UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): May 7, 2014
CLEAN HARBORS, INC.
(Exact name of registrant as specified in its charter)
Massachusetts |
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001-34223 |
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04-2997780 |
(State or other jurisdiction |
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(Commission |
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(IRS Employer |
42 Longwater Drive, Norwell, |
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02061-9149 |
(Address of principal executive offices) |
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(Zip Code) |
(781) 792-5000
(Registrants telephone number, including area code)
Not Applicable
(Former name or former address, if changed since last report.)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 2.02 Results of Operations and Financial Condition
On May 7, 2014 Clean Harbors, Inc. (the Company) issued a press release announcing the Companys results of operations for the first quarter ended March 31, 2014. A copy of that press release is furnished with this report as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits
99.1 Press Release dated May 7, 2014
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
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Clean Harbors, Inc. |
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(Registrant) |
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May 7, 2014 |
/s/ James M. Rutledge |
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Vice Chairman, President and Chief Financial Officer |
Exhibit 99.1
Press Release |
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Clean Harbors Reports First-Quarter 2014 Financial Results |
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· Company Achieves Q1 Revenue and Adjusted EBITDA In Line with Guidance
· Reports Q1 Revenue of $846.7 Million, EPS of $0.15; Adjusted EBITDA of $102.0 Million
· Year-over-year Results Reflect Effects of Currency Translation and Adverse Weather
· Concludes Quarter with Strong March Performance and Sales Momentum
· Cost Reduction Efforts Proceeding On Plan
· Company Confirms 2014 Revenue and Adjusted EBITDA Guidance
Norwell, Mass. May 7, 2014 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 first quarter ended March 31, 2014.
Revenues for the first quarter were $846.7 million compared with $862.2 million in the same period in 2013. Income from operations in the first quarter of 2014 was $29.9 million compared with $34.8 million in the same period of 2013.
First-quarter 2014 net income was $9.0 million, or $0.15 per diluted share, compared with $10.5 million, or $0.17 per diluted share, in the first quarter of 2013. First-quarter 2014 net income was reduced by $4.7 million of pre-tax integration and severance costs. First-quarter 2013 net income included pre-tax adjustments related to acquisition accounting of $13.6 million, as well as approximately $5.7 million in integration and severance costs.
Adjusted EBITDA (see description below) in the first quarter of 2014 was $102.0 million compared with $111.2 million in the same period of 2013.
Comments on the First Quarter
We ended the first quarter with a strong finish, exceeding our revenue guidance and reporting Adjusted EBITDA in line with our expectations, said Alan S. McKim, Chairman and Chief Executive Officer. Adverse weather affected our business in the first two months of the quarter, but conditions began to normalize and we achieved improved results in many of our lines of business. Within our segments, we saw Technical Services deliver another solid quarter, achieving year-over-year growth as incineration utilization reached 91% and landfill volumes grew 25% on increased project work.
In our Industrial and Field Services segment, strength in our core Industrial business was offset by the negative translation impact of our Canadian operations into U.S. dollars, McKim said. The performance of our SK Environmental Services segment reflected the unfavorable weather, which caused abnormally high office closures, slowed customer demand and increased heating/maintenance costs. Our Oil Re-refining and
42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com
Press Release |
|
Clean Harbors Reports First-Quarter 2014 Financial Results |
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Recycling segment rebounded from year-end and demonstrated improvement as the quarter progressed, including some pricing gains in March after a significant decline in base oil pricing in January. Our Oil and Gas Field Services segment performed as expected in the quarter despite softness in our seismic business and the unfavorable currency translation effect.
In conjunction with our fourth-quarter news release, we announced a number of initiatives aimed at lowering our cost structure and improving our returns, McKim said. Beyond the synergies that we already achieved through Safety-Kleen in 2013, we set a target of eliminating an additional $75 million in companywide expenses. Many of these programs are underway, and we remain on course to attain our full-year goal. We also launched a series of margin improvement initiatives, such as actions related to our pay-for-oil (PFO) program. During the first quarter, we lowered PFO costs by three cents per gallon from the fourth quarter and are encouraged by the efforts of that entire team.
We are focused on increasing our returns and recognizing the value presented by our own shares. As a result, we launched the first stock buyback program in our Companys history late in the first quarter. The Board authorized a $150 million program that we intend to pursue going forward, McKim said.
