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

 

0-16379

 

04-2997780

(State or other jurisdiction
of incorporation)

 

(Commission
File Number)

 

(IRS Employer
Identification No.)

 

 

 

 

 

1501 Washington Street, Braintree,
Massachusetts

 

02184-7535

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s 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:

 

o

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o

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 Company’s 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.

 

2



 

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)

 

 

 

 

November 7, 2005

/s/ James M. Rutledge

 

 

Executive Vice President and

 

Chief Financial Officer

 

3


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 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 income from operations and EBITDA for 2005 and 2004 (in thousands):

 

 

 

For the three months ended:

 

For the nine months ended:

 

 

 

September 30,
2005

 

September 30,
2004

 

September 30,
2005

 

September  30,
2004

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

$

12,311

 

$

11,239

 

$

36,933

 

$

24,459

 

Accretion of environmental liabilities

 

2,633

 

2,546

 

7,883

 

7,753

 

Depreciation and amortization

 

7,163

 

5,803

 

21,517

 

17,464

 

Refinancing transaction costs and severance

 

 

60

 

 

1,202

 

EBITDA

 

$

22,107

 

$

19,648

 

$

66,333

 

$

50,878

 

 

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.

 

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 48 waste management facilities, including nine landfills, five incineration locations and seven wastewater treatment centers, the Company provides essential services to over 45,000 customers, including more than 175 Fortune 500 companies, thousands of smaller private entities and numerous federal, state and local governmental agencies.  Headquartered in Braintree, 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.  Furthermore, all financial information in this press release is unaudited, and may change materially upon completion of the audit of the Company’s financial statements.  A variety of factors beyond the control of the Company affect the Company’s 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 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;

 

                  The effects of conditions in the financial services industry on the availability of capital and financing;

 

                  The Company’s 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 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, 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 Company’s Web Page at www.cleanharbors.com.

 

Contacts:

Bill Geary

 

Jason Fredette

Executive Vice President and General Counsel

 

Associate Vice President

Clean Harbors, Inc.

 

Sharon Merrill Associates, Inc.

781-849-1800

 

617-542-5300

InvestorRelations@cleanharbors.com

 

clhb@investorrelations.com

 



 

CLEAN HARBORS, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

Unaudited

(in thousands except per share amounts)

 

 

 

Three Months Ended
September 30,

 

Nine Months Ended
September 30,

 

 

 

2005

 

2004

 

2005

 

2004

 

Revenues

 

$

178,580

 

$

162,650

 

$

517,456

 

$

467,038

 

 

 

 

 

 

 

 

 

 

 

Cost of revenues (exclusive of items shown separately below)

 

129,009

 

116,835

 

373,990

 

340,137

 

 

 

 

 

 

 

 

 

 

 

Selling, general and administrative expenses

 

27,464

 

26,227

 

77,133

 

77,225

 

 

 

 

 

 

 

 

 

 

 

Accretion of environmental liabilities

 

2,633

 

2,546

 

7,883

 

7,753

 

 

 

 

 

 

 

 

 

 

 

Depreciation and amortization

 

7,163

 

5,803

 

21,517

 

17,464

 

 

 

 

 

 

 

 

 

 

 

Income from operations

 

12,311

 

11,239

 

36,933

 

24,459

 

 

 

 

 

 

 

 

 

 

 

Other income (expense), net

 

(83

)

(85

)

427

 

(1,189

)

 

 

 

 

 

 

 

 

 

 

Loss on refinancing

 

 

 

 

(7,099

)

 

 

 

 

 

 

 

 

 

 

Interest (expense), net

 

(5,884

)

(5,576

)

(17,791

)

(16,377

)

 

 

 

 

 

 

 

 

 

 

Income (loss) before provision for income taxes

 

6,344

 

5,578

 

19,569

 

(206

)

 

 

 

 

 

 

 

 

 

 

Provision for income taxes

 

887

 

1,137

 

1,900

 

4,663

 

 

 

 

 

 

 

 

 

 

 

Net income (loss)

 

5,457

 

4,441

 

17,669

 

(4,869

)

 

 

 

 

 

 

 

 

 

 

Redemption of Series C Preferred Stock and dividends and accretion on preferred stocks

 

70

 

112

 

210

 

11,728

 

 

 

 

 

 

 

 

 

 

 

Net income (loss) attributable to common shareholders

 

$

5,387

 

$

4,329

 

$

17,459

 

$

(16,597

)

 

 

 

 

 

 

 

 

 

 

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Basic earnings (loss) attributable to common shareholders

 

$

0.35

 

$

0.31

 

$

1.16

 

$

(1.18

)

Diluted earnings (loss) attributable to common shareholders

 

$

0.31

 

$

0.25

 

$

1.02

 

$

(1.18

)

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding

 

15,416

 

14,108

 

15,081

 

14,038

 

 

 

 

 

 

 

 

 

 

 

Weighted average common shares outstanding plus potentially dilutive common shares

 

17,644

 

17,446

 

17,357

 

14,038

 

 



 

CLEAN HARBORS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

ASSETS

( dollars in thousands)

 

 

 

September 30,
2005

 

December 31,
2004

 

 

 

(unaudited)

 

 

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

47,141

 

$

31,081

 

Marketable securities

 

 

16,800

 

Accounts receivable, net

 

135,782

 

120,886

 

Unbilled accounts receivable

 

8,531

 

5,377

 

Deferred costs

 

4,367

 

4,923

 

Prepaid expenses

 

7,183

 

13,407

 

Supplies inventories

 

11,754

 

10,318

 

Deferred tax asset

 

194

 

188

 

Income tax receivable

 

1,468

 

 

Properties held for sale

 

8,934

 

8,849

 

Total current assets

 

225,354

 

211,829

 

 

 

 

 

 

 

Property, plant and equipment, net

 

178,203

 

180,526

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Deferred financing costs

 

7,938

 

8,950

 

Goodwill

 

19,032

 

19,032

 

Permits and other intangibles, net

 

78,428

 

80,463

 

Deferred tax asset

 

507

 

488

 

Other

 

3,444

 

3,414

 

 

 

109,349

 

112,347

 

Total assets

 

$

512,906

 

$

504,702

 

 



 

CLEAN HARBORS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

(dollars in thousands)

 

 

 

September 30,
2005

 

December 31,
2004

 

 

 

(unaudited)

 

 

 

Current liabilities:

 

 

 

 

 

Uncashed checks

 

$

8,636

 

$

6,542

 

Current portion of capital lease obligations

 

1,870

 

1,522

 

Accounts payable

 

65,397

 

70,363

 

Accrued disposal costs

 

3,168

 

3,032

 

Deferred revenue

 

19,537

 

22,060

 

Other accrued expenses

 

39,001

 

41,054

 

Current portion of closure, post-closure and remedial liabilities

 

13,710

 

14,258

 

Income taxes payable

 

2,421

 

2,302

 

Total current liabilities

 

153,740

 

161,133

 

Other liabilities:

 

 

 

 

 

Closure and post-closure liabilities, less current portion

 

19,411

 

22,721

 

Remedial liabilities, less current portion

 

137,991

 

144,289

 

Long-term obligations

 

148,246

 

148,122

 

Capital lease obligations, less current portion

 

4,480

 

3,485

 

Other long-term liabilities

 

13,788

 

13,298

 

Accrued pension cost

 

634

 

616

 

Total other liabilities

 

324,550

 

332,531

 

Total stockholders’ equity, net

 

34,616

 

11,038

 

Total liabilities and stockholders’ equity

 

$

512,906

 

$

504,702