Clean Harbors Announces Record Fourth Quarter and Year-End 2006 Financial Results
Strong Demand for Technical Services Drives 20% Top-Line Growth
NORWELL, Mass.--(BUSINESS WIRE)--March 14, 2007--Clean Harbors, Inc. ("Clean Harbors") (NASDAQ: CLHB), the leading provider of environmental and hazardous waste management services throughout North America, today announced financial results for the fourth quarter and full year ended December 31, 2006.
Clean Harbors increased revenues by approximately 20 percent to $231.8 million in the fourth quarter of 2006 from $193.7 million in the fourth quarter of 2005. Income from operations grew to $19.8 million from $14.3 million for the fourth quarter of 2005. EBITDA grew by approximately 31 percent to $31.4 million from $23.9 million for the fourth quarter of 2005. See below for a description of EBITDA and a reconciliation to GAAP results.
Net income attributable to common shareholders rose to $11.4 million, or $0.56 per diluted share, from $7.9 million, or $0.43 per diluted share, in the same period of 2005.
Comments on the Fourth Quarter
"The fourth quarter of 2006 was a strong conclusion to the best year in Clean Harbors' history," said Alan S. McKim, Chairman and Chief Executive Officer. "With solid demand across our business lines and good weather, we delivered quarterly revenue in excess of $200 million for the second consecutive quarter, exclusive of any revenue attributed to Teris, which we acquired in August."
"Organic growth in the fourth quarter was primarily driven by our Technical Services business, which continued to perform large facilities projects," McKim said. "Incineration volumes were strong, and we achieved utilization of 91 percent, despite the addition of significant capacity earlier in the year. Reflecting increased activity in both the United States and Canada, total landfill volumes were nearly 30 percent higher than in the same period in 2005."
"In Site Services, we continued our steady geographic expansion with the opening of another branch in southern Florida," said McKim. "We did not have any major emergency response events in the quarter, unlike the fourth quarter of 2005 when we posted more than $17 million of higher margin revenue related to post-hurricane clean-up projects. Consequently, our Site Services margins were down, even though we generated a steady stream of small scale projects that produced approximately $7 million in revenue in the quarter."
Comments on Full-Year 2006
Revenues for the year ended December 31, 2006 increased nearly 17 percent to $829.8 million, compared with $711.2 million for full-year 2005. Income from operations for full-year 2006 increased 45 percent to $74.4 million versus $51.3 million in the prior year. EBITDA (see description below) for 2006 increased 33 percent to $119.9 million from $90.3 million for 2005.
The Company generated net income attributable to common shareholders of $46.4 million, or $2.26 per diluted share, for the full-year 2006. This compares with a 2005 net income attributable to common shareholders of $25.3 million, or $1.45 per diluted share.
"The year 2006 was outstanding for Clean Harbors both financially and operationally," McKim said. "We added substantial incineration capacity, constructed several secure landfill cells, upgraded numerous facilities, expanded our transportation fleet, and exceeded our Health, Safety & Compliance targets. In support of our successful strategy of introducing the Clean Harbors brand into new markets and expanding our footprint, we opened six new Site Services locations in 2006. These initiatives enabled us to post the largest organic increase in revenues in the Company's history."
"At the same time, we successfully completed the Teris acquisition, which will broaden our service offerings and improve our ability to service our customers," said McKim. "Although Teris is still ramping up, it turned in an exemplary month in December. We also met our goal of Teris being accretive in the fourth quarter and we expect to see continued improvement throughout 2007."
"We successfully drove annual top-line growth, while continuing to closely manage our operating costs and environmental liabilities, as well as improve our operating efficiencies," McKim said. "As a result, net income grew substantially from 2005 and EBITDA grew by approximately 33 percent."
