EX-99.1 2 a15-5347_1ex99d1.htm EX-99.1

Exhibit 99.1

 

Press Release

 

Clean Harbors Reports Fourth-Quarter
and Year-End 2014 Financial Results

 

·            Announces Q4 Revenue of $845.0 Million, EPS of $0.46 and Adjusted EBITDA of $130.8 Million

 

·            Generates Full-Year Revenue of $3.4 Billion and Adjusted EBITDA of $521.9 Million

 

·            Offsets Slowdown Related to Energy Markets through Environmental Business Performance

 

·            Confirms 2015 Adjusted EBITDA Guidance

 

Norwell, Mass. — February 25, 2015 — 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 fourth quarter and year ended December 31, 2014.

 

Revenues for the fourth quarter were $845.0 million, compared with $879.4 million in the same period of 2013.  Income from operations in the fourth quarter of 2014 was $57.5 million, compared with $58.9 million in the same period of 2013.

 

Fourth-quarter 2014 net income was $27.4 million, or $0.46 per diluted share, compared with net income of $26.8 million, or $0.44 per diluted share, in the same period of 2013.  Net income for the fourth quarter of 2014 and 2013 included pre-tax integration and severance costs of $0.5 million and $2.2 million, respectively.

 

Adjusted EBITDA (see description below) in the fourth quarter of 2014 was $130.8 million, compared with $129.3 million in the same period of 2013.  The Company purchased $50.5 million of Clean Harbors stock as part of its share repurchase program during the fourth quarter.

 

Comments on the Fourth Quarter

 

“We concluded 2014 with a strong fourth-quarter performance, particularly in light of numerous headwinds affecting the energy markets,” said Alan S. McKim, Chairman and Chief Executive Officer. “Q4 Adjusted EBITDA was above our guidance range. Revenue, while lower mostly due to the effect of currency translation, was in line with our expectations.  From a margin perspective, cost reduction initiatives and a stronger business mix drove an 80-basis-point improvement in Adjusted EBITDA from the fourth quarter of last year. This increase underscores the significant leverage within our network of disposal facilities and the cross-selling we are deriving from Safety-Kleen.

 

“Our Technical Services segment posted an exceptional quarter, with incineration utilization of 96% and landfill volumes at the highest quarterly level in our history, up 37% from the prior year.  As a result, we grew Adjusted EBITDA in the segment by 23% in the quarter on 7% revenue growth, while margins reached 29.6%.  SK Environmental Services continued its consistent performance with another quarter of increased profitability and improved margins.  Our Industrial and Field Services segment delivered revenue growth in

 

GRAPHIC

 

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

 


 

Press Release

 

Clean Harbors Reports Fourth-Quarter
and Year-End 2014 Financial Results

 

the quarter, primarily as a result of a 16% revenue increase in our Field Services business, which continues to benefit from collaboration with Safety-Kleen.  Results in our Oil Re-refining and Recycling segment reflect the year-over-year decline in base oil pricing.  Lastly, our Oil and Gas Field Services and Lodging Services segments underperformed in the quarter, largely because of margin pressures and the challenging sales environment brought on by the dynamics of the current energy market.”

 

Full-Year 2014 Results

 

Revenues for 2014 were $3.40 billion compared with $3.51 billion in 2013.  Net loss for 2014, which included a $123.4 million non-cash, pre-tax goodwill impairment charge, was $28.3 million, or $0.47 per share, compared with net income of $95.6 million, or $1.57 per diluted share, in 2013.  Excluding the impairment charge, adjusted net income for 2014 was $92.4 million, or $1.53 per diluted share.  2014 net loss also included $11.1 million of pre-tax integration and severance costs.  2013 net income included $17.5 million in pre-tax integration and severance costs, and $13.6 million in pre-tax adjustments related to acquisition accounting.  Adjusted EBITDA (see description below) increased to $521.9 million in 2014 from $510.1 million for 2013.

