CLH Clean Harbors Inc

• Posts 12% Q3 Revenue Increase to $1.53 Billion, Led by Strength in Field Services
• Generates 26% Q3 Net Income Growth to $115.2 Million, or EPS of $2.12
• Achieves 18% Growth in Q3 Adjusted EBITDA to $301.8 Million with Margin of 19.7%
• Revises Full-Year 2024 Adjusted EBITDA and Adjusted Free Cash Flow Guidance
• Commercial Launch of Kimball, Nebraska Incinerator Planned for November

Clean Harbors, Inc. (“Clean Harbors” or the “Company”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the third quarter ended September 30, 2024.

“We delivered profitable growth in both our operating segments while improving our consolidated Adjusted EBITDA margin by 100 basis points from the same period a year ago,” said Mike Battles, Co-Chief Executive Officer. “Underlying demand remained healthy across our Environmental Services (ES) segment. Despite higher Adjusted EBITDA, our Safety-Kleen Sustainability Solutions (SKSS) segment results reflected softer-than-expected demand and pricing of base oil and lubricants throughout the quarter with a more meaningful decline in September. We continue to prioritize safety with industry-leading results, achieving a Total Recordable Incident Rate (TRIR) of 0.69 year-to-date through September.”

Third-Quarter 2024 Results

Revenues grew 12% to $1.53 billion, compared with $1.37 billion in the same period of 2023. Income from operations increased 25% to $192.3 million, compared with $154.4 million in the third quarter of 2023.

Net income was up 26% to $115.2 million, or $2.12 per diluted share, compared with $91.3 million, or $1.68 per diluted share, for the same period in 2023.

Adjusted EBITDA (see description and reconciliation below) grew 18% to $301.8 million, compared with $255.0 million in the same period of 2023.

Third-Quarter 2024 Segment Review

“Our ES segment achieved a 13% increase in revenue and 15% growth in Adjusted EBITDA, which generated a 40-basis point improvement in segment margin. The third quarter marks our tenth consecutive quarter of year-over-year margin improvement in the ES segment,” said Eric Gerstenberg, Co-Chief Executive Officer. “ES growth was led by Field Services, which grew 68%, reflecting the HEPACO acquisition earlier this year and healthy organic growth in our legacy business. Technical Services revenue grew 8% on higher network volumes and pricing. Incineration utilization was 89% for the quarter, up from 86% in the same period a year ago. Average incineration pricing increased 6%. Safety-Kleen Environmental Services posted another consistent performance with 8% revenue growth in the ES segment. Our Industrial Services business experienced a difficult environment in Q3 resulting from weakness in the U.S. refinery space, where we saw work deferred and fall turnarounds scaled back given industry challenges in that vertical.”

“SKSS results improved from the third quarter a year ago. Revenues grew 6%, reflecting the contribution of our Noble Oil acquisition in March, while Adjusted EBITDA increased 32%,” said Battles. “However, current supply overhangs in the base oil market resulted in lower demand and pricing pressure, which caused a weaker-than-anticipated EBITDA performance this quarter.”

Business Outlook and Financial Guidance

“As we enter the final quarter of 2024, the overall demand environment in North America is healthy, and the outlook for our ES segment is positive,” Gerstenberg said. “Favorable market dynamics, including reshoring, infrastructure spending, PFAS, and other regulatory changes should continue to fuel growth opportunities for Clean Harbors. We are meeting these opportunities with new capacity and capabilities. The commercial launch of our new incinerator in Kimball, Nebraska is scheduled for November, providing an essential outlet for additional hazardous waste volumes as it ramps up over the next 12-18 months. On the services side, the addition of HEPACO’s emergency response capabilities creates a foundation for continued growth in Field Services. We also expect our Technical Services and SK Environmental businesses to grow steadily, feeding volumes into Kimball and the other facilities in our network. In Industrial Services, we are taking actions to counter the weakness in fall turnarounds and look to return that business to revenue growth in 2025.”

“Within SKSS, we remain committed to stabilizing our business amidst the current pricing challenges and weak demand for base oil. We are taking decisive actions to reduce production and collection costs while also pursuing growth initiatives in Group III, blended sales, and our partnership with Castrol. These programs have the potential to reduce the carbon footprints of businesses significantly, and we believe they will gain traction as more customers look to Safety-Kleen as their sustainability partner in the coming years,” Battles concluded. “Overall, despite some market obstacles related to base oil and refining customers, we expect to end 2024 with strong momentum across our network of disposal facilities and service offerings giving us a positive trajectory into 2025.”