Non-GAAP Fourth-Quarter and Full-Year Results
Clean Harbors reports EBITDA results, which are non-GAAP financial measures, 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 EBITDA achieved. The Company defines EBITDA in accordance with its outstanding credit agreement, as described in the following reconciliation showing the differences between reported net income and EBITDA for 2006 and 2005 (in thousands):
For the three For the year
months ended: ended:
December December December December
31, 31, 31, 31,
2006 2005 2006 2005
-------- -------- --------- --------
Net income $11,493 $ 7,952 $ 46,675 $25,621
Accretion of environmental
liabilities 2,587 2,501 10,220 10,384
Depreciation and amortization 9,043 7,116 35,339 28,633
Loss on early extinguishment of
debt 239 - 8,529 -
Interest expense, net 3,144 4,963 12,447 22,754
Provision for income taxes 4,760 1,595 6,339 3,495
Other (income) expense 174 (184) 447 (611)
Equity interest in joint venture (50) - (61) -
-------- -------- --------- --------
EBITDA $31,390 $23,943 $119,935 $90,276
======== ======== ========= ========
Business Outlook and Financial Guidance
"We expect 2007 to be another year of solid demand for Clean Harbors services," McKim said. "Volumes at our incinerators are strong, utilization rates are high, and we anticipate that we will continue to benefit from increased outsourcing trends from customers with captive incinerators. We have already taken several strategic steps to position the Company for further growth in 2007. In January, we acquired the remaining 50 percent interest of Teris' joint venture in Puerto Rico, Ensco Caribe. This represents an exciting opportunity to provide our full range of environmental services to businesses across Puerto Rico and the Caribbean under our new subsidiary, Clean Harbors Caribe Inc. We also announced a price increase across all service lines effective March 15, which should counter rising operating costs and support our growth in the second quarter and beyond."
The first quarter is traditionally the slowest quarter of the year for Clean Harbors due to the effect of weather on the Company's plants and customers' operations. For the first quarter of 2007, the Company expects revenue in the range of $200 million to $205 million. The Company expects to generate EBITDA for the first quarter of 2007 in the range of $22 million to $25 million. For 2007, the Company expects to increase revenues by 8 percent to 9 percent, and achieve EBITDA growth in the range of 12 percent to 13 percent.
Conference Call Information
Clean Harbors will conduct a conference call for investors to discuss the information contained in this press release today, Wednesday, March 14, 2007 at 9:00 a.m. (ET). Investors who want to hear a webcast of the call should log onto www.cleanharbors.com and select "Investor Relations." In addition, if you are unable to listen to the live webcast, the call will be archived on the investor section of the website.
Those who wish to listen to the fourth-quarter and year-end 2006 conference call webcast should visit the Investor Relations section of the Company's website at www.cleanharbors.com. The live call also can be accessed by dialing 800.395.0708 or 913.981.5560 (confirmation code: 2469747) 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, Inc.
Clean Harbors, Inc. is North America's leading provider of environmental and hazardous waste management services. With an unmatched infrastructure of 49 waste management facilities, including nine landfills, six incineration locations and six wastewater treatment centers, the Company provides essential services to over 45,000 customers, including more than 325 Fortune 500 companies, thousands of smaller private entities and numerous federal, state and local governmental agencies. Headquartered in Norwell, Massachusetts, Clean Harbors has more than 100 locations strategically positioned throughout North America in 36 U.S. states, six Canadian provinces, 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, and involve risks and uncertainties. These forward-looking statements are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof. The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements other than through its various filings with the Securities and Exchange Commission. Furthermore, all financial information in this press release is based on preliminary data and is subject to the final closing of the Company's books and records.
A variety of factors beyond the control of the Company may affect the Company's performance, including, but not limited to:
-- The Company's ability to successfully integrate Teris'
operations and assets into its existing network of services
and disposal facilities;
-- The Company's ability to manage the significant environmental
liabilities that it assumed in connection with the CSD and
Teris acquisitions;
-- The availability and costs of liability insurance and
financial assurance required by governmental entities relating
to our facilities;
-- The effects of general economic conditions in the United
States, Canada and other territories and countries where the
Company does business;
-- The effect of economic forces and competition in specific
marketplaces where the Company competes;
-- The possible impact of new regulations or laws pertaining to
all activities of the Company's operations;
-- The outcome of litigation or threatened litigation or
regulatory actions;
-- The effect of commodity pricing on overall revenues and
profitability;
-- Possible fluctuations in quarterly or annual results or
adverse impacts on the Company's results caused by the
adoption of new accounting standards or interpretations or
regulatory rules and regulations;
-- The effect of weather conditions or other aspects of the
forces of nature on field or facility operations;
-- The effects of industry trends in the environmental services
and waste handling marketplace; and
-- The effects of conditions in the financial services industry
on the availability of capital and financing.
Any of the above factors and numerous others not listed nor foreseen may adversely impact the Company's financial performance. Additional information on the potential factors that could affect the Company's actual results of operations is included in its filings with the Securities and Exchange Commission, which may be viewed on the Investor portal of the Company's Web Page at www.cleanharbors.com.
