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): August 3, 2022
(Exact name of registrant as specified in its charter)
(State or other jurisdiction of incorporation) | (Commission File Number) | (IRS Employer Identification No.) | ||||||||||||
| (Address of Principal Executive Offices) | (Zip Code) | ||||||||||||||||||||||
Registrant’s telephone number, including area code (781 ) 792-5000
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:
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ☐
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐
Securities registered pursuant to Section 12(b) of the Act:
| Title of each class | Trading Symbol | Name of each exchange on which registered | ||||||||||||
Item 2.02 Results of Operations and Financial Condition
On August 3, 2022, Clean Harbors, Inc. (the “Company”) issued a press release announcing the Company’s results of operations for the second quarter ended June 30, 2022. A copy of that press release is furnished with this report as Exhibit 99.1.
Item 9.01 Financial Statements and Exhibits.
(d) Exhibits. The following exhibits are being furnished herewith:
| Exhibit No. | Description | |||||||
| 99.1 | ||||||||
| 104 | The cover page from this Current Report on Form 8-K, formatted in iXBRL (Inline eXtensible Business Reporting Language) | |||||||
1
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.
| Clean Harbors, Inc. | |||||
| (Registrant) | |||||
| August 3, 2022 | /s/ Michael L. Battles | ||||
| Executive Vice President and Chief Financial Officer | |||||
2
EXHIBIT 99.1
Press Release
Clean Harbors Announces Record Second-Quarter 2022 Financial Results
•Reports Q2 Revenues of $1.36 Billion, up 46% on Strength Across All Core Businesses and Addition of HydroChemPSC
•Generates Q2 Net Income of $148.2 Million, or GAAP EPS of $2.71 and Adjusted EPS of $2.44
•Achieves Q2 Adjusted EBITDA Growth of 65% to $309.1 Million
•Raises 2022 Adjusted EBITDA and Adjusted Free Cash Flow Guidance
NORWELL, Mass. – August 3, 2022 – Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the second quarter ended June 30, 2022.
“The combination of robust demand, positive market dynamics and crisp execution of our growth strategy resulted in record quarterly financial results,” said Alan S. McKim, Chairman, President and Chief Executive Officer. “As the leading environmental services and sustainability solutions provider for more than 300,000 customers, our suite of environmentally focused services was highly sought after in the quarter, as were the premium eco-friendly products generated by our re-refinery business. We have experienced an acceleration of demand for our hazardous waste disposal and recycling network to all-time highs. HydroChemPSC (HPC), which we acquired in late 2021, is proving to be a valuable addition. Against a backdrop of high inflation and supply chain challenges, we executed exceptionally well through effective pricing, cost reduction programs, process improvements and best-in-class industry performance. Our results this quarter illustrate the powerful combination of our entire portfolio working together and leveraging the strengths of each business. Our safety results were the best in the Company’s history with a Total Recordable Incident Rate (TRIR) through June 30 of 0.82 – well ahead of our goal of less than 1.0 for the year.”
Second-Quarter Results
Revenues increased 46% to $1.36 billion from $926.5 million in the same period of 2021. Income from operations grew 92% to $211.2 million from $110.0 million in the second quarter of 2021.
Net income was $148.2 million, or $2.71 per diluted share. This compared with net income of $67.1 million, or $1.22 per diluted share, for the same period in 2021. Adjusted for certain items in both periods, adjusted net income was $133.1 million, or $2.44 per diluted share, for the second quarter of 2022, compared with adjusted net income of $65.4 million, or $1.19 per diluted share, for the same period of 2021. (See reconciliation tables below).
Adjusted EBITDA (see description below) increased 65% to $309.1 million from $187.8 million in the same period of 2021.