Business Outlook and Financial Guidance
Looking ahead, we are optimistic about our prospects for 2014, and we believe the steps we are taking to address the challenges in our markets have set the Company on the path to recovery. We are encouraged by some of the overall trends we are seeing in our businesses ranging from increasing volumes in our disposal network to improved base oil pricing and lower PFO in re-refining to the opening of new Safety-Kleen branches to opportunities in our core Industrial business lines. Strength in a number of our key verticals such as Chemical, Manufacturing and Automotive also will support continuing improvement in our performance as the year progresses. We have initiated two major operational changes that will drive organic growth and business development: reconfiguring the sales organization for a greater emphasis on cross selling, and forming a new supply chain organization to enhance strategic sourcing and logistics. Overall, we are confident that the combination of our cost-reduction programs, margin enhancement activity and organic growth initiatives will deliver increased value to our shareholders, McKim concluded.
Based on its first-quarter financial performance and current market conditions, Clean Harbors is reiterating its previously announced 2014 annual revenue and Adjusted EBITDA guidance. The Company continues to expect 2014 revenues in the range of $3.5 billion to $3.6 billion and Adjusted EBITDA in the range of $525 million to $555 million. A reconciliation of the Companys Adjusted EBITDA guidance to net income guidance is included below.
42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com
Press Release |
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Clean Harbors Reports First-Quarter 2014 Financial Results |
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For the second quarter of 2014, the Company expects revenue in the range of $860 million to $880 million. The Company expects to generate Adjusted EBITDA for the second quarter of 2014 in the range of $130 million to $135 million. A reconciliation of the Companys Adjusted EBITDA guidance to net income guidance is included below.
Non-GAAP Results
Clean Harbors reports Adjusted EBITDA results, which is a non-GAAP financial measure, as a complement to results provided in accordance with accounting principles generally accepted in the United States (GAAP). The Company believes that Adjusted EBITDA provides additional useful information to investors since the Companys loan covenants are based upon levels of Adjusted EBITDA achieved. The Company defines Adjusted EBITDA in accordance with its existing credit agreement, as described in the following reconciliation showing the differences between reported net income and Adjusted EBITDA for the first quarter of 2014 and 2013 (in thousands):
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For the three months ended: |
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March 31, 2014 |
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March 31, 2013 |
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Net income |
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$ |
8,960 |
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$ |
10,502 |
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Accretion of environmental liabilities |
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2,724 |
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2,835 |
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Depreciation and amortization |
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69,356 |
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60,006 |
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Other income |
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(4,178 |
) |
(525 |
) | ||
Interest expense, net |
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19,554 |
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19,873 |
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Pre-tax, non-cash acquisition accounting inventory adjustment |
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13,559 |
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Provision for income taxes |
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5,570 |
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4,978 |
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Adjusted EBITDA |
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$ |
101,986 |
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$ |
111,228 |
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42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com
Press Release |
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Clean Harbors Reports First-Quarter 2014 Financial Results |
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Adjusted EBITDA Guidance Reconciliation
An itemized reconciliation between projected net income and projected Adjusted EBITDA is as follows:
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For the Quarter Ending June 30, 2014 |
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Amount |
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Margin % (1) |
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(In millions) |
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Projected GAAP net income |
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$ |
23 |
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to |
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$ |
27 |
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2.7 |
% |
to |
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3.1 |
% |
Adjustments: |
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|
|
|
|
|
|
|
|
|
|
|
| ||
Accretion of environmental liabilities |
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3 |
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to |
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3 |
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0.4 |
% |
to |
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0.3 |
% | ||
Depreciation and amortization |
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70 |
|
to |
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68 |
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8.1 |
% |
to |
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7.7 |
% | ||
Interest expense, net |
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20 |
|
to |
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20 |
|
2.3 |
% |
to |
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2.3 |
% | ||
Provision for income taxes |
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14 |
|
to |
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17 |
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1.6 |
% |
to |
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1.9 |
% | ||
Projected Adjusted EBITDA |
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$ |
130 |
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to |
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$ |
135 |
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15.1 |
% |
to |
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15.3 |
% |
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|
|
|
|
|
|
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Revenues (In millions) |
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$ |
860 |
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to |
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$ |
880 |
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For the Year Ending December 31, 2014 |
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Amount |
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Margin % (1) |
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(In millions) |
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Projected GAAP net income |
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$ |
94 |
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to |
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$ |
119 |
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2.7 |
% |
to |
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3.3 |
% |
Adjustments: |
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|
|
|
|
|
|
|
|
|
|
|
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Accretion of environmental liabilities |
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13 |
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to |
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11 |
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0.4 |
% |
to |
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0.3 |
% | ||
Depreciation and amortization |
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280 |
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to |
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275 |
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8.0 |
% |
to |
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7.6 |
% | ||
Interest expense, net |
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80 |
|
to |
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79 |
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2.3 |
% |
to |
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2.2 |
% | ||
Provision for income taxes |
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58 |
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to |
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71 |
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1.6 |
% |
to |
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2.0 |
% | ||
Projected Adjusted EBITDA |
|
$ |
525 |
|
to |
|
$ |
555 |
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15.0 |
% |
to |
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15.4 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
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Revenues (In millions) |
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$ |
3,500 |
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to |
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$ |
3,600 |
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|
|
|
|
|
|
(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.
