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) November 7, 2005
CLEAN HARBORS, INC.
(Exact name of registrant as specified in its charter)
Massachusetts |
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0-16379 |
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04-2997780 |
(State or other
jurisdiction |
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(Commission |
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(IRS Employer |
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1501
Washington Street, Braintree, |
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02184-7535 |
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(Address of principal executive offices) |
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(Zip Code) |
Registrants telephone number, including area code (781) 849-1800 ext. 4454
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:
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Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
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Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
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Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
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Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Item 2.02 Results of Operations and Financial Condition.
On November 7, 2005, Clean Harbors, Inc. (the Company) issued a press release announcing the Companys results of operations for the three and nine-month periods ended September 30, 2005. A copy of that press release is furnished with this Report as Exhibit 99.1.
99.1 Press Release dated November 7, 2005.
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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.
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Clean Harbors, Inc. |
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(Registrant) |
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November 7, 2005 |
/s/ James M. Rutledge |
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Executive Vice President and |
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Chief Financial Officer |
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Exhibit 99.1
Press Release
Clean Harbors Announces Third-Quarter 2005 Financial Results
Strong Revenue Growth Drives Double-Digit Increase in Profitability
Braintree, MA November 7, 2005 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 third quarter ended September 30, 2005.
Revenues grew approximately10 percent to $178.6 million in the third quarter of 2005 from $162.7 million in the third quarter of 2004. Income from operations rose 10 percent to $12.3 million from $11.2 million for the third quarter of 2004. Net income increased 23 percent to $5.5 million, or $0.31 per diluted share, for the third quarter of 2005, compared with $4.4 million, or $0.25 per diluted share, in the comparable period in 2004.
EBITDA (see description below) increased by 13 percent to $22.1 million in the third quarter of 2005 from $19.6 million in the same period a year earlier.
Comments on the Third Quarter
Clean Harbors delivered another quarter of solid revenue generation and profitability improvement, stated Alan S. McKim, Chairman and Chief Executive Officer. Our Site Services business fueled top-line growth due in part to emergency response work related to the Gulf Coast hurricanes. On the technical side of our business, utilization at our incinerators remained healthy. Landfill volumes rose sequentially from the second quarter, but remained at relatively low levels in comparison with the year-ago quarter.
Although Hurricanes Katrina and Rita created sizeable long-term opportunities for Clean Harbors, their effect on our business during the third quarter was somewhat mixed, McKim said. Activity related to the hurricanes generated approximately $7 million in revenue during the quarter. However, our initial work related to Hurricane Katrina consisted mainly of non-traditional, lower-margin services, such as setting up rescue operations centers, supplying fuel and conducting non-hazardous cleanup. In addition, dozens of Clean Harbors employees participated in non-billable humanitarian search and rescue missions immediately following Katrina.
When Hurricane Rita struck, we were forced to halt many of our emergency response activities in the Gulf region, to ensure the safety of our personnel, said McKim. We also shut down four Clean Harbors disposal facilities including our Deer Park, Texas site for nearly a week, thereby decreasing operating income by $1.4 million. Looking ahead, we expect to see a more positive financial impact from our hurricane-related work in the Gulf Coast region, with our Site Services business playing an important role in what will be a major long-term recovery effort.
1501 Washington Street PO Box 859048 Braintree, Massachusetts 02185-9048 800.282.0058 www.cleanharbors.com
McKim said, Operationally, our focus on improving efficiencies and reducing costs continues. On October 1, we transitioned the remainder of our Canadian operations to the WIN software platform. Based on our experience with WIN in our U.S. operations, we expect that this will enable us to manage our Canadian workflow and resources more cost effectively.