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
Q2 2022 Segment Review
“Environmental Services (ES) revenues increased 51% year-over-year, and Adjusted EBITDA in the segment rose 53%. These results were driven by the addition of HPC, volume growth of high-value waste in our disposal and recycling facilities, pricing initiatives and strong demand across all our service businesses,” McKim said. “Utilization of our incinerator network reached 90% in the quarter, up from 87% a year ago. Average incineration pricing was up a healthy 18% from a year ago, representing a balance of pricing initiatives and higher-value waste streams. Landfill volumes in the quarter increased by 36% driven by a noticeable pickup in remediation and waste projects. Our Industrial Services business, now branded as HPC Industrial, delivered profitable growth in the quarter, as we capitalized on a robust and extensive spring turnaround season. Field Services achieved 35% growth from a year ago through a steady stream of emergency response projects and the addition of HPC’s utilities business. Safety-Kleen Environmental grew 21% with uniform strength across its core service offerings. EBITDA margins in this segment improved 40 basis points from a year ago and are up more than 500 basis points from the first quarter. Overall, an outstanding quarter for this entire segment.
“Safety-Kleen Sustainability Solutions (SKSS) revenues grew 31% in Q2, and Adjusted EBITDA climbed 53% from a year ago,” McKim said. “Demand for our base oil was extremely high throughout the quarter given industry dynamics and global supply disruptions. Two substantive base oil price increases occurred mid-quarter, helping drive greater revenue and profitability. Our collections team also did a remarkable job actively managing the front end of our re-refining spread in both collection volumes and costs. In addition, our creation of the SKSS segment and better strategic management of this business is enabling more success and a path to more consistent profitability.”
Business Outlook and Financial Guidance
“Our business thrived in the second quarter, and we are seeing many indications that those positive demand trends will continue in the back half of the year,” McKim said. “Our unique and valuable network of disposal and recycling assets remains in high demand as we are benefiting from the resurgence in U.S. manufacturing, our 3M partnership, global reshoring to the U.S. and a healthy projects pipeline. On top of today’s healthy backlog, we expect future demand for our scarce disposal assets to accelerate through a variety of factors including infrastructure spending, strict enforcement of U.S. environmental regulations, captive incinerator closings and reshoring of multiple industries. With that robust growth environment in mind, we are continuing to move forward with the construction of our new incinerator in Nebraska, along with near-term investments in our plants to drive throughput across our network and reinforce our market leadership. Within our service businesses, we are hiring as rapidly as possible to meet customer needs and facilitate additional growth, while also lowering third-party costs.
“Within SKSS, the business is being well-managed at both ends of our re-refining spread,” McKim said. “On the back end, we are benefiting from a strong pricing environment that shows no sign of slowing. The value of our base oil also continues to rise not just due to industry conditions but the recognition of the quality, scarcity and reliability of our re-refined products. In conjunction with that shifting market view and demand for truly sustainable product alternatives, we recently launched our KLEEN+TM brand to fully capture the value of our
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
base oil. On the front end of our re-refining spread, we are continuing to benefit from the long-term market impact of IMO 2020, along with system enhancements and greater transportation efficiencies. We also recently purchased a re-refinery in Georgia. This location will generate additional production and will reduce our transportation costs by providing a local outlet for waste oil collected in the Southeastern U.S.
“As reflected in our revised annual guidance, we expect to realize strong operating results in both segments throughout the back half of 2022, while continuing to execute on our pricing and cost reduction strategies to drive further margin improvement, even in an inflationary environment. We anticipate delivering record top- and bottom-line results this year, along with a robust free cash flow to support our capital allocation strategy,” McKim concluded.
In the third quarter of 2022, Clean Harbors expects Adjusted EBITDA to increase approximately 50% from the prior-year period, reflecting higher profitability in both the ES and SKSS segments, as well as the addition of HPC.
Based on its first-half 2022 performance and current market conditions, Clean Harbors is raising the midpoint of its 2022 Adjusted EBITDA guidance by $175 million. For the year, the Company now expects:
•Adjusted EBITDA in the range of $975 million to $1.005 billion, or a midpoint of $990 million. This range is based on anticipated GAAP net income in the range of $355 million to $390 million; and
•Adjusted free cash flow in the range of $310 million to $350 million, or a midpoint of $330 million. This range is based on anticipated net cash from operating activities in the range of $630 million to $690 million.
