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) March 7, 2006

 

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 March 7, 2006, Clean Harbors, Inc. (“the Company”) issued a press release announcing the Company’s results of operations for the fourth quarter and year ended December 31, 2005. A copy of that press release is furnished with this report as Exhibit 99.1.

 

Item 9.01                                                 Financial Statements and Exhibits

 

99.1                           Press Release date March 7, 2006

 

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)

 

 

 

 

March 7, 2006

/s/ James M. Rutledge

 

 

Executive Vice President and

 

Chief Financial and Accounting Officer

 

2


 

Exhibit 99.1

 

Press Release

 

Clean Harbors Reports Record Financial Results
for the Fourth Quarter and Full Year 2005

 

Braintree, MA – March 7, 2006 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, 2005.

 

Clean Harbors increased revenues by approximately 10 percent to $193.7 million in the fourth quarter of 2005 from $176.2 million in the fourth quarter of 2004.  Income from operations was $14.3 million for the fourth quarter of 2005.  This compares with $14.7 million for the fourth quarter of 2004.  Net income attributable to common shareholders was $7.9 million, or $0.43 per diluted share, for the fourth quarter of 2005.  This compares with $7.4 million, or $0.42 per diluted share, in the same period of 2004.  EBITDA (see description below) was $23.9 million in the fourth quarter of 2005, flat with the same period a year earlier.

 

“Clean Harbors delivered another record-setting performance in the fourth quarter of 2005,” stated Alan S. McKim, Chairman and Chief Executive Officer.  “Our revenue reached new highs due to several factors.  First was our involvement in the hurricane clean-up efforts, which contributed approximately $17 million to our fourth-quarter revenues.  Our Site Services operation also performed particularly well during the quarter.  Excluding our Gulf region emergency response work, we grew this segment of our business by approximately eight percent year over year.  Much of this increase can be attributed to our vertical market sales approach and the eight new field offices we opened in North America during 2005.

 

“During the fourth quarter, our Tech Services business also exceeded our expectations.  Utilization at our incinerators neared full capacity for the quarter as we benefited from the MACT investments at our Deer Park facility, as well as favorable timing of the holidays and warm weather conditions.  Landfill volumes also rose nearly 10 percent year over year as we closed contracts for several large facility projects,” McKim continued.

 

Comments on Full-Year 2005

 

Revenues for the year ended December 31, 2005 increased 11% to $711.2 million, compared with $643.2 million for full-year 2004.  Income from operations for full-year 2005 increased 30% to $51.3 million versus $39.4 million in the prior year.  The Company generated net income attributable to common shareholders of $25.3 million, or $1.45 per diluted share, for the full-year 2005.  This compares with a 2004 net loss attributable to common shareholders of $(9.2) million, or $(0.65) per diluted share.  EBITDA (see description below) for 2005 increased 21% to $90.3 million from $74.7 million for 2004.

 

 

1501 Washington Street PO Box 859048 Braintree, Massachusetts 02185-9048 800.282.0058 www.cleanharbors.com

 



 

“Clean Harbors extended its track record of organic growth with another strong performance in 2005,” McKim added.  “Over the past two years alone, we have grown our revenues in excess of $100 million, and our bottom-line enhancements have been even more notable.  We have carefully managed our cost structure, our environmental liabilities and our capital spending during that time, resulting in approximately $40 million in incremental EBITDA over that same two-year period.  Through this positive cash flow and our December 2005 equity offering, we boosted our cash balances and marketable securities to approximately $136 million at year-end 2005 from $48 million at the end of 2004.”

 

In January 2006, approximately $61.3 million of cash was used to redeem 35% of Clean Harbors’ outstanding 11.25% senior secured notes due 2012, including the prepayment penalty and accrued interest relating to the redemption.  This redemption, together with the amendment and restatement of the Company’s credit agreement on December 1, 2005, is expected to save Clean Harbors approximately $8.7 million in cash interest expense in 2006.