 

“In 2014, we encountered several headwinds that included declining Canadian currency, a slowdown in the Oil Sands, a drop in base oil prices and turbulence in the energy markets.  We took aggressive action and responded decisively to each of these issues by implementing a $75 million cost reduction plan, creating a regional sales structure, introducing our Zero-Pay and Charge-for-Oil initiative toward year-end and conducting a strategic review of our portfolio that resulted in a planned carve out of our Oil and Gas Field Services business,” McKim said.  “Ultimately, we were successful in growing our Adjusted EBITDA from the prior year despite these significant market challenges, as we drove record volumes into our disposal network.  Our margin expansion and growth in profitability in 2014 were the direct results of the outstanding team we have at Clean Harbors.  Our team’s commitment to service excellence and safety remains a critical element in our success.  In 2014, we again improved our key safety metrics, benefitting our employees, our customers and the communities we serve.”

 

Business Outlook and Financial Guidance

 

“We enter 2015 with operational and sales momentum in our environmental-related businesses, while still facing external headwinds across several segments,” McKim said. “Activity in the Oil Sands region remains weak, limiting opportunities and creating pricing pressure for our Lodging Services segment.  Our Oil and Gas Field Services segment also is experiencing margin pressure as it operates in an environment of reduced exploration budgets and significantly lower rig counts in both the U.S. and Canada.  However, we anticipate ongoing strength in Technical Services as we continue to drive substantial volumes into our disposal network, particularly from Safety-Kleen. Within SK Environmental Services, we see organic growth opportunities, including new branch locations and cross-selling with our Field Services team.  Our Industrial Services

 

GRAPHIC

 

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

 


 

Press Release

 

Clean Harbors Reports Fourth-Quarter
and Year-End 2014 Financial Results

 

business is poised for a year of increased turnaround services to our clients and sees a solid pipeline of project activity in the U.S.  Within our Oil Re-refining and Recycling segment, we will continue to address the spread compression we have experienced in that business.  In addition, we are implementing additional expense reductions in areas such as procurement, branch consolidations and non-billable headcount, which will further drive down our cost structure.  We expect to see our margins continue to improve in 2015, even with the challenges we are facing in oil-related markets.”

 

Based on its 2014 financial performance and current market conditions, Clean Harbors is reiterating its previously announced 2015 annual Adjusted EBITDA guidance. The Company continues to anticipate Adjusted EBITDA in the range of $530 million to $570 million.  A reconciliation of the Company’s Adjusted EBITDA guidance to net income guidance is included below.

 

For the first quarter of 2015, the Company expects to generate Adjusted EBITDA in the range of $83 million to $90 million.

 

Clean Harbors reports Adjusted EBITDA, 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 (loss) and Adjusted EBITDA for the fourth quarter and full year of 2014 and 2013 (in thousands):

 

 

 

For the Three Months Ended:

 

For the Year Ended:

 

 

 

December 31,
2014

 

December 31,
2013

 

December 31,
2014

 

December 31,
2013

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

$

27,377

 

$

26,801

 

$

(28,328

)

$

95,566

 

Accretion of environmental liabilities

 

2,637

 

2,913

 

10,612

 

11,541

 

Depreciation and amortization

 

70,603

 

67,545

 

276,083

 

264,449

 

Goodwill impairment charge

 

—

 

—

 

123,414

 

—

 

Other (income) expense

 

(244

)

325

 

(4,380

)

(1,705

)

Interest expense, net

 

19,238

 

19,592

 

77,668

 

78,376

 

Pre-tax, non-cash acquisition accounting inventory adjustment

 

—

 

—

 

—

 

13,559

 

Provision for income taxes

 

11,166

 

12,159

 

66,850

 

48,319

 

Adjusted EBITDA

 

$

130,777

 

$

129,335

 

$

521,919

 

$

510,105

 

 

GRAPHIC

 

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

 


 