Non-GAAP Results
Clean Harbors reports Adjusted EBITDA, which is a non-GAAP financial measure and should not be considered as 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
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
between reported net income and Adjusted EBITDA for the three and six months ended June 30, 2022 and 2021 (in thousands, except percentages):
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||
| June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||||||||||||||||||
| Net income | $ | 148,157 | $ | 67,075 | $ | 193,471 | $ | 88,811 | |||||||||||||||
| Accretion of environmental liabilities | 3,197 | 2,873 | 6,353 | 5,826 | |||||||||||||||||||
| Stock-based compensation | 6,835 | 3,305 | 12,547 | 6,785 | |||||||||||||||||||
| Depreciation and amortization | 87,868 | 71,592 | 172,166 | 143,755 | |||||||||||||||||||
| Other (income) expense, net | (1,265) | 1,480 | (1,969) | 2,708 | |||||||||||||||||||
| Gain on sale of business | (8,864) | — | (8,864) | — | |||||||||||||||||||
| Interest expense, net of interest income | 26,256 | 18,051 | 51,273 | 35,969 | |||||||||||||||||||
| Provision for income taxes | 46,886 | 23,395 | 64,352 | 33,368 | |||||||||||||||||||
| Adjusted EBITDA | $ | 309,070 | $ | 187,771 | $ | 489,329 | $ | 317,222 | |||||||||||||||
| Adjusted EBITDA Margin | 22.8 | % | 20.3 | % | 19.4 | % | 18.3 | % | |||||||||||||||
This press release includes a discussion of net income and earnings per share adjusted for the impacts of tax-related valuation allowances and other items 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 and adjusted net income, and the difference between earnings per share and adjusted earnings per share, for the three and six months ended June 30, 2022 and 2021 (in thousands, except per share amounts):
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||
| June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||||||||||||||||||
| Adjusted net income | |||||||||||||||||||||||
| Net income | $ | 148,157 | $ | 67,075 | $ | 193,471 | $ | 88,811 | |||||||||||||||
| Gain on sale of business | (8,864) | — | (8,864) | — | |||||||||||||||||||
| Tax-related valuation allowances and other | (6,209) | (1,641) | (6,095) | 7 | |||||||||||||||||||
| Adjusted net income | $ | 133,084 | $ | 65,434 | $ | 178,512 | $ | 88,818 | |||||||||||||||
| Adjusted earnings per share | |||||||||||||||||||||||
| Earnings per share | $ | 2.71 | $ | 1.22 | $ | 3.54 | $ | 1.62 | |||||||||||||||
| Gain on sale of business | (0.16) | — | (0.16) | — | |||||||||||||||||||
| Tax-related valuation allowances and other | (0.11) | (0.03) | (0.11) | — | |||||||||||||||||||
Adjusted earnings per share | $ | 2.44 | $ | 1.19 | $ | 3.27 | $ | 1.62 | |||||||||||||||
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. Adjusted free cash flow should not be considered an alternative to net cash from operating
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
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 for the three and six months ended June 30, 2022 and 2021 (in thousands):
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||
| June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||||||||||||||||||
| Adjusted free cash flow | |||||||||||||||||||||||
| Net cash from operating activities | $ | 170,599 | $ | 162,432 | $ | 131,970 | $ | 265,432 | |||||||||||||||
| Additions to property, plant and equipment | (77,734) | (50,075) | (148,042) | (91,988) | |||||||||||||||||||
| Proceeds from sale and disposal of fixed assets | 1,703 | 2,275 | 3,023 | 3,479 | |||||||||||||||||||
| Adjusted free cash flow | $ | 94,568 | $ | 114,632 | $ | (13,049) | $ | 176,923 | |||||||||||||||
Adjusted EBITDA Guidance Reconciliation
An itemized reconciliation between projected GAAP net income and projected Adjusted EBITDA is as follows (in millions):
| For the Year Ending December 31, 2022 | |||||||||||
| Projected GAAP net income | $355 | to | $390 | ||||||||
| Adjustments: | |||||||||||
| Accretion of environmental liabilities | 13 | to | 12 | ||||||||
| Stock-based compensation | 26 | to | 29 | ||||||||
| Depreciation and amortization | 345 | to | 335 | ||||||||
| Gain on sale of business | (9) | to | (9) | ||||||||
| Interest expense, net | 114 | to | 109 | ||||||||
| Provision for income taxes | 131 | to | 139 | ||||||||
| Projected Adjusted EBITDA | $975 | to | $1,005 | ||||||||
Adjusted Free Cash Flow Guidance Reconciliation
An itemized reconciliation between projected net cash from operating activities and projected adjusted free cash flow is as follows (in millions):
| For the Year Ending December 31, 2022 | |||||||||||
| Projected net cash from operating activities | $630 | to | $690 | ||||||||
| Additions to property, plant and equipment | (330) | to | (350) | ||||||||
| Proceeds from sale and disposal of fixed assets | 10 | to | 10 | ||||||||
| Projected adjusted free cash flow | $310 | to | $350 | ||||||||
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
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com
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.
