Exhibit 99.1
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Press Release
Clean Harbors Announces First-Quarter 2020 Financial Results
| · | Reports Q1 Revenues up 10% to $858.6 Million |
| · | Increases Q1 Net Income to $11.6 Million, or EPS of $0.21, with Adjusted EPS of $0.28 |
| · | Achieves 21% Growth in Q1 Adjusted EBITDA to $122.6 Million |
| · | Improves Q1 Adjusted EBITDA Margin by 130 Basis Points to 14.3% |
| · | Takes Wide Range of Actions in Response to COVID-19 |
| · | Withdraws 2020 Adjusted EBITDA and Adjusted Free Cash Flow Guidance |
NORWELL, Mass. – April 29, 2020 – Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the first quarter ended March 31, 2020.
“We delivered record Adjusted EBITDA in Q1 with strong growth in both operating segments,” said Alan S. McKim, Chairman, President and Chief Executive Officer. “We drove substantial volumes of high-value waste streams into our disposal and recycling network, benefitting from consistent base business, multiple projects and favorable weather. These factors contributed to a 21% increase in Adjusted EBITDA over the first quarter of 2019 and a 130 basis-point improvement in Adjusted EBITDA margin.”
First-Quarter 2020 Results
Revenues increased 10% to $858.6 million from $780.8 million in the same period of 2019. Income from operations grew 92% to $45.5 million from $23.7 million.
Net income was $11.6 million, or $0.21 per diluted share. This compares with net income of $1.0 million, or $0.02 per diluted share, for the same period in 2019. Adjusted for certain items in both periods, adjusted net income was $15.6 million, or $0.28 per diluted share, for the first quarter of 2020, compared with adjusted net income of $5.1 million, or $0.09 per diluted share, in the same period of 2019. (See reconciliation table below)
Adjusted EBITDA (see description below) increased 21% to $122.6 million from $101.7 million in the same period of 2019.
Q1 2020 Review
“Profitability in our Environmental Services segment increased 22% for the quarter on top-line growth of 11%, driven by our disposal facilities,” McKim said. “Incineration utilization climbed to 86% and we captured more high-value waste streams across our network. Our landfills benefitted from steady base business and several projects that helped generate a 39% increase in volumes. Field Services revenue grew nearly 50% largely due to cleanup of a chemical plant fire and COVID-19 decontamination work.
“Our Safety-Kleen segment also grew profitably, with a 12% increase in Adjusted EBITDA on 8% higher revenue,” McKim said. “Core offerings such as containerized waste services and vacuum services contributed to steady growth in our branch network. Waste oil collection was stable at 55 million gallons, and we gradually increased our charge-for-oil (CFO) rates during the quarter. Within Safety-Kleen Oil, we generated greater production volumes and our transportation costs improved from a year ago, when flooding and frozen rivers disrupted barge traffic.”
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
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Response to the Coronavirus Pandemic
“Although the impact of COVID-19 on our Q1 results was limited, it progressively worsened toward quarter end as shelter in place orders took hold in the United States and Canada,” McKim said. “In anticipation of the economic downturn and softer demand, particularly for Safety-Kleen, we took decisive actions to align our cost structure with the current environment and protect our balance sheet.”
The Company’s actions included:
| § | Downsizing its workforce through furloughs and other actions |
| § | Implementing a non-billable hiring freeze, travel restrictions and wage freeze |
| § | Shuttering nearly half of its re-refinery production due to supply constraints and market demand |
| § | Drawing down $150 million on its revolving credit facility |
| § | Lowering its expected 2020 net capex spend by more than $50 million |
| § | Withdrawing 2020 annual guidance until market conditions stabilize |
Business Outlook
“Our prudent cost actions position us well for the anticipated reopening of the U.S. and Canadian economies in the second half of 2020,” McKim said. “Although we have seen some cancellations and project delays due to COVID-19, we expect Environmental Services to weather the current downturn well. We exited Q1 with a healthy backlog of waste streams in our disposal network and have not seen a meaningful decline from most of our large quantity generators. In addition, we are continuing to perform COVID-19 decontamination work and handling growing volumes of infectious waste for a variety of customers.
“With stay-at-home orders greatly reducing vehicle travel across North America, the pandemic is limiting near-term demand for our core Safety-Kleen offerings, including used motor oil (UMO) collection. We expect our branch business to rebound when shelter-in-place mandates are lifted and low gasoline prices and a reduction in air travel encourage a steady increase in driving. In our SK Oil business, our re-refining spread has contracted with the drop in crude prices. Despite our aggressive increase in charge-for-oil pricing, near-term demand for base oil has dropped precipitously, prompting us to shutter some re-refining capacity until the markets improve.