 

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 2005 and 2004 (in thousands):

 

 

 

For the three months ended:

 

For the year ended:

 

 

 

December 31,
2005

 

December 31,
2004

 

December 31,
2005

 

December 31,
2004

 

 

 

 

 

 

 

 

 

 

 

Net income

 

$

7,952

 

$

7,469

 

$

25,621

 

$

2,600

 

Accretion of environmental liabilities

 

2,501

 

2,641

 

10,384

 

10,394

 

Depreciation and amortization

 

7,116

 

6,630

 

28,633

 

24,094

 

Loss on refinancing

 

 

 

 

7,099

 

Interest expense, net

 

4,963

 

5,920

 

22,754

 

22,297

 

Provision for income taxes

 

1,595

 

1,380

 

3,495

 

6,043

 

Other non-recurring refinancing-related expenses

 

 

140

 

 

1,326

 

Change in value of embedded derivative

 

 

 

 

1,590

 

Other income

 

(184

)

(314

)

(611

)

(699

)

EBITDA

 

$

23,943

 

$

23,866

 

$

90,276

 

$

74,744

 

 



 

Business Outlook and Financial Guidance

 

“Thanks to the dedication of our talented team, Clean Harbors entered 2006 as the recognized leader in the market for environmental and hazardous waste management services,” McKim concluded.  “We anticipate that we will continue to play a key role in the Gulf Coast clean-up efforts at least through mid-2006.  Throughout the year, we intend to continue growing our Site Services business by opening offices across North America.  At the same time, we will focus on maximizing throughput at our incinerators and landfills to foster high-margin organic growth.  We also will continue to seek selective acquisitions that provide us with opportunities for additional scale and profits.”

 

For the first quarter of 2006, the Company expects to grow revenue by six to nine percent year-over-year to a range of $175 million to $180 million.  The Company currently anticipates that it will generate more than $10 million of this total in Gulf region-related revenues in the first quarter.  The Company expects to generate EBITDA for the first quarter in the range of $20 million to $22 million.

 

Below the EBITDA line, the Company anticipates it will record a loss on refinancing of $(8.3) million in the first quarter of 2006 consisting of a prepayment penalty of $5.9 million and a write-off of deferred financing fees and unamortized discount totaling $2.4 million on the $52.5 million principal amount of redeemed senior secured notes.

 

Conference Call Information

 

Clean Harbors will conduct a conference call for investors to discuss the information contained in this news release today at 9:00 a.m. (ET).  On the call, Chairman, President and Chief Executive Officer Alan McKim and Executive Vice President and Chief Financial Officer James M. Rutledge will discuss Clean Harbors’ financial results, business outlook and growth strategy.

 

Investors who wish to listen to the fourth-quarter webcast should visit the Investor Relations section of the Company’s website at www.cleanharbors.com.  The live conference call also can be accessed by dialing (888) 349-5690 or (706) 643-3945 (conference ID: 4214915) 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 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 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 manage the significant environmental liabilities which it assumed in connection with the CSD acquisition;

                  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.

 

Contacts:

 

 

Bill Geary

 

Jason Fredette

Executive Vice President and General Counsel

 

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:

 

Year Ended

 

 

 

December 31,

 

December 31,

 

 

 

2005

 

2004

 

2005

 

2004

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

193,714

 

$

176,181

 

$

711,170

 

$

643,219

 

Cost of revenues

 

138,592

 

124,701

 

512,582

 

464,838

 

Selling, general and administrative expenses

 

31,179

 

27,528

 

108,312

 

104,509

 

Accretion of environmental liabilities

 

2,501

 

2,641

 

10,384

 

10,394

 

Depreciation and amortization

 

7,116

 

6,630

 

28,633

 

24,094

 

Income from operations

 

14,326

 

14,681

 

51,259

 

39,384

 

Other income (expense)

 

184

 

88

 

611

 

(1,345

)

(Loss) on refinancing

 

 

 

 

(7,099

)

Interest (expense), net

 

(4,963

)

(5,920

)

(22,754

)

(22,297

)

Income before provision for income taxes

 

9,547

 

8,849

 

29,116

 