42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com
Press Release |
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Clean Harbors Reports First-Quarter 2014 Financial Results |
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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 and view the accompanying slides should visit the Investor Relations section of the Companys 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 Companys website.
About Clean Harbors
Clean Harbors (NYSE: CLH) is North Americas leading provider of environmental, energy and industrial services. The Company serves a diverse customer base, including a majority of the Fortune 500, across the chemical, energy, manufacturing and additional markets, 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 North Americas largest re-refiner and recycler of used oil and a leading provider of parts washers and environmental services to commercial, industrial and automotive customers. Founded in 1980 and based in Massachusetts, Clean Harbors operates throughout the United States, Canada, 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, 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 Securities and Exchange Commission, which may be viewed in the Investors section of Clean Harbors website at www.cleanharbors.com.
42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com
Press Release |
|
Clean Harbors Reports First-Quarter 2014 Financial Results |
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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 |
42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com
Press Release |
|
Clean Harbors Reports First-Quarter 2014 Financial Results |
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CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF INCOME
(in thousands except per share amounts)
|
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For the three months ended: |
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|
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March 31, 2014 |
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March 31, 2013 |
| ||
|
|
|
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|
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Revenues |
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$ |
846,667 |
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$ |
862,163 |
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Cost of revenues (exclusive of items shown separately below) |
|
625,719 |
|
636,024 |
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Selling, general and administrative expenses |
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118,962 |
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128,470 |
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Accretion of environmental liabilities |
|
2,724 |
|
2,835 |
| ||
Depreciation and amortization |
|
69,356 |
|
60,006 |
| ||
Income from operations |
|
29,906 |
|
34,828 |
| ||
Other income |
|
4,178 |
|
525 |
| ||
Interest (expense), net |
|
(19,554 |
) |
(19,873 |
) | ||
Income before provision for income taxes |
|
14,530 |
|
15,480 |
| ||
Provision for income taxes |
|
5,570 |
|
4,978 |
| ||
Net income |
|
$ |
8,960 |
|
$ |
10,502 |
|
Earnings per share: |
|
|
|
|
| ||
Basic |
|
$ |
0.15 |
|
$ |
0.17 |
|
Diluted |
|
$ |
0.15 |
|
$ |
0.17 |
|
|
|
|
|
|
| ||
Shares used to compute earnings per share Basic |
|
60,720 |
|
60,464 |
| ||
Shares used to compute earnings per share Diluted |
|
60,861 |
|
60,630 |
|
42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com
Press Release |
|
Clean Harbors Reports First-Quarter 2014 Financial Results |
|
CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
|
|
March 31, 2014 |
|
December 31, 2013 |
| ||
Current assets: |
|
|
|
|
| ||
Cash and cash equivalents |
|
$ |
249,007 |
|
$ |
310,073 |
|
Marketable securities |
|
213 |
|
12,435 |
| ||
Accounts receivable, net |
|
566,394 |
|
579,394 |
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Unbilled accounts receivable |
|
40,832 |
|
26,568 |
| ||
Deferred costs |
|
16,523 |
|
16,134 |
| ||
Inventories and supplies |
|
152,443 |
|
152,096 |
| ||
Prepaid expenses and other current assets |
|
56,677 |
|
41,962 |
| ||
Deferred tax assets |
|
32,469 |
|
32,517 |
| ||
Total current assets |
