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- Achieves 30% Increase in Q2 Revenues to $926.5 Million <\/i><\/li>\n
- Delivers Q2 Net Income of $67.1 Million, or EPS of $1.22, with Adjusted EPS of $1.19<\/i><\/li>\n
- Reports Q2 Adjusted EBITDA of $187.8 Million, a 36% Increase; Margin Improves by 80 Basis Points to 20.3%<\/i><\/li>\n
- Unveils Incineration Expansion Plan at Kimball, Nebraska Facility Where New State-of-the-Art Kiln will be Constructed <\/i><\/li>\n
- Announces Plans to Acquire HydroChemPSC for $1.25 Billion (See Separate News Release Issued Today)<\/i><\/li>\n
- Raises 2021 Adjusted EBITDA and Adjusted Free Cash Flow Guidance<\/i><\/li>\n<\/ul>\n
NORWELL, Mass.–(BUSINESS WIRE<\/a>)–Clean Harbors, Inc.<\/a> (\u201cClean Harbors\u201d) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America,today announced financial results for the second quarter ended June 30, 2021.\n<\/p>\n
\n\u201cOur second-quarter financial results far exceeded our guidance, as we benefitted from a steady flow of high-value waste streams into our disposal network and a strong performance within our Safety-Kleen Sustainability Solutions business,\u201d said Alan S. McKim, Chairman, President and Chief Executive Officer. \u201cThese factors, coupled with a rebound in demand for many of our service offerings, drove substantial revenue growth and the highest second-quarter Adjusted EBITDA, Adjusted EBITDA margin and adjusted free cash flow in the Company\u2019s history. Positive underlying market trends helped generate growth across all key lines of business.\u201d\n<\/p>\n
Second-Quarter 2021 Results
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<\/b>Revenues increased 30% to $926.5 million from $710.0 million in the same period of 2020. Income from operations grew 83% to $110.0 million from $60.2 million in the second quarter of 2020.\n<\/p>\n\nNet income was $67.1 million, or $1.22 per diluted share. This compares with net income of $29.0 million, or $0.52 per diluted share, for the same period in 2020. Adjusted for certain items in both periods, adjusted net income was $65.4 million, or $1.19 per diluted share, for the second quarter of 2021, compared with adjusted net income of $28.9 million, or $0.52 per diluted share, in the same period of 2020. (See reconciliation tables below)\n<\/p>\n
\nAdjusted EBITDA (see description below) increased 36% to $187.8 million from $138.3 million in the same period of 2020. Benefits from Canadian and U.S. government assistance programs accounted for $5.2 million of contributions in the second quarter of 2021 compared with $23.4 million in the same period of 2020.\n<\/p>\n
Q2 2021 Review
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<\/b>\u201cWithin our Environmental Services segment, revenues increased 18% from a year ago and 11% from Q1, fueled by growth in disposal and recycling volumes and a surge in Industrial Services activity,\u201d McKim said. \u201cOur incineration network continued to see strong demand, particularly for high-value waste streams, leading to utilization of 87% and a 5% increase in the average price per pound from a year ago. Our landfill business rebounded after several challenging quarters due to the pandemic, as volumes grew 13% and the average price increased 10%. Our Safety-Kleen Environmental branches continued their steady recovery, with quarterly parts washer services reaching 240,000 for the first time since the pandemic began. We also saw a meaningful contribution from our Industrial Services business with more than 50% growth driven by a backlog of deferred maintenance by customers during the past year.\u201d\n<\/p>\n\n\u201cOur Safety-Kleen Sustainability Solutions (SKSS) segment delivered extraordinary growth and profitability in the quarter, as our new segment continues to benefit from the combination of our waste oil collection with our SK Oil business. The supply shortages for base and blended oil, along with the impacts of IMO 2020, created a highly favorable pricing environment,\u201d McKim said. \u201cThese market conditions led to the widening spread in our used oil market. Segment revenue was up 32% from the first quarter and more than doubled from a year ago, when the pandemic temporarily shut down more than half of our re-refining plants. Adjusted EBITDA in the segment doubled from Q1 and was up more than seven-fold from a year ago. Waste oil collections grew to 57 million gallons from 47 million in the first quarter and from 43 million a year ago.\u201d\n<\/p>\n