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, 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 | For the Six Months Ended | ||||||||||||||||||||||
| June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | ||||||||||||||||||||
| Revenues | $ | 1,356,312 | $ | 926,458 | $ | 2,525,421 | $ | 1,734,606 | |||||||||||||||
| Cost of revenues: (exclusive of items shown separately below) | 898,469 | 617,886 | 1,741,858 | 1,178,422 | |||||||||||||||||||
| Selling, general and administrative expenses | 155,608 | 124,106 | 306,781 | 245,747 | |||||||||||||||||||
| Accretion of environmental liabilities | 3,197 | 2,873 | 6,353 | 5,826 | |||||||||||||||||||
| Depreciation and amortization | 87,868 | 71,592 | 172,166 | 143,755 | |||||||||||||||||||
| Income from operations | 211,170 | 110,001 | 298,263 | 160,856 | |||||||||||||||||||
| Other income (expense), net | 1,265 | (1,480) | 1,969 | (2,708) | |||||||||||||||||||
| Gain on sale of business | 8,864 | — | 8,864 | — | |||||||||||||||||||
| Interest expense, net | (26,256) | (18,051) | (51,273) | (35,969) | |||||||||||||||||||
| Income before provision for income taxes | 195,043 | 90,470 | 257,823 | 122,179 | |||||||||||||||||||
| Provision for income taxes | 46,886 | 23,395 | 64,352 | 33,368 | |||||||||||||||||||
| Net income | $ | 148,157 | $ | 67,075 | $ | 193,471 | $ | 88,811 | |||||||||||||||
| Earnings per share: | |||||||||||||||||||||||
| Basic | $ | 2.73 | $ | 1.23 | $ | 3.56 | $ | 1.63 | |||||||||||||||
| Diluted | $ | 2.71 | $ | 1.22 | $ | 3.54 | $ | 1.62 | |||||||||||||||
| Shares used to compute earnings per share - Basic | 54,318 | 54,529 | 54,362 | 54,625 | |||||||||||||||||||
| Shares used to compute earnings per share - Diluted | 54,597 | 54,854 | 54,639 | 54,945 | |||||||||||||||||||
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)
| June 30, 2022 | December 31, 2021 | ||||||||||
| Current assets: | |||||||||||
| Cash and cash equivalents | $ | 344,631 | $ | 452,575 | |||||||
| Short-term marketable securities | 70,797 | 81,724 | |||||||||
| Accounts receivable, net | 1,005,488 | 792,734 | |||||||||
| Unbilled accounts receivable | 134,173 | 94,963 | |||||||||
| Inventories and supplies | 275,696 | 250,692 | |||||||||
| Prepaid expenses and other current assets | 93,320 | 68,483 | |||||||||
| Total current assets | 1,924,105 | 1,741,171 | |||||||||
| Property, plant and equipment, net | 1,913,145 | 1,863,175 | |||||||||
| Other assets: | |||||||||||
| Operating lease right-of-use assets | 157,048 | 161,797 | |||||||||
| Goodwill | 1,244,655 | 1,227,042 | |||||||||
| Permits and other intangibles, net | 637,254 | 644,912 | |||||||||
| Other | 48,449 | 15,602 | |||||||||
| Total other assets | 2,087,406 | 2,049,353 | |||||||||
| Total assets | $ | 5,924,656 | $ | 5,653,699 | |||||||
| Current liabilities: | |||||||||||
| Current portion of long-term debt | $ | 17,535 | $ | 17,535 | |||||||
| Accounts payable | 409,218 | 359,866 | |||||||||
| Deferred revenue | 94,531 | 83,749 | |||||||||
| Accrued expenses and other current liabilities | 387,047 | 391,414 | |||||||||
| Current portion of closure, post-closure and remedial liabilities | 34,551 | 25,136 | |||||||||
| Current portion of operating lease liabilities | 47,176 | 47,614 | |||||||||