Based on its third-quarter performance and current forecast, Clean Harbors revised its full-year 2024 guidance and now expects:

• Adjusted EBITDA in the range of $1.10 billion to $1.12 billion, or a midpoint of $1.11 billion, which represents 10% growth year-over-year. This Adjusted EBITDA range is based on anticipated GAAP net income in the range of $375 million to $395 million.
• Adjusted free cash flow in the range of $280 million to $320 million, or a midpoint of $300 million, which includes spending related to the Kimball incinerator and the Company’s Baltimore expansion. The Company is revising this range due to its new Adjusted EBITDA guidance and increased short-term working capital levels. This new range is based on anticipated net cash from operating activities in the range of $680 million to $750 million.

Non-GAAP Results

Clean Harbors reports Adjusted EBITDA, which is a non-GAAP financial measure and should not be considered 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 because the Company’s management routinely evaluates the performance of its businesses based upon levels of Adjusted EBITDA, which excludes certain expenses relating to transactions not reflective of our core operations, and because the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved. The Company defines Adjusted EBITDA consistent with its existing revolving credit agreement, as described in the following reconciliation showing the differences between reported GAAP net income and Adjusted EBITDA for the three and nine months ended September 30, 2024 and 2023 (in thousands, except percentages):

 

Three Months Ended

 

Nine Months Ended

 

September 30, 2024

 

September 30, 2023

 

September 30, 2024

 

September 30, 2023

Net income

$

115,213

 

 

$

91,340

 

 

$

318,325

 

 

$

279,507

 

Accretion of environmental liabilities

 

3,618

 

 

 

3,388

 

 

 

10,139

 

 

 

10,281

 

Stock-based compensation

 

5,837

 

 

 

4,291

 

 

 

20,690

 

 

 

14,809

 

Depreciation and amortization

 

100,063

 

 

 

92,970

 

 

 

295,632

 

 

 

267,425

 

Other expense (income), net

 

1,123

 

 

 

(334

)

 

 

2,431

 

 

 

833

 

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

2,362

 

Interest expense, net of interest income

 

35,779

 

 

 

29,696

 

 

 

100,767

 

 

 

80,400

 

Provision for income taxes

 

40,181

 

 

 

33,666

 

 

 

111,741

 

 

 

102,044

 

Adjusted EBITDA

$

301,814

 

 

$

255,017

 

 

$

859,725

 

 

$

757,661

 

Adjusted EBITDA Margin

 

19.7

%

 

 

18.7

%

 

 

19.3

%

 

 

18.6

%

Adjusted Free Cash Flow Reconciliation

Clean Harbors reports adjusted free cash flow, which is a non-GAAP financial measure that should not be considered an alternative to net cash from operating activities or other measurements under GAAP. The Company considers adjusted free cash flow 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. 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 reported GAAP net cash from operating activities and adjusted free cash flow is as follows for the three and nine months ended September 30, 2024 and 2023 (in thousands):

 

Three Months Ended

 

Nine Months Ended

 

September 30, 2024

 

September 30, 2023

 

September 30, 2024

 

September 30, 2023

Adjusted free cash flow

 

 

 

 

 

 

 

Net cash from operating activities

$

239,239

 

 

$

220,119

 

 

$

473,833

 

 

$

455,692

 

Additions to property, plant and equipment

 

(96,803

)

 

 

(107,608

)

 

 

(369,826

)

 

 

(311,906

)

Proceeds from sale and disposal of fixed assets

 

2,058

 

 

 

2,185

 

 

 

6,353

 

 

 

5,129

 

Adjusted free cash flow

$

144,494

 

 

$

114,696

 

 

$

110,360

 

 

$

148,915

 

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, 2024

Projected net income

$375

to

$395

Adjustments:

 

 

 

