbilled accounts receivable

 

187,148

 

 

107,859

Inventories and supplies

 

365,356

 

 

327,511

Prepaid expenses and other current assets

 

93,440

 

 

82,939

Total current assets

 

2,229,062

 

 

2,052,219

Property, plant and equipment, net

 

2,408,647

 

 

2,193,318

Other assets:

 

 

 

Operating lease right-of-use assets

 

214,858

 

 

187,060

Goodwill

 

1,482,085

 

 

1,287,736

Permits and other intangibles, net

 

727,463

 

 

602,797

Other long-term assets

 

74,833

 

 

59,739

Total other assets

 

2,499,239

 

 

2,137,332

Total assets

$

7,136,948

 

$

6,382,869

 

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

15,102

 

$

10,000

Accounts payable

 

447,940

 

 

451,806

Deferred revenue

 

108,035

 

 

95,230

Accrued expenses and other current liabilities

 

392,708

 

 

397,157

Current portion of closure, post-closure and remedial liabilities

 

31,954

 

 

26,914

Current portion of operating lease liabilities

 

65,901

 

 

56,430

Total current liabilities

 

1,061,640

 

 

1,037,537

Other liabilities:

 

 

 

Closure and post-closure liabilities, less current portion

 

103,299

 

 

105,044

Remedial liabilities, less current portion

 

95,458

 

 

97,885

Long-term debt, less current portion

 

2,775,837

 

 

2,291,717

Operating lease liabilities, less current portion

 

152,328

 

 

131,743

Deferred tax liabilities

 

360,861

 

 

353,107

Other long-term liabilities

 

145,804

 

 

118,330

Total other liabilities

 

3,633,587

 

 

3,097,826

Total stockholders’ equity, net

 

2,441,721

 

 

2,247,506

Total liabilities and stockholders’ equity

$

7,136,948

 

$

6,382,869

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Six Months Ended

 

June 30, 2024

 

June 30, 2023

Cash flows from operating activities:

 

 

 

Net income

$

203,112

 

 

$

188,167

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

Depreciation and amortization

 

195,569

 

 

 

174,455

 

Allowance for doubtful accounts

 

4,349

 

 

 

1,209

 

Amortization of deferred financing costs and debt discount

 

2,937

 

 

 

2,718

 

Accretion of environmental liabilities

 

6,521

 

 

 

6,893

 

Changes in environmental liability estimates

 

3,963

 

 

 

387

 

Deferred income taxes

 

(88

)

 

 

(356

)

Other expense, net

 

1,308

 

 

 

1,167

 

Stock-based compensation

 

14,853

 

 

 

10,518

 

Loss on early extinguishment of debt

 

—

 

 

 

2,362

 

Environmental expenditures

 

(9,934

)

 

 

(16,323

)

Changes in assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable and unbilled accounts receivable

 

(116,307

)

 

 

(5,659

)

Inventories and supplies

 

(28,673

)

 

 

(1,111

)

Other current and long-term assets

 

(28,870

)

 

 

(22,749

)

Accounts payable

 

(12,418

)

 

 

(78,139

)

Other current and long-term liabilities

 

(1,728

)

 

 

(27,966

)

Net cash from operating activities

 

234,594

 

 

 

235,573

 

Cash flows used in investing activities:

 

 

 

Additions to property, plant and equipment

 

(273,023

)

 

 

(204,298

)

Proceeds from sale and disposal of fixed assets

 

4,295

 

 

 

2,944

 

Acquisitions, net of cash acquired

 

(477,201

)

 

 

(120,636

)

Proceeds from sale of business

 

750

 

 

 

—

 

Additions to intangible assets including costs to obtain or renew permits

 

(1,868

)

 

 

(1,114

)

Purchases of available-for-sale securities

 

(55,318

)

 

 

(74,451

)

Proceeds from sale of available-for-sale securities

 

71,695

 

 

 

50,290

 

Net cash used in investing activities

 

(730,670

)

 

 

(347,265

)

Cash flows from (used in) financing activities:

 

 

 

Change in uncashed checks

 

(1,868

)

 

 

2,392

 

Tax payments related to withholdings on vested restricted stock

 

(4,599

)

 

 

(4,335

)

Repurchases of common stock

 