| Total current liabilities | 990,058 | 925,314 | |||||||||
| Other liabilities: | |||||||||||
| Closure and post-closure liabilities, less current portion | 90,618 | 87,088 | |||||||||
| Remedial liabilities, less current portion | 101,484 | 98,752 | |||||||||
| Long-term debt, less current portion | 2,510,963 | 2,517,024 | |||||||||
| Operating lease liabilities, less current portion | 112,854 | 117,991 | |||||||||
| Deferred tax liabilities | 322,108 | 314,853 | |||||||||
| Other long-term liabilities | 79,621 | 78,790 | |||||||||
| Total other liabilities | 3,217,648 | 3,214,498 | |||||||||
Total stockholders’ equity, net | 1,716,950 | 1,513,887 | |||||||||
Total liabilities and stockholders’ equity | $ | 5,924,656 | $ | 5,653,699 | |||||||
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 Six Months Ended | |||||||||||
| June 30, 2022 | June 30, 2021 | ||||||||||
| Cash flows from operating activities: | |||||||||||
| Net income | $ | 193,471 | $ | 88,811 | |||||||
| Adjustments to reconcile net income to net cash from operating activities: | |||||||||||
| Depreciation and amortization | 172,166 | 143,755 | |||||||||
| Allowance for doubtful accounts | 6,927 | 2,109 | |||||||||
| Amortization of deferred financing costs and debt discount | 3,135 | 1,806 | |||||||||
| Accretion of environmental liabilities | 6,353 | 5,826 | |||||||||
| Changes in environmental liability estimates | 1,232 | 445 | |||||||||
| Deferred income taxes | 2,226 | 1,912 | |||||||||
| Other (income) expense, net | (1,969) | 2,708 | |||||||||
| Stock-based compensation | 12,547 | 6,785 | |||||||||
| Gain on sale of business | (8,864) | — | |||||||||
| Environmental expenditures | (7,028) | (6,594) | |||||||||
| Changes in assets and liabilities, net of acquisitions: | |||||||||||
| Accounts receivable and unbilled accounts receivable | (263,584) | (51,285) | |||||||||
| Inventories and supplies | (23,888) | 765 | |||||||||
| Other current and non-current assets | (25,504) | (12,043) | |||||||||
| Accounts payable | 45,748 | 49,880 | |||||||||
| Other current and long-term liabilities | 19,002 | 30,552 | |||||||||
| Net cash from operating activities | 131,970 | 265,432 | |||||||||
| Cash flows used in investing activities: | |||||||||||
| Additions to property, plant and equipment | (148,042) | (91,988) | |||||||||
| Proceeds from sale and disposal of fixed assets | 3,023 | 3,479 | |||||||||
| Acquisitions, net of cash acquired | (68,766) | (22,918) | |||||||||
| Proceeds from sale of business, net of transaction costs | 17,486 | — | |||||||||
| Additions to intangible assets including costs to obtain or renew permits | (836) | (1,750) | |||||||||
| Proceeds from sale of available-for-sale securities | 32,835 | 70,526 | |||||||||
| Purchases of available-for-sale securities | (23,182) | (89,689) | |||||||||
| Net cash used in investing activities | (187,482) | (132,340) | |||||||||
| Cash flows used in financing activities: | |||||||||||
| Change in uncashed checks | 475 | (2,895) | |||||||||
| Tax payments related to withholdings on vested restricted stock | (2,571) | (4,739) | |||||||||
| Repurchases of common stock | (33,694) | (45,409) | |||||||||
| Deferred financing costs paid | (321) | (146) | |||||||||
| Payments on finance leases | (6,552) | (3,577) | |||||||||