Press Release

 

Clean Harbors Reports Fourth-Quarter
and Year-End 2014 Financial Results

 

This press release includes a discussion of net income and earnings per share amounts adjusted for the goodwill impairment charge identified in the reconciliations provided below.  The Company believes that discussion of these additional non-GAAP measures provide investors with meaningful comparisons of current results to prior periods’ results by excluding items that the Company does not believe reflect its fundamental business performance.  The following shows the difference between net (loss) income to adjusted net income and (loss) earnings per share to adjusted earnings per share for the year ended December 31, 2014 and 2013 (in thousands):

 

 

 

For the Year Ended:

 

 

 

December 31,
2014

 

December 31,
2013

 

Adjusted net income

 

 

 

 

 

Net (loss) income

 

$

(28,328

)

$

95,566

 

Goodwill impairment charge, net of tax

 

120,750

 

—

 

Adjusted net income

 

$

92,422

 

$

95,566

 

 

 

 

 

 

 

Adjusted earnings per share

 

 

 

 

 

(Loss) earnings per share

 

$

(0.47

)

$

1.57

 

Goodwill impairment charge, net of tax

 

2.00

 

—

 

Adjusted earnings per share

 

$

1.53

 

$

1.57

 

 

Adjusted EBITDA Guidance Reconciliation

 

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

 

 

 

For the Quarter Ending
March 31, 2015

 

For the Year Ending
December 31, 2015

 

 

 

Amount

 

Amount

 

 

 

(In millions)

 

(In millions)

 

Projected GAAP net (loss) income

 

$

(4

)

to

 

$

2

 

$

103

 

to

 

$

136

 

Adjustments:

 

 

 

 

 

 

 

 

 

 

 

 

 

Accretion of environmental liabilities

 

3

 

to

 

3

 

11

 

to

 

10

 

Depreciation and amortization

 

68

 

to

 

65

 

275

 

to

 

265

 

Interest expense, net

 

19

 

to

 

19

 

76

 

to

 

76

 

(Benefit) provision for income taxes

 

(3

)

to

 

1

 

65

 

to

 

83

 

Projected Adjusted EBITDA

 

$

83

 

to

 

$

90

 

$

530

 

to

 

$

570

 

 

GRAPHIC

 

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

 


 

Press Release

 

Clean Harbors Reports Fourth-Quarter
and Year-End 2014 Financial Results

 

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 Investors 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 North America’s 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 America’s 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.

 

GRAPHIC

 

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

 


 

Press Release

 

Clean Harbors Reports Fourth-Quarter
and Year-End 2014 Financial Results

 

Contacts:

 

James M. Rutledge

 

Eric Kraus

 

Jim Buckley

Vice Chairman, President and CFO

 

EVP Corporate Communications

 

SVP Investor Relations

Clean Harbors, Inc.

 

& Public Affairs

 

Clean Harbors, Inc.

781.792.5100

 

Clean Harbors, Inc.

 

781.792.5100

InvestorRelations@cleanharbors.com

 

781.792.5100

 

Buckley.James@cleanharbors.com

 

 

Kraus.Eric@cleanharbors.com

 

 

 

GRAPHIC

 

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

 


 

Press Release

 

Clean Harbors Reports Fourth-Quarter
and Year-End 2014 Financial Results

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

 

UNAUDITED CONSOLIDATED STATEMENTS OF INCOME (LOSS)

 

 (in thousands except per share amounts)

 

 

 

For the Three Months Ended:

 

For the Year Ended:

 

 

 

December 31,
2014

 

December 31,
2013

 

December 31,
2014

 

December 31,
2013

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

845,024

 

$

879,430

 

$

3,401,636

 

$

3,509,656

 

Cost of revenues (exclusive of items shown separately below)

 

610,720

 

645,164

 

2,441,796

 

2,542,633

 

Selling, general and administrative expenses

 

103,527

 

104,931

 