8,643

 

Provision for income taxes

 

1,595

 

1,380

 

3,495

 

6,043

 

Net income

 

7,952

 

7,469

 

25,621

 

2,600

 

Redemption of Series C Preferred Stock, dividends on Series B and C Preferred Stocks and accretion on Series C Preferred Stock

 

69

 

70

 

279

 

11,798

 

Net income (loss) attributable to common shareholders

 

$

7,883

 

$

7,399

 

$

25,342

 

$

(9,198

)

Earnings (loss) per share:

 

 

 

 

 

 

 

 

 

Basic earnings (loss) attributable to common shareholders

 

$

0.46

 

$

0.52

 

$

1.62

 

$

(0.65

)

Diluted earnings (loss) attributable to common shareholders

 

$

0.43

 

$

0.42

 

$

1.45

 

$

(0.65

)

Weighted average common shares outstanding

 

17,262

 

14,279

 

15,629

 

14,099

 

Weighted average common shares outstanding plus potentially dilutive common shares

 

18,566

 

17,850

 

17,717

 

14,099

 

 



 

CLEAN HARBORS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 

ASSETS

(in thousands)

 

 

 

(Unaudited)

 

 

 

 

 

December
31,

 

December
31,

 

 

 

2005

 

2004

 

Current assets:

 

 

 

 

 

Cash and cash equivalents

 

$

132,449

 

$

31,081

 

Restricted cash

 

3,469

 

 

Marketable securities

 

 

16,800

 

Accounts receivable, net

 

147,659

 

120,886

 

Unbilled accounts receivable

 

7,049

 

5,377

 

Deferred costs

 

4,937

 

4,923

 

Prepaid expenses

 

6,411

 

13,407

 

Supplies inventories

 

12,723

 

10,318

 

Deferred tax asset

 

219

 

188

 

Income tax receivable

 

1,462

 

 

Properties held for sale

 

7,670

 

8,849

 

Total current assets

 

324,048

 

211,829

 

Property, plant and equipment, net

 

178,524

 

180,526

 

 

 

 

 

 

 

Other assets:

 

 

 

 

 

Deferred financing costs

 

9,508

 

8,950

 

Goodwill

 

19,032

 

19,032

 

Permits and other intangibles, net

 

77,803

 

80,463

 

Deferred tax asset

 

1,715

 

488

 

Other

 

3,734

 

3,414

 

 

 

111,792

 

112,347

 

Total assets

 

$

614,364

 

$

504,702

 

 



 

CLEAN HARBORS, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

LIABILITIES AND STOCKHOLDERS’ EQUITY

(in thousands)

 

 

 

(Unaudited)

 

 

 

 

 

December 31,

 

December 31,

 

 

 

2005

 

2004

 

Current liabilities:

 

 

 

 

 

Uncashed checks

 

$

7,982

 

$

6,542

 

Current portion of long-term debt

 

52,500

 

 

Current portion of capital lease obligations

 

1,893

 

1,522

 

Accounts payable

 

71,372

 

70,363

 

Accrued disposal costs

 

3,109

 

3,032

 

Deferred revenue

 

21,784

 

22,060

 

Other accrued expenses

 

49,779

 

41,054

 

Current portion of closure, post-closure and remedial liabilities

 

10,817

 

14,258

 

Income taxes payable

 

4,458

 

2,302

 

Total current liabilities

 

223,694

 

161,133

 

Other liabilities:

 

 

 

 

 

Closure and post-closure liabilities, less current portion

 

20,728

 

22,721

 

Remedial liabilities, less current portion

 

139,144

 

144,289

 

Long-term obligations, less current maturities

 

95,790

 

148,122

 

Capital lease obligations, less current portion

 

4,108

 

3,485

 

Other long-term liabilities

 

14,421

 

13,298

 

Accrued pension cost

 

825

 

616

 

Total other liabilities

 

275,016

 

332,531

 

Total stockholders’ equity, net

 

115,654

 

11,038

 

Total liabilities and stockholders’ equity

 

$

614,364

 

$

504,702