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(in thousands except per share amounts)
For the three
months ended: Year ended:
December December December December
31, 31, 31, 31,
2006 2005 2006 2005
--------- --------- --------- ---------
Revenues $231,849 $193,714 $829,809 $711,170
Cost of revenues 165,907 138,592 584,835 512,582
Selling, general and
administrative expenses 34,552 31,179 125,039 108,312
Accretion of environmental
liabilities 2,587 2,501 10,220 10,384
Depreciation and amortization 9,043 7,116 35,339 28,633
--------- --------- --------- ---------
Income from operations 19,760 14,326 74,376 51,259
Other income (expense) (174) 184 (447) 611
Loss on early extinguishment
of debt (239) - (8,529) -
Interest (expense), net (3,144) (4,963) (12,447) (22,754)
--------- --------- --------- ---------
Income before provision for
income taxes and equity
interest in joint venture 16,203 9,547 52,953 29,116
Provision for income taxes 4,760 1,595 6,339 3,495
Equity interest in joint
venture (50) - (61) -
--------- --------- --------- ---------
Net income 11,493 7,952 46,675 25,621
Redemption of Series C
Preferred Stock, dividends on
Series B and C Preferred
Stocks and accretion on
Series C Preferred Stock 69 69 276 279
--------- --------- --------- ---------
Net income attributable to
common shareholders $ 11,424 $ 7,883 $ 46,399 $ 25,342
========= ========= ========= =========
Earnings per share:
Basic earnings
attributable to common
shareholders $ 0.58 $ 0.46 $ 2.38 $ 1.62
========= ========= ========= =========
Diluted earnings
attributable to common
shareholders $ 0.56 $ 0.43 $ 2.26 $ 1.45
========= ========= ========= =========
Weighted average common shares
outstanding 19,634 17,262 19,526 15,629
========= ========= ========= =========
Weighted average common shares
outstanding plus potentially
dilutive common shares 20,637 18,566 20,657 17,717
========= ========= ========= =========
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
(in thousands)
(Unaudited)
December 31, December 31,
2006 2005
------------ ------------
Current assets:
Cash and cash equivalents $ 73,550 $ 132,449
Restricted cash and cash equivalents - 3,469
Marketable securities 10,240 -
Accounts receivable, net 169,581 147,659
Unbilled accounts receivable 16,078 7,049
Deferred costs 7,140 4,937
Prepaid expenses 9,301 6,411
Supplies inventories 20,101 12,723
Deferred tax assets 9,238 219
Income tax receivable 150 1,462
Properties held for sale 7,440 7,670
------------ ------------
Total current assets 322,819 324,048
------------ ------------
Property, plant and equipment, net 244,126 178,524
------------ ------------
Other assets:
Deferred financing costs 7,206 9,508
Goodwill 19,032 19,032
Permits and other intangibles, net 65,743 77,803
Investment in joint venture 2,208 -
Deferred tax assets 6,388 1,715
Other 3,286 3,734
------------ ------------
103,863 111,792
------------ ------------
Total assets $ 670,808 $ 614,364
============ ============
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS' EQUITY
(in thousands)
(Unaudited)
December 31, December 31,
2006 2005
------------ ------------
Current liabilities:
Uncashed checks $ 11,083 $ 7,982
Current portion of long-term debt - 52,500
Current portion of capital lease
obligations 1,391 1,893
Accounts payable 81,432 71,372
Accrued disposal costs 3,058 3,109
Deferred revenue 29,409 21,784
Other accrued expenses 53,941 49,779
Current portion of closure, post-
closure and remedial liabilities 13,707 10,817
Income taxes payable 4,333 4,458
------------ ------------
Total current liabilities 198,354 223,694
------------ ------------
Other liabilities:
Closure and post-closure liabilities,
less current portion 23,520 20,728
Remedial liabilities, less current
portion 136,173 139,144
Long-term obligations, less current
maturities 120,522 95,790
Capital lease obligations, less current
portion 2,648 4,108
Other long-term liabilities 15,609 14,417
Accrued pension cost 796 825
------------ ------------
Total other liabilities 299,268 275,012
------------ ------------
Total stockholders' equity, net 173,186 115,658
------------ ------------
Total liabilities and stockholders'
equity $ 670,808 $ 614,364
============ ============
CONTACT: Clean Harbors, Inc.
James M. Rutledge, 781-792-5100
Executive Vice President and Chief Financial Officer
InvestorRelations@cleanharbors.com
or
Bill Geary, 781-792-5130
Executive Vice President and General Counsel
or
Sharon Merrill Associates, Inc.
Jim Buckley, 617-542-5300
Executive Vice President
clhb@investorrelations.com
SOURCE: Clean Harbors, Inc.