437,921

 

470,477

 

Accretion of environmental liabilities

 

2,637

 

2,913

 

10,612

 

11,541

 

Depreciation and amortization

 

70,603

 

67,545

 

276,083

 

264,449

 

Goodwill impairment charge

 

—

 

—

 

123,414

 

—

 

Income from operations

 

57,537

 

58,877

 

111,810

 

220,556

 

Other income (expense)

 

244

 

(325

)

4,380

 

1,705

 

Interest expense, net

 

(19,238

)

(19,592

)

(77,668

)

(78,376

)

Income before provision for income taxes

 

38,543

 

38,960

 

38,522

 

143,885

 

Provision for income taxes

 

11,166

 

12,159

 

66,850

 

48,319

 

Net income (loss)

 

$

27,377

 

$

26,801

 

$

(28,328

)

$

95,566

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

Basic

 

$

0.46

 

$

0.44

 

$

(0.47

)

$

1.58

 

Diluted

 

$

0.46

 

$

0.44

 

$

(0.47

)

$

1.57

 

 

 

 

 

 

 

 

 

 

 

Shares used to compute earnings (loss) per share — Basic

 

59,491

 

60,671

 

60,311

 

60,574

 

Shares used to compute earnings (loss) per share — Diluted

 

59,613

 

60,835

 

60,311

 

60,728

 

 

GRAPHIC

 

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

 


 

Press Release

 

Clean Harbors Reports Fourth-Quarter
and Year-End 2014 Financial Results

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

 

UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS

 

(in thousands)

 

 

 

December 31, 2014

 

December 31, 2013

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

246,879

 

$

310,073

 

Marketable securities

 

—

 

12,435

 

Accounts receivable, net

 

557,131

 

579,394

 

Unbilled accounts receivable

 

40,775

 

26,568

 

Deferred costs

 

19,018

 

16,134

 

Inventories and supplies

 

168,663

 

152,096

 

Prepaid expenses and other current assets

 

57,435

 

41,962

 

Deferred tax assets

 

36,532

 

32,517

 

Total current assets

 

1,126,433

 

1,171,179

 

Property, plant and equipment, net

 

1,558,834

 

1,602,170

 

Other assets:

 

 

 

 

 

Deferred financing costs

 

17,580

 

20,860

 

Goodwill

 

452,669

 

570,960

 

Permits and other intangibles, net

 

530,080

 

569,973

 

Other

 

18,682

 

18,536

 

Total other assets

 

1,019,011

 

1,180,329

 

Total assets

 

$

3,704,278

 

$

3,953,678

 

Current liabilities:

 

 

 

 

 

Current portion of capital lease obligations

 

$

536

 

$

1,329

 

Accounts payable

 

267,329

 

316,462

 

Deferred revenue

 

62,966

 

55,454

 

Accrued expenses

 

219,549

 

236,829

 

Current portion of closure, post-closure and remedial liabilities

 

22,091

 

29,471

 

Total current liabilities

 

572,471

 

639,545

 

Other liabilities:

 

 

 

 

 

Closure and post-closure liabilities, less current portion

 

45,702

 

41,201

 

Remedial liabilities, less current portion

 

138,029

 

148,911

 

Long-term obligations

 

1,395,000

 

1,400,000

 

Capital lease obligations, less current portion

 

—

 

1,435

 

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

 

290,205

 

246,947

 

Total other liabilities

 

1,868,936

 

1,838,494

 

Total stockholders’ equity, net

 

1,262,871

 

1,475,639

 

Total liabilities and stockholders’ equity

 

$

3,704,278

 

$

3,953,678

 

 

GRAPHIC

 

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

 


 

Press Release

 

Clean Harbors Reports Fourth-Quarter
and Year-End 2014 Financial Results

 

Supplemental Segment Data (in thousands)

 

 

 

For the Three Months Ended:

 

 

 

December 31, 2014

 

December 31, 2013

 