Non-GAAP Third-Quarter Results
Clean Harbors reports EBITDA results, which are non-GAAP financial measures, as a complement to results provided in accordance with generally accepted accounting principles in the United States (GAAP) and believes that such information provides additional useful information to investors since the Companys loan covenants are based upon levels of EBITDA achieved. The Company defines EBITDA in accordance with its outstanding credit agreement, as described in the following reconciliation showing the differences between reported income from operations and EBITDA for 2005 and 2004 (in thousands):
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For the three months ended: |
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For the nine months ended: |
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September 30, |
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September 30, |
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September 30, |
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September 30, |
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Income from operations |
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$ |
12,311 |
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$ |
11,239 |
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$ |
36,933 |
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$ |
24,459 |
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Accretion of environmental liabilities |
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2,633 |
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2,546 |
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7,883 |
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7,753 |
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Depreciation and amortization |
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7,163 |
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5,803 |
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21,517 |
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17,464 |
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Refinancing transaction costs and severance |
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60 |
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1,202 |
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EBITDA |
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$ |
22,107 |
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$ |
19,648 |
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$ |
66,333 |
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$ |
50,878 |
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Business Outlook & Financial Guidance
We enter the final quarter of 2005 with substantial earnings and revenue momentum, McKim said. The clean-up and reconstruction efforts in the Gulf region provide Clean Harbors with some longer-term upside potential. We are now transitioning to more of our traditional services in the Gulf region, which should generate higher margins and profitability than our initial emergency response work in the area. For the fourth quarter, we believe we will generate more than $10 million in Gulf region-related revenues. The full extent of our involvement is not yet known, however, as many companies are only just beginning to assess the full extent of the damages they sustained as a result of the hurricanes.
Overall, we will continue to focus on capturing large-scale facility projects, expanding our Site Services business and implementing ongoing cost management initiatives. At the same time, we will continue to
pursue selective acquisition opportunities that will be accretive to our business, McKim concluded.
Based on year-to-date results and current market conditions, the Company expects revenues for the fourth quarter of 2005 to be in a range of $171 million to $176 million, and EBITDA to be in the range of $20 million to $22 million. For the full year 2005, the Company expects to grow revenue by 7 to 8 percent over 2004 to a range of $689 million to $694 million. EBITDA for the full year 2005 is expected to grow 16 to 18 percent over 2004 to a range of $86.4 million to $88.4 million.
Conference Call Information
Clean Harbors will conduct a conference call for investors to discuss the information contained in this news release tomorrow, November 8, 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.
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 managements 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. Furthermore, all financial information in this press release is unaudited, and may change materially upon completion of the audit of the Companys financial statements. A variety of factors beyond the control of the Company affect the Companys performance, including, but not limited to:
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 Companys 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 Companys 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;
The effects of conditions in the financial services industry on the availability of capital and financing;
The Companys ability to manage the significant environmental liabilities, which it assumed in connection with the CSD acquisition; and
The availability and costs of liability insurance and financial assurance required by governmental entities relating to our facilities.
Any of the above factors and numerous others not listed nor foreseen may adversely impact the Companys financial performance. Additional information on the potential factors that could affect the Companys actual results of operations is included in its filings with the Securities and Exchange Commission, and its subsequent reports on Form 10-Q, which are filed with the SEC and the Annual Report on Form 10-K/A for the fiscal year ended December 31, 2004, which the Company filed on April 29, 2005, and subsequent quarterly and/or other reports filed with the SEC since then, which may be viewed on the Investor portal of the Companys Web Page at www.cleanharbors.com.