“Our first-quarter results further demonstrated the strength of our business model, the value of our irreplaceable portfolio of disposal assets and our front-line role in emergency response,” McKim concluded. “Our market leadership, financial liquidity and positive free cash flow will enable us to navigate this global crisis.”
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
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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 since the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved and management routinely evaluates the performance of its businesses based upon levels of Adjusted EBITDA. The Company defines Adjusted EBITDA in accordance with its existing revolving credit agreement, as described in the following reconciliation showing the differences between reported net income and Adjusted EBITDA for the three months ended March 31, 2020 and 2019 (in thousands):
| For the Three Months Ended: | ||||||||
| March 31, 2020 | March 31, 2019 | |||||||
| Net income | $ | 11,572 | $ | 976 | ||||
| Accretion of environmental liabilities | 2,561 | 2,574 | ||||||
| Depreciation and amortization | 74,533 | 75,355 | ||||||
| Other expense (income), net | 2,365 | (2,983 | ) | |||||
| Loss on sale of businesses | 3,074 | — | ||||||
| Interest expense, net | 18,787 | 19,764 | ||||||
| Provision for income taxes | 9,698 | 5,977 | ||||||
| Adjusted EBITDA | $ | 122,590 | $ | 101,663 | ||||
| Adjusted EBITDA Margin | 14.3 | % | 13.0 | % | ||||
This press release includes a discussion of net income and earnings per share adjusted for the loss on sale of businesses, net of tax and the impacts of tax-related valuation allowances as identified in the reconciliations provided below. The Company believes that discussion of these additional non-GAAP measures provides 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 income to adjusted net income, and earnings per share to adjusted earnings per share for the three months ended March 31, 2020 and 2019 (in thousands, except per share amounts):
| For the Three Months Ended: | ||||||||
| March 31, 2020 | March 31, 2019 | |||||||
| Adjusted net income | ||||||||
| Net income | $ | 11,572 | $ | 976 | ||||
| Loss on sale of businesses, net of tax | 3,074 | — | ||||||
| Tax-related valuation allowances | 931 | 4,106 | ||||||
| Adjusted net income | $ | 15,577 | $ | 5,082 | ||||
| Adjusted earnings per share | ||||||||
| Earnings per share | $ | 0.21 | $ | 0.02 | ||||
| Loss on sale of businesses, net of tax | 0.05 | — | ||||||
| Tax-related valuation allowances | 0.02 | 0.07 | ||||||
| Adjusted earnings per share | $ | 0.28 | $ | 0.09 | ||||
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
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Adjusted Free Cash Flow Reconciliation
Clean Harbors reports adjusted free cash flow, which it considers 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. The Company excludes cash impacts of items derived from non-operating activities such as taxes paid in connection with divestitures and in the current period have also excluded cash paid in connection with the purchase of its corporate headquarters and certain capital improvements to the site as these expenditures are considered one-time in nature. Adjusted free cash flow should not be considered an alternative to net cash from operating activities or other measurements under GAAP. 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 net cash from operating activities and adjusted free cash flow is as follows (in thousands):
| For the Three Months Ended: | ||||||||
| March 31, 2020 | March 31, 2019 | |||||||
| Adjusted free cash flow | ||||||||
| Net cash from operating activities | $ | 33,681 | $ | 29,740 | ||||
| Additions to property, plant and equipment | (82,767 | ) | (58,947 | ) | ||||
| Purchase and capital improvements of corporate headquarters | 20,735 | — | ||||||
| Proceeds from sale and disposal of fixed assets | 2,150 | 4,321 | ||||||
| Adjusted free cash flow | $ | (26,201 | ) | $ | (24,886 | ) | ||
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 201.689.8881 or 877.709.8155 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, energy and manufacturing, 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 in the United States, Canada, Mexico, Puerto Rico and India. For more information, visit www.cleanharbors.com.
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • 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,” 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, the risks and uncertainties surrounding COVID-19 and the related impact on the Company’s business, and those items identified as “Risk Factors” in Clean Harbors’ most recently filed 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.