Revenue

 

Third Party
Revenues

 

Intersegment
Revenues
(Expense), net

 

Direct
Revenues

 

Third Party
Revenues

 

Intersegment
Revenues
(Expense), net

 

Direct
Revenues

 

Technical Services

 

$

277,210

 

$

42,499

 

$

319,709

 

$

264,260

 

$

35,120

 

$

299,380

 

Industrial and Field Services

 

171,083

 

(10,591

)

160,492

 

164,848

 

(10,207

)

154,641

 

Oil Re-refining and Recycling

 

120,305

 

(46,276

)

74,029

 

133,610

 

(49,156

)

84,454

 

SK Environmental Services

 

163,628

 

16,001

 

179,629

 

168,517

 

22,766

 

191,283

 

Lodging Services

 

36,070

 

471

 

36,541

 

52,959

 

857

 

53,816

 

Oil and Gas Field Services

 

76,870

 

744

 

77,614

 

95,371

 

934

 

96,305

 

Corporate Items

 

(142

)

(2,848

)

(2,990

)

(135

)

(314

)

(449

)

Total

 

$

845,024

 

$

—

 

$

845,024

 

$

879,430

 

$

—

 

$

879,430

 

 

 

 

For the Year Ended:

 

 

 

December 31, 2014

 

December 31, 2013

 

Revenue

 

Third Party
Revenues

 

Intersegment
Revenues
(Expense), net

 

Direct
Revenues

 

Third Party
Revenues

 

Intersegment
Revenues
(Expense), net

 

Direct
Revenues

 

Technical Services

 

$

1,043,267

 

$

162,116

 

$

1,205,383

 

$

1,023,926

 

$

123,889

 

$

1,147,815

 

Industrial and Field Services

 

681,779

 

(42,410

)

639,369

 

708,523

 

(44,934

)

663,589

 

Oil Re-refining and Recycling

 

533,587

 

(201,864

)

331,723

 

528,636

 

(193,009

)

335,627

 

SK Environmental Services

 

667,320

 

80,419

 

747,739

 

665,008

 

107,091

 

772,099

 

Lodging Services

 

172,218

 

2,514

 

174,732

 

208,545

 

3,840

 

212,385

 

Oil and Gas Field Services

 

303,189

 

5,081

 

308,270

 

383,959

 

6,546

 

390,505

 

Corporate Items (1)

 

276

 

(5,856

)

(5,580

)

(8,941

)

(3,423

)

(12,364

)

Total

 

$

3,401,636

 

$

—

 

$

3,401,636

 

$

3,509,656

 

$

—

 

$

3,509,656

 

 

(1)   Corporate Items revenue for the year ended December 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-Kleen’s historical deferred revenue at December 28, 2012. Revenue for the six reportable segments for the year ended December 31, 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 Fourth-Quarter
and Year-End 2014 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 (loss).

 

 

 

For the Three Months Ended:

 

For the Year Ended:

 

Adjusted EBITDA

 

December 31,
2014

 

December 31,
2013

 

December 31,
2014

 

December 31,
2013

 

 

 

 

 

 

 

 

 

 

 

Technical Services

 

$

94,728

 

$

77,236

 

$

328,130

 

$

285,520

 

Industrial and Field Services

 

20,200

 

21,523

 

87,591

 

96,804

 

Oil Re-refining and Recycling

 

2,309

 

10,253

 

51,561

 

57,003

 

SK Environmental Services

 

29,001

 

28,448

 

113,986

 

112,722

 

Lodging Services

 

12,242

 

17,088

 

61,438

 

80,358

 

Oil and Gas Field Services

 

12,426

 

15,397

 

40,114

 

67,855

 

Corporate Items

 

(40,129

)

(40,610

)

(160,901

)

(190,157

)

Total

 

$

130,777

 

$

129,335

 

$

521,919

 

$

510,105

 

 

GRAPHIC

 

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