Accretion of environmental liabilities

15

to

14

Stock-based compensation

27

to

30

Depreciation and amortization

405

to

395

Interest expense, net

145

to

140

Provision for income taxes

133

to

146

Projected Adjusted EBITDA

$1,100

to

$1,120

Adjusted Free Cash Flow Guidance Reconciliation

An itemized reconciliation between projected GAAP net cash from operating activities and projected adjusted free cash flow is as follows (in millions):

 

For the Year Ending December 31, 2024

Projected net cash from operating activities

$680

to

$750

Additions to property, plant and equipment

(410)

to

(440)

Proceeds from sale and disposal of fixed assets

10

to

10

Projected adjusted free cash flow

$280

to

$320

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 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 877.709.8155 or 201.689.8881 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, manufacturing and refining, 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 a leading provider of parts washers and environmental services to commercial, industrial and automotive customers, as well as North America’s largest re-refiner and recycler of used oil. 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,” “potential” or similar expressions. Such statements may include, but are not limited to, statements about the Company’s future financial and operating results, plans, strategy, objectives and goals, cost management initiatives, contingent liabilities, liquidity, business and market conditions, customer demand, acquisitions, growth opportunities, expectations, and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors’ management as of the date of this press release 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 reports on 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.

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

 

 

Three Months Ended

 

Nine Months Ended

 

September 30,

 

September 30,

 

 

2024

 

 

 

2023

 

 

 

2024

 

 

 

2023

 

Revenues

$

1,529,422

 

 

$

1,365,696

 

 

$

4,458,836

 

 

$

4,070,983

 

Cost of revenues (exclusive of items shown separately below)

 

1,055,599

 

 

 

943,951

 

 

 

3,062,211

 

 

 

2,822,977

 

Selling, general and administrative expenses

 

177,846

 

 

 

171,019

 

 

 

557,590

 

 

 

505,154

 

Accretion of environmental liabilities

 

3,618

 

 

 

3,388

 

 

 

10,139

 

 

 

10,281

 

Depreciation and amortization

 

100,063

 

 

 

92,970

 

 

 

295,632

 

 

 

267,425

 

Income from operations

 

192,296

 

 

 

154,368

 

 

 

533,264

 

 

 

465,146

 

Other (expense) income, net

 

(1,123

)

 

 

334

 

 

 

(2,431

)

 

 

(833

)

Loss on early extinguishment of debt

 

—

 

 

 

—

 

 

 

—

 

 

 

(2,362

)

Interest expense, net

 

(35,779

)

 

 

(29,696

)

 

 

(100,767

)

 

 

(80,400

)

Income before provision for income taxes

 

155,394

 

 

 

125,006

 

 

 

430,066

 

 

 

381,551

 

Provision for income taxes

 

40,181

 

 

 

33,666

 

 

 

111,741

 

 

 

102,044

 

Net income

$

115,213

 

 

$

91,340

 

 

$

318,325

 

 

$

279,507

 

Earnings per share:

 

 

 

 

 

 

 

Basic

$

2.14

 

 

$

1.69

 

 

$

5.90

 

 

$

5.17

 

Diluted

$

2.12

 

 

$

1.68

 

 

$

5.87

 

 

$

5.14

 

Shares used to compute earnings per share - Basic

 

53,951

 

 

 

54,122

 

 

 

53,936

 

 

 

54,097

 

Shares used to compute earnings per share - Diluted

 

54,229

 

 

 

54,419

 

 

 

54,229

 

 

 

54,411

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands)

 

 

September 30, 2024

 

December 31, 2023

Current assets:

(unaudited)

 

 

Cash and cash equivalents

$

512,371

 

 

$

444,698

 

Short-term marketable securities

 

82,371

 

 

106,101

Accounts receivable, net

 

1,100,660

 

 

 

983,111

 

Unbilled accounts receivable

 

204,308

 

 

 

107,859

 

Inventories and supplies

 

376,564

 

 

 

327,511

 

Prepaid expenses and other current assets

 

78,204

 

 

 

82,939

 

Total current assets

 

2,354,478

 

 

 

2,052,219

 

Property, plant and equipment, net

 

2,452,312

 

 

 

2,193,318

 

Other assets:

 

 

 

Operating lease right-of-use assets

 

246,061

 

 

 

187,060

 

Goodwill

 

1,485,065

 

 

 

1,287,736

 

Permits and other intangibles, net

 

708,935

 

 

 

602,797

 

Other long-term assets

 