| Principal payments on debt | (8,768) | (3,768) | |||||||||
| Net cash used in financing activities | (51,431) | (60,534) | |||||||||
| Effect of exchange rate change on cash | (1,001) | 3,915 | |||||||||
| (Decrease) increase in cash and cash equivalents | (107,944) | 76,473 | |||||||||
| Cash and cash equivalents, beginning of period | 452,575 | 519,101 | |||||||||
| Cash and cash equivalents, end of period | $ | 344,631 | $ | 595,574 | |||||||
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 | $ | 48,104 | $ | 34,164 | |||||||
| Income taxes paid, net of refunds | 29,307 | 32,519 | |||||||||
| Non-cash investing activities: | |||||||||||
| Property, plant and equipment accrued | 21,156 | 8,807 | |||||||||
| Remedial liability assumed in acquisition of property, plant and equipment | 13,073 | — | |||||||||
| ROU assets obtained in exchange for operating lease liabilities | 20,686 | 5,774 | |||||||||
| ROU assets obtained in exchange for finance lease liabilities | 7,646 | 18,704 | |||||||||
Supplemental Segment Data (in thousands)
| For the Three Months Ended | |||||||||||||||||||||||||||||||||||
| Revenue | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||||||||||
| Third Party Revenues | Intersegment Revenues (Expense), net | Direct Revenues | Third Party Revenues | Intersegment Revenues (Expense), net | Direct Revenues | ||||||||||||||||||||||||||||||
| Environmental Services | $ | 1,084,506 | $ | 6,237 | $ | 1,090,743 | $ | 723,147 | $ | 950 | $ | 724,097 | |||||||||||||||||||||||
| Safety-Kleen Sustainability Solutions | 271,727 | (6,237) | 265,490 | 203,232 | (950) | 202,282 | |||||||||||||||||||||||||||||
| Corporate Items | 79 | — | 79 | 79 | — | 79 | |||||||||||||||||||||||||||||
| Total | $ | 1,356,312 | $ | — | $ | 1,356,312 | $ | 926,458 | $ | — | $ | 926,458 | |||||||||||||||||||||||
| For the Six Months Ended | |||||||||||||||||||||||||||||||||||
| Revenue | June 30, 2022 | June 30, 2021 | |||||||||||||||||||||||||||||||||
| Third Party Revenues | Intersegment Revenues (Expense), net | Direct Revenues | Third Party Revenues | Intersegment Revenues (Expense), net | Direct Revenues | ||||||||||||||||||||||||||||||
| Environmental Services | $ | 2,025,304 | $ | 12,884 | $ | 2,038,188 | $ | 1,376,025 | $ | 2,674 | $ | 1,378,699 | |||||||||||||||||||||||
| Safety-Kleen Sustainability Solutions | 499,966 | (12,884) | 487,082 | 358,423 | (2,674) | 355,749 | |||||||||||||||||||||||||||||
| Corporate Items | 151 | — | 151 | 158 | — | 158 | |||||||||||||||||||||||||||||
| Total | $ | 2,525,421 | $ | — | $ | 2,525,421 | $ | 1,734,606 | $ | — | $ | 1,734,606 | |||||||||||||||||||||||
| For the Three Months Ended | For the Six Months Ended | ||||||||||||||||||||||
| Adjusted EBITDA | June 30, 2022 | June 30, 2021 | June 30, 2022 | June 30, 2021 | |||||||||||||||||||
| Environmental Services | $ | 269,341 | $ | 176,041 | $ | 452,943 | $ | 316,295 | |||||||||||||||
| Safety-Kleen Sustainability Solutions | 97,010 | 63,314 | 148,887 | 94,946 | |||||||||||||||||||
| Corporate Items | (57,281) | (51,584) | (112,501) | (94,019) | |||||||||||||||||||
| Total | $ | 309,070 | $ | 187,771 | $ | 489,329 | $ | 317,222 | |||||||||||||||
Clean Harbors • 42 Longwater Drive • PO Box 9149 • Norwell, Massachusetts 02061-9149 • 800.282.0058 • www.cleanharbors.com