Contacts:
| Michael L. Battles | Jim Buckley | |
| EVP and Chief Financial Officer | SVP Investor Relations | |
| Clean Harbors, Inc. | Clean Harbors, Inc. | |
| 781.792.5100 | 781.792.5100 | |
| InvestorRelations@cleanharbors.com | Buckley.James@cleanharbors.com |
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands, except per share amounts)
| For the Three Months Ended: | ||||||||
| March 31, 2020 | March 31, 2019 | |||||||
| Revenues | $ | 858,563 | $ | 780,839 | ||||
| Cost of revenues (exclusive of items shown separately below) | 606,666 | 564,364 | ||||||
| Selling, general and administrative expenses | 129,307 | 114,812 | ||||||
| Accretion of environmental liabilities | 2,561 | 2,574 | ||||||
| Depreciation and amortization | 74,533 | 75,355 | ||||||
| Income from operations | 45,496 | 23,734 | ||||||
| Other (expense) income, net | (2,365 | ) | 2,983 | |||||
| Loss on sale of businesses | (3,074 | ) | — | |||||
| Interest expense, net | (18,787 | ) | (19,764 | ) | ||||
| Income before provision for income taxes | 21,270 | 6,953 | ||||||
| Provision for income taxes | 9,698 | 5,977 | ||||||
| Net income | $ | 11,572 | $ | 976 | ||||
| Earnings per share: | ||||||||
| Basic | $ | 0.21 | $ | 0.02 | ||||
| Diluted | $ | 0.21 | $ | 0.02 | ||||
| Shares used to compute earnings per share — Basic | 55,757 | 55,848 | ||||||
| Shares used to compute earnings per share — Diluted | 56,055 | 56,082 | ||||||
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
| March 31, 2020 | December 31, 2019 | |||||||
| Current assets: | ||||||||
| Cash and cash equivalents | $ | 432,205 | $ | 371,991 | ||||
| Short-term marketable securities | 62,143 | 42,421 | ||||||
| Accounts receivable, net | 658,482 | 644,738 | ||||||
| Unbilled accounts receivable | 51,215 | 56,326 | ||||||
| Deferred costs | 21,270 | 21,746 | ||||||
| Inventories and supplies | 216,532 | 214,744 | ||||||
| Prepaid expenses and other current assets | 44,629 | 48,942 | ||||||
| Total current assets | 1,486,476 | 1,400,908 | ||||||
| Property, plant and equipment, net | 1,547,119 | 1,588,151 | ||||||
| Other assets: | ||||||||
| Operating lease right-of-use assets | 160,526 | 162,206 | ||||||
| Goodwill | 519,627 | 525,013 | ||||||
| Permits and other intangibles, net | 406,881 | 419,066 | ||||||
| Other | 11,392 | 13,560 | ||||||
| Total other assets | 1,098,426 | 1,119,845 | ||||||
| Total assets | $ | 4,132,021 | $ | 4,108,904 | ||||
| Current liabilities: | ||||||||
| Current portion of long-term obligations | $ | 7,535 | $ | 7,535 | ||||
| Accounts payable | 267,892 | 298,375 | ||||||
| Deferred revenue | 71,243 | 73,370 | ||||||
| Accrued expenses | 255,513 | 276,540 | ||||||
| Current portion of closure, post-closure and remedial liabilities | 16,231 | 23,301 | ||||||
| Current portion of operating lease liabilities | 39,998 | 40,979 | ||||||
| Total current liabilities | 658,412 | 720,100 | ||||||
| Other liabilities: | ||||||||
| Closure and post-closure liabilities, less current portion | 76,106 | 68,368 | ||||||
| Remedial liabilities, less current portion | 98,966 | 98,155 | ||||||
| Long-term obligations, less current portion | 1,702,992 | 1,554,116 | ||||||
| Operating lease liabilities, less current portion | 120,649 | 121,020 | ||||||
| Deferred taxes, unrecognized tax benefits and other long-term liabilities | 269,091 | 277,332 | ||||||
| Total other liabilities | 2,267,804 | 2,118,991 | ||||||
| Total stockholders’ equity, net | 1,205,805 | 1,269,813 | ||||||
| Total liabilities and stockholders’ equity | $ | 4,132,021 | $ | 4,108,904 | ||||
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
| For the Three Months Ended: | ||||||||
| March 31, 2020 | March 31, 2019 | |||||||
| Cash flows from operating activities: | ||||||||
| Net income | $ | 11,572 | $ | 976 | ||||
| Adjustments to reconcile net income to net cash from operating activities: | ||||||||
| Depreciation and amortization | 74,533 | 75,355 | ||||||
| Allowance for doubtful accounts | 4,700 | (3,425 | ) | |||||
| Amortization of deferred financing costs and debt discount | 891 | 1,000 | ||||||