Contacts:
Bill Geary |
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Jason Fredette |
Executive Vice President and General Counsel |
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Associate Vice President |
Clean Harbors, Inc. |
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Sharon Merrill Associates, Inc. |
781-849-1800 |
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617-542-5300 |
InvestorRelations@cleanharbors.com |
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clhb@investorrelations.com |
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(in thousands except per share amounts)
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Three Months Ended |
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Nine Months Ended |
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2005 |
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2004 |
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2005 |
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2004 |
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Revenues |
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$ |
178,580 |
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$ |
162,650 |
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$ |
517,456 |
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$ |
467,038 |
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Cost of revenues (exclusive of items shown separately below) |
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129,009 |
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116,835 |
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373,990 |
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340,137 |
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Selling, general and administrative expenses |
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27,464 |
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26,227 |
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77,133 |
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77,225 |
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Accretion of environmental liabilities |
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2,633 |
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2,546 |
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7,883 |
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7,753 |
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Depreciation and amortization |
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7,163 |
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5,803 |
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21,517 |
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17,464 |
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Income from operations |
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12,311 |
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11,239 |
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36,933 |
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24,459 |
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Other income (expense), net |
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(83 |
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(85 |
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427 |
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(1,189 |
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Loss on refinancing |
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(7,099 |
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Interest (expense), net |
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(5,884 |
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(5,576 |
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(17,791 |
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(16,377 |
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Income (loss) before provision for income taxes |
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6,344 |
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5,578 |
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19,569 |
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(206 |
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Provision for income taxes |
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887 |
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1,137 |
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1,900 |
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4,663 |
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Net income (loss) |
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5,457 |
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4,441 |
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17,669 |
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(4,869 |
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Redemption of Series C Preferred Stock and dividends and accretion on preferred stocks |
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70 |
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112 |
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210 |
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11,728 |
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Net income (loss) attributable to common shareholders |
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$ |
5,387 |
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$ |
4,329 |
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$ |
17,459 |
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$ |
(16,597 |
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Earnings (loss) per share: |
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Basic earnings (loss) attributable to common shareholders |
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$ |
0.35 |
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$ |
0.31 |
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$ |
1.16 |
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$ |
(1.18 |
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Diluted earnings (loss) attributable to common shareholders |
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$ |
0.31 |
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$ |
0.25 |
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$ |
1.02 |
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$ |
(1.18 |
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Weighted average common shares outstanding |
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15,416 |
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14,108 |
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15,081 |
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14,038 |
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Weighted average common shares outstanding plus potentially dilutive common shares |
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17,644 |
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17,446 |
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17,357 |
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14,038 |
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CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
ASSETS
( dollars in thousands)
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September 30, |
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December 31, |
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(unaudited) |
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Current assets: |
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Cash and cash equivalents |
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$ |
47,141 |
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$ |
31,081 |
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Marketable securities |
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16,800 |
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Accounts receivable, net |
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135,782 |
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120,886 |
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Unbilled accounts receivable |
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8,531 |
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5,377 |
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Deferred costs |
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4,367 |
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4,923 |
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Prepaid expenses |
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7,183 |
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13,407 |
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Supplies inventories |
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11,754 |
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10,318 |
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Deferred tax asset |
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194 |
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188 |
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Income tax receivable |
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1,468 |
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Properties held for sale |
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8,934 |
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8,849 |
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Total current assets |
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225,354 |
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211,829 |
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Property, plant and equipment, net |
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178,203 |
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180,526 |
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Other assets: |
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Deferred financing costs |
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7,938 |
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8,950 |
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Goodwill |
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19,032 |
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19,032 |
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Permits and other intangibles, net |
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78,428 |
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80,463 |
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Deferred tax asset |
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507 |
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488 |
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Other |
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3,444 |
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3,414 |
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109,349 |
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112,347 |
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Total assets |
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$ |
512,906 |
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$ |
504,702 |
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CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
LIABILITIES AND STOCKHOLDERS EQUITY
(dollars in thousands)
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September 30, |
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December 31, |
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(unaudited) |
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Current liabilities: |
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Uncashed checks |
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$ |
8,636 |
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$ |
6,542 |
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Current portion of capital lease obligations |
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1,870 |
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1,522 |
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Accounts payable |
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65,397 |
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70,363 |
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Accrued disposal costs |
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3,168 |
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3,032 |
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Deferred revenue |
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19,537 |
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22,060 |
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Other accrued expenses |
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39,001 |
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41,054 |
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Current portion of closure, post-closure and remedial liabilities |
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13,710 |
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14,258 |
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Income taxes payable |
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2,421 |
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2,302 |
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Total current liabilities |
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153,740 |
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161,133 |
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Other liabilities: |
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Closure and post-closure liabilities, less current portion |
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19,411 |
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22,721 |
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Remedial liabilities, less current portion |
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137,991 |
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144,289 |
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Long-term obligations |
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148,246 |
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148,122 |
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Capital lease obligations, less current portion |
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4,480 |
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3,485 |
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Other long-term liabilities |
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13,788 |
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13,298 |
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Accrued pension cost |
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634 |
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616 |
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Total other liabilities |
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324,550 |
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332,531 |
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Total stockholders equity, net |
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34,616 |
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11,038 |
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Total liabilities and stockholders equity |
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$ |
512,906 |
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$ |
504,702 |
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