\nIn late June, Clean Harbors announced the signing of a definitive agreement with Vertex Energy, Inc. (NASDAQ: VTNR) to acquire certain assets related to Vertex\u2019s used motor oil collection and re-refinery business in an all-cash transaction for $140 million, subject to working capital and other adjustments. The acquisition is now expected to close toward the end of the current quarter of 2021 or shortly thereafter, subject to approval by U.S. regulators and Vertex shareholders, and other customary closing conditions.\n<\/p>\n
Company Announces Planned Expansion of Incineration Network Capacity
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<\/b>Clean Harbors plans to construct a 70,000-ton hazardous waste incinerator at the Company\u2019s plant in Kimball, Nebraska, which specializes in the destruction of hazardous and non-hazardous materials. The advanced new kiln will more than double annual incineration capacity at the 600-acre site to nearly 130,000 tons. Costing approximately $180 million to permit and construct over a four-year time frame, the new incinerator will add over 100 full-time workers upon completion.\n<\/p>\n\n\u201cClean Harbors is proud to make this investment in Nebraska to provide much needed environmental service capabilities to the Western U.S.,\u201d McKim said. \u201cWe are excited to build upon our longtime relationship with the Kimball community, and confident these new jobs and increased business activity will benefit the economy of the region and the entire state.\u201d\n<\/p>\n
\nThe Kimball expansion will be designed as North America\u2019s most technologically advanced hazardous waste incinerator, equipped with world-class air emissions control technology that exceeds the Federal Clean Air Act\u2019s most stringent air emissions standards. The plant will be only the second U.S. commercial hazardous waste incinerator to come online in the past 25 years, along with Clean Harbors El Dorado incinerator that opened in early 2017.\n<\/p>\n
\n\u201cWhile there is a lengthy permitting process and complex construction requirements, we are targeting having this facility operational in late 2024 and accepting waste in the first half of 2025,\u201d McKim said. \u201cWe are confident that incineration demand \u2013 driven by the ongoing U.S. chemical and manufacturing expansion, and the continuing reduction of captive incinerators \u2013 will enable our additional capacity to be readily absorbed when it opens.\u201d\n<\/p>\n
Business Outlook and Financial Guidance
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<\/b>\u201cWe enter the second half of 2021 with considerable momentum across all our key markets, backed by a promising North American economic environment. We expect a record-setting financial year for the Company,\u201d McKim concluded. \u201cWithin our Environmental Services segment, we see encouraging signs for steady waste volumes, project work and rising demand for our broad suite of service offerings. With the planned acquisition of HydroChemPSC, we will significantly bolster our capabilities within Industrial Services and Field Services while driving more volumes into our network. Within our SKSS segment, we see our used oil to base oil pricing spread extending until later in the year, and we will continue to see the benefits of separating out this segment. We will continue to capitalize on the opportunities afforded by these current market conditions, and look forward to adding the Vertex facilities, personnel and waste oil collection assets to this segment. Overall, we continue to maintain a favorable outlook in both of our segments for the remainder of the year and into 2022.\u201d\n<\/p>\n\nBased on its second-quarter financial performance and current market conditions, Clean Harbors is raising its 2021 guidance. For the year, the Company currently expects:\n<\/p>\n
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- \nAdjusted EBITDA in the range of $620 million to $650 million, based on anticipated GAAP net income in the range of $159 million to $193 million; and\n<\/li>\n
- \nAdjusted free cash flow in the range of $285 million to $315 million, based on anticipated net cash from operating activities in the range of $475 million to $525 million.\n<\/li>\n<\/ul>\n
\nFor the third quarter of 2021, Clean Harbors expects Adjusted EBITDA to be at a level similar to or slightly above the third quarter of 2020, when the Company recognized $13.3 million from government assistance programs.\n<\/p>\n
Non-GAAP Results
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<\/b>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\u2019s 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\u2019s 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 and six months ended June 30, 2021 and 2020 (in thousands, except percentages):\n<\/p>\n
- Delivers Q2 Net Income of $67.1 Million, or EPS of $1.22, with Adjusted EPS of $1.19<\/i><\/li>\n
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