59,159

 

 

 

59,739

 

Total other assets

 

2,499,220

 

 

 

2,137,332

 

Total assets

$

7,306,010

 

 

$

6,382,869

 

 

 

 

 

Current liabilities:

 

 

 

Current portion of long-term debt

$

15,102

 

 

$

10,000

 

Accounts payable

 

504,206

 

 

 

451,806

 

Deferred revenue

 

103,291

 

 

 

95,230

 

Accrued expenses and other current liabilities

 

398,236

 

 

 

397,157

 

Current portion of closure, post-closure and remedial liabilities

 

30,477

 

 

 

26,914

 

Current portion of operating lease liabilities

 

70,539

 

 

 

56,430

 

Total current liabilities

 

1,121,851

 

 

 

1,037,537

 

Other liabilities:

 

 

 

Closure and post-closure liabilities, less current portion

 

105,375

 

 

 

105,044

 

Remedial liabilities, less current portion

 

94,384

 

 

 

97,885

 

Long-term debt, less current portion

 

2,773,659

 

 

 

2,291,717

 

Operating lease liabilities, less current portion

 

179,040

 

 

 

131,743

 

Deferred tax liabilities

 

356,150

 

 

 

353,107

 

Other long-term liabilities

 

147,241

 

 

 

118,330

 

Total other liabilities

 

3,655,849

 

 

 

3,097,826

 

Total stockholders’ equity, net

 

2,528,310

 

 

 

2,247,506

 

Total liabilities and stockholders’ equity

$

7,306,010

 

 

$

6,382,869

 

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)

 

 

Nine Months Ended

 

September 30, 2024

 

September 30, 2023

Cash flows from operating activities:

 

 

 

Net income

$

318,325

 

 

$

279,507

 

Adjustments to reconcile net income to net cash from operating activities:

 

 

 

Depreciation and amortization

 

295,632

 

 

 

267,425

 

Allowance for doubtful accounts

 

5,674

 

 

 

2,620

 

Amortization of deferred financing costs and debt discount

 

4,623

 

 

 

4,036

 

Accretion of environmental liabilities

 

10,139

 

 

 

10,281

 

Changes in environmental liability estimates

 

4,347

 

 

 

3,258

 

Deferred income taxes

 

(418

)

 

 

(356

)

Other expense, net

 

2,431

 

 

 

833

 

Stock-based compensation

 

20,690

 

 

 

14,809

 

Loss on early extinguishment of debt

 

—

 

 

 

2,362

 

Environmental expenditures

 

(19,679

)

 

 

(24,064

)

Changes in assets and liabilities, net of acquisitions:

 

 

 

Accounts receivable and unbilled accounts receivable

 

(145,647

)

 

 

(46,445

)

Inventories and supplies

 

(39,673

)

 

 

12,691

 

Other current and long-term assets

 

(47,826

)

 

 

(18,190

)

Accounts payable

 

30,004

 

 

 

(40,013

)

Other current and long-term liabilities

 

35,211

 

 

 

(13,062

)

Net cash from operating activities

 

473,833

 

 

 

455,692

 

Cash flows used in investing activities:

 

 

 

Additions to property, plant and equipment

 

(369,826

)

 

 

(311,906

)

Proceeds from sale and disposal of fixed assets

 

6,353

 

 

 

5,129

 

Acquisitions, net of cash acquired

 

(474,011

)

 

 

(119,596

)

Proceeds from sale of business

 

750

 

 

 

750

 

Additions to intangible assets including costs to obtain or renew permits

 

(2,545

)

 

 

(1,507

)

Purchases of available-for-sale securities

 

(73,682

)

 

 

(104,329

)

Proceeds from sale of available-for-sale securities

 

100,021

 

 

 

84,390

 

Net cash used in investing activities

 

(812,940

)

 

 

(447,069

)

Cash flows from (used in) financing activities:

 

 

 

Change in uncashed checks

 

(5,852

)

 

 

3,004

 

Tax payments related to withholdings on vested restricted stock

 

(11,514

)

 

 

(10,886

)

Repurchases of common stock

 

(30,215

)

 

 

(18,000

)

Deferred financing costs paid

 

(8,316

)

 

 

(6,371

)

Payments on finance leases

 

(23,596

)

 

 