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1,114,558 |
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1,171,179 |
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Property, plant and equipment, net |
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1,588,286 |
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1,602,170 |
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Other assets: |
|
|
|
|
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Deferred financing costs |
|
20,036 |
|
20,860 |
| ||
Goodwill |
|
565,062 |
|
570,960 |
| ||
Permits and other intangibles, net |
|
557,211 |
|
569,973 |
| ||
Other |
|
18,802 |
|
18,536 |
| ||
Total other assets |
|
1,161,111 |
|
1,180,329 |
| ||
Total assets |
|
$ |
3,863,955 |
|
$ |
3,953,678 |
|
Current liabilities: |
|
|
|
|
| ||
Current portion of capital lease obligations |
|
$ |
1,119 |
|
$ |
1,329 |
|
Accounts payable |
|
284,768 |
|
316,462 |
| ||
Deferred revenue |
|
56,469 |
|
55,454 |
| ||
Accrued expenses |
|
213,096 |
|
236,829 |
| ||
Current portion of closure, post-closure and remedial liabilities |
|
31,866 |
|
29,471 |
| ||
Total current liabilities |
|
587,318 |
|
639,545 |
| ||
Other liabilities: |
|
|
|
|
| ||
Closure and post-closure liabilities, less current portion |
|
40,809 |
|
41,201 |
| ||
Remedial liabilities, less current portion |
|
144,485 |
|
148,911 |
| ||
Long-term obligations |
|
1,400,000 |
|
1,400,000 |
| ||
Capital lease obligations, less current portion |
|
913 |
|
1,435 |
| ||
Deferred taxes, unrecognized tax benefits and other long-term liabilities |
|
244,795 |
|
246,947 |
| ||
Total other liabilities |
|
1,831,002 |
|
1,838,494 |
| ||
Total stockholders equity, net |
|
1,445,635 |
|
1,475,639 |
| ||
Total liabilities and stockholders equity |
|
$ |
3,863,955 |
|
$ |
3,953,678 |
|
42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com
Press Release |
|
Clean Harbors Reports First-Quarter 2014 Financial Results |
|
Supplemental Segment Data (in thousands)
|
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For the three months ended: |
| |||||||||||||||||
|
|
March 31, 2014 |
|
March 31, 2013 |
| |||||||||||||||
Revenue |
|
Third Party |
|
Intersegment |
|
Direct |
|
Third Party |
|
Intersegment |
|
Direct |
| |||||||
Technical Services |
|
$ |
236,781 |
|
$ |
37,833 |
|
$ |
274,614 |
|
$ |
233,939 |
|
$ |
25,271 |
|
$ |
259,210 |
| |
Oil Re-refining and Recycling |
|
137,986 |
|
(56,213 |
) |
81,773 |
|
146,931 |
|
(56,561 |
) |
90,370 |
| |||||||
SK Environmental Services |
|
152,322 |
|
27,996 |
|
180,318 |
|
152,955 |
|
41,489 |
|
194,444 |
| |||||||
Industrial and Field Services |
|
215,676 |
|
(10,957 |
) |
204,719 |
|
221,418 |
|
(13,218 |
) |
208,200 |
| |||||||
Oil and Gas Field Services |
|
103,751 |
|
1,850 |
|
105,601 |
|
116,696 |
|
3,942 |
|
120,638 |
| |||||||
Corporate Items (1) |
|
151 |
|
(509 |
) |
(358 |
) |
(9,776 |
) |
(923 |
) |
(10,699 |
) | |||||||
Total |
|
$ |
846,667 |
|
$ |
|
|
$ |
846,667 |
|
$ |
862,163 |
|
$ |
|
|
$ |
862,163 |
| |
(1) Corporate Items revenue for the three months ended March 31, 2013 includes one-time, non-cash reductions of approximately $10.2 million due to the impact of fair value acquisition accounting adjustments on Safety-Kleens historical deferred revenue at December 28, 2012. Revenue for the five reportable segments for the three months ended March 31, 2013 excludes such adjustments to maintain comparability with future operating results and reflect how the Company manages the business.
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 Companys 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 above for a reconciliation of the Companys total Adjusted EBITDA to GAAP net income.
|
|
For the three months ended: |
| ||||
Adjusted EBITDA |
|
March 31, 2014 |
|
March 31, 2013 |
| ||
|
|
|
|
|
| ||
Technical Services |
|
$ |
62,177 |
|
$ |
60,045 |
|
Oil Re-refining and Recycling |
|
13,432 |
|
15,312 |
| ||
SK Environmental Services |
|
21,976 |
|
27,040 |
| ||
Industrial and Field Services |
|
34,141 |
|
36,346 |
| ||
Oil and Gas Field Services |
|
16,299 |
|
27,551 |
| ||
Corporate Items |
|
(46,039 |
) |
(55,066 |
) | ||
Total |
|
$ |
101,986 |
|
$ |
111,228 |
|
42 Longwater Drive · P.O. Box 9149 · Norwell, Massachusetts 02061-9149 · 781.792.5000 · www.cleanharbors.com
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