| Accretion of environmental liabilities | 2,561 | 2,574 | ||||||
| Changes in environmental liability estimates | 3,470 | (774 | ) | |||||
| Other expense (income), net | 2,365 | (2,983 | ) | |||||
| Stock-based compensation | 3,291 | 5,809 | ||||||
| Loss on sale of businesses | 3,074 | — | ||||||
| Environmental expenditures | (3,435 | ) | (3,264 | ) | ||||
| Changes in assets and liabilities, net of acquisitions: | ||||||||
| Accounts receivable and unbilled accounts receivable | (24,960 | ) | 12,086 | |||||
| Inventories and supplies | (7,024 | ) | (832 | ) | ||||
| Other current and non-current assets | 8,714 | (11,738 | ) | |||||
| Accounts payable | (5,169 | ) | (27,956 | ) | ||||
| Other current and long-term liabilities | (40,902 | ) | (17,088 | ) | ||||
| Net cash from operating activities | 33,681 | 29,740 | ||||||
| Cash flows used in investing activities: | ||||||||
| Additions to property, plant and equipment | (82,767 | ) | (58,947 | ) | ||||
| Proceeds from sale and disposal of fixed assets | 2,150 | 4,321 | ||||||
| Acquisitions, net of cash acquired | — | (14,870 | ) | |||||
| Proceeds from sale of businesses, net of transactional costs | 7,856 | — | ||||||
| Additions to intangible assets including costs to obtain or renew permits | (448 | ) | (1,132 | ) | ||||
| Proceeds from sale of available-for-sale securities | 12,180 | 8,600 | ||||||
| Purchases of available-for-sale securities | (32,058 | ) | (12,941 | ) | ||||
| Net cash used in investing activities | (93,087 | ) | (74,969 | ) | ||||
| Cash flows from (used in) financing activities: | ||||||||
| Change in uncashed checks | (1,775 | ) | (4,769 | ) | ||||
| Tax payments related to withholdings on vested restricted stock | (2,224 | ) | (2,276 | ) | ||||
| Repurchases of common stock | (17,341 | ) | (6,324 | ) | ||||
| Payments on finance leases | (329 | ) | (115 | ) | ||||
| Principal payments on debt | (1,884 | ) | (1,884 | ) | ||||
| Borrowing from revolving credit facility | 150,000 | — | ||||||
| Net cash from (used in) financing activities | 126,447 | (15,368 | ) | |||||
| Effect of exchange rate change on cash | (6,827 | ) | 1,461 | |||||
| Increase (decrease) in cash and cash equivalents | 60,214 | (59,136 | ) | |||||
| Cash and cash equivalents, beginning of period | 371,991 | 226,507 | ||||||
| Cash and cash equivalents, end of period | $ | 432,205 | $ | 167,371 | ||||
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
| Supplemental information: | ||||||||
| Cash payments for interest and income taxes: | ||||||||
| Interest paid | $ | 30,648 | $ | 8,712 | ||||
| Income taxes paid | 971 | 967 | ||||||
| Non-cash investing activities: | ||||||||
| Property, plant and equipment accrued | 12,173 | 13,002 | ||||||
| ROU assets obtained in exchange for operating lease liabilities | 12,410 | (3,896 | ) | |||||
| ROU assets obtained in exchange for finance lease liabilities | (856 | ) | 23,027 | |||||
Supplemental Segment Data (in thousands)
| For the Three Months Ended: | ||||||||||||||||||||||||
| Revenue | March 31, 2020 | March 31, 2019 | ||||||||||||||||||||||
| Third Party Revenues | Intersegment Revenues (Expense), net | Direct Revenues | Third Party Revenues | Intersegment Revenues (Expense), net | Direct Revenues | |||||||||||||||||||
| Environmental Services | $ | 528,104 | $ | 38,258 | $ | 566,362 | $ | 473,698 | $ | 35,324 | $ | 509,022 | ||||||||||||
| Safety-Kleen | 330,369 | (37,157 | ) | 293,212 | 306,547 | (34,070 | ) | 272,477 | ||||||||||||||||
| Corporate Items | 90 | (1,101 | ) | (1,011 | ) | 594 | (1,254 | ) | (660 | ) | ||||||||||||||
| Total | $ | 858,563 | $ | — | $ | 858,563 | $ | 780,830 | $ | — | $ | 780,839 | ||||||||||||
| For the Three Months Ended: | ||||||||
| Adjusted EBITDA | March 31, 2020 | March 31, 2019 | ||||||
| Environmental Services | $ | 108,914 | $ | 89,510 | ||||
| Safety-Kleen | 61,148 | 54,793 | ||||||
| Corporate Items | (47,472 | ) | (42,640 | ) | ||||
| Total | $ | 122,590 | $ | 101,663 | ||||
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com