(10,215

)

 

 

(8,001

)

Deferred financing costs paid

 

(8,148

)

 

 

(6,346

)

Payments on finance leases

 

(11,491

)

 

 

(7,588

)

Principal payments on debt

 

(7,551

)

 

 

(618,975

)

Proceeds from issuance of debt, net of discount

 

499,375

 

 

 

500,000

 

Borrowing from revolving credit facility

 

—

 

 

 

114,000

 

Payment on revolving credit facility

 

—

 

 

 

(114,000

)

Net cash from (used in) financing activities

 

455,503

 

 

 

(142,853

)

Effect of exchange rate change on cash

 

(2,133

)

 

 

718

 

Decrease in cash and cash equivalents

 

(42,706

)

 

 

(253,827

)

Cash and cash equivalents, beginning of period

 

444,698

 

 

 

492,603

 

Cash and cash equivalents, end of period

$

401,992

 

 

$

238,776

 

Supplemental information:

 

Cash payments for interest and income taxes:

 

Interest paid

$

74,079

 

 

$

49,257

 

Income taxes paid, net of refunds

 

70,307

 

 

 

92,494

 

Non-cash investing activities:

 

Property, plant and equipment accrued

 

28,315

 

 

 

26,427

 

ROU assets obtained in exchange for operating lease liabilities

 

49,420

 

 

 

38,474

 

ROU assets obtained in exchange for finance lease liabilities

 

45,174

 

 

 

13,992

 

Supplemental Segment Data (in thousands)

 

Three Months Ended

Revenue

June 30, 2024

 

June 30, 2023

 

Third-Party Revenues

 

Intersegment Revenues (Expenses), net

 

Direct Revenues

 

Third-Party Revenues

 

Intersegment Revenues (Expenses), net

 

Direct Revenues

Environmental Services

$

1,297,298

 

$

12,085

 

 

$

1,309,383

 

$

1,161,482

 

$

10,554

 

 

$

1,172,036

Safety-Kleen Sustainability Solutions

 

255,322

 

 

(12,085

)

 

 

243,237

 

 

236,302

 

 

(10,554

)

 

 

225,748

Corporate Items

 

99

 

 

—

 

 

 

99

 

 

116

 

 

—

 

 

 

116

Total

$

1,552,719

 

$

—

 

 

$

1,552,719

 

$

1,397,900

 

$

—

 

 

$

1,397,900

 

 

Six Months Ended

Revenue

June 30, 2024

 

June 30, 2023

 

Third-Party Revenues

 

Intersegment Revenues (Expenses), net

 

Direct Revenues

 

Third-Party Revenues

 

Intersegment Revenues (Expenses), net

 

Direct Revenues

Environmental Services

$

2,458,577

 

$

23,316

 

 

$

2,481,893

 

$

2,222,464

 

$

20,313

 

 

$

2,242,777

Safety-Kleen Sustainability Solutions

 

470,636

 

 

(23,316

)

 

 

447,320

 

 

482,600

 

 

(20,313

)

 

 

462,287

Corporate Items

 

201

 

 

—

 

 

 

201

 

 

223

 

 

—

 

 

 

223

Total

$

2,929,414

 

$

—

 

 

$

2,929,414

 

$

2,705,287

 

$

—

 

 

$

2,705,287

 

 

Three Months Ended

 

Six Months Ended

Adjusted EBITDA

June 30, 2024

 

June 30, 2023

 

June 30, 2024

 

June 30, 2023

Environmental Services

$

359,915

 

 

$

305,622

 

 

$

624,390

 

 

$

533,967

 

Safety-Kleen Sustainability Solutions

 

51,476

 

 

 

53,415

 

 

 

81,176

 

 

 

94,878

 

Corporate Items

 

(83,575

)

 

 

(71,531

)

 

 

(147,655

)

 

 

(126,201

)

Total

$

327,816

 

 

$

287,506

 

 

$

557,911

 

 

$

502,644

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20240731074674/en/

Eric J. Dugas EVP and Chief Financial Officer Clean Harbors, Inc. 781.792.5100 InvestorRelations@cleanharbors.com

Jim Buckley SVP Investor Relations Clean Harbors, Inc. 781.792.5100 Buckley.James@cleanharbors.com