(11,594

)

Principal payments on debt

 

(11,327

)

 

 

(621,475

)

Proceeds from issuance of debt, net of discount

 

499,375

 

 

 

500,000

 

Borrowing from revolving credit facility

 

—

 

 

 

114,000

 

Payment on revolving credit facility

 

—

 

 

 

(114,000

)

Net cash from (used in) financing activities

 

408,555

 

 

 

(165,322

)

Effect of exchange rate change on cash

 

(1,775

)

 

 

61

 

Increase (decrease) in cash and cash equivalents

 

67,673

 

 

 

(156,638

)

Cash and cash equivalents, beginning of period

 

444,698

 

 

 

492,603

Cash and cash equivalents, end of period

$

512,371

 

$

335,965

Supplemental information:

 

 

 

Cash payments for interest and income taxes:

 

 

 

Interest paid

$

134,177

 

 

$

100,813

 

Income taxes paid, net of refunds

 

100,752

 

 

 

107,328

 

Non-cash investing activities:

 

 

 

Property, plant and equipment accrued

 

43,604

 

 

29,127

ROU assets obtained in exchange for operating lease liabilities

 

98,927

 

 

 

61,741

 

ROU assets obtained in exchange for finance lease liabilities

 

53,391

 

 

 

26,317

 

Supplemental Segment Data (in thousands)

 

Three Months Ended

Revenue

September 30, 2024

 

September 30, 2023

 

Third-Party Revenues

 

Intersegment Revenues (Expenses), net

 

Direct Revenues

 

Third-Party Revenues

 

Intersegment Revenues (Expenses), net

 

Direct Revenues

Environmental Services

$

1,287,650

 

 

$

9,537

 

 

$

1,297,187

 

 

$

1,135,279

 

 

$

11,084

 

 

$

1,146,363

 

Safety-Kleen Sustainability Solutions

 

241,676

 

 

 

(9,537

)

 

 

232,139

 

 

 

230,305

 

 

 

(11,084

)

 

 

219,221

 

Corporate Items

 

96

 

 

—

 

 

 

96

 

 

112

 

 

—

 

 

 

112

Total

$

1,529,422

 

 

$

—

 

 

$

1,529,422

 

 

$

1,365,696

 

 

$

—

 

 

$

1,365,696

 

 

Nine Months Ended

Revenue

September 30, 2024

 

September 30, 2023

 

Third-Party Revenues

 

Intersegment Revenues (Expenses), net

 

Direct Revenues

 

Third-Party Revenues

 

Intersegment Revenues (Expenses), net

 

Direct Revenues

Environmental Services

$

3,746,227

 

 

$

32,853

 

 

$

3,779,080

 

 

$

3,357,743

 

 

$

31,397

 

 

$

3,389,140

 

Safety-Kleen Sustainability Solutions

 

712,312

 

 

 

(32,853

)

 

 

679,459

 

 

 

712,905

 

 

 

(31,397

)

 

 

681,508

 

Corporate Items

 

297

 

 

—

 

 

 

297

 

 

335

 

 

—

 

 

 

335

Total

$

4,458,836

 

 

$

—

 

 

$

4,458,836

 

 

$

4,070,983

 

 

$

—

 

 

$

4,070,983

 

 

Three Months Ended

 

Nine Months Ended

Adjusted EBITDA

September 30, 2024

 

September 30, 2023

 

September 30, 2024

 

September 30, 2023

Environmental Services

$

332,502

 

 

$

288,982

 

 

$

956,892

 

 

$

822,949

 

Safety-Kleen Sustainability Solutions

 

41,226

 

 

 

31,146

 

 

 

122,402

 

 

 

126,024

 

Corporate Items

 

(71,914

)

 

 

(65,111

)

 

 

(219,569

)

 

 

(191,312

)

Total

$

301,814

 

 

$

255,017

 

 

$

859,725

 

 

$

757,661

 

 

View source version on businesswire.com: https://www.businesswire.com/news/home/20241029468697/en/

Eric J. Dugas EVP and Chief Financial Officer Clean Harbors, Inc. 781.792.5100 InvestorRelations@cleanharbors.com

Jim Buckley SVP Investor Relations Clean Harbors, Inc. 781.792.5100 Buckley.James@cleanharbors.com