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Clean Harbors Reports Third-Quarter 2015 Financial Results

The following excerpt is from the company's SEC filing.

Announces Revenues of $893.4 Million and EPS of $0.69

Achieves 8% Increase in Adjusted EBITDA to a Record $165.6 Million on Strong Emergency Response Contribution

Posts Adjusted EBITDA Margin of 18.5%

Reduces 2015 Adjusted EBITDA Guidance Due to Ongoing Headwinds

Initiates $100 Million Cost Reduction Program for 2016 to Align With Market Conditions

Norwell, Mass. November 4, 2015

Clean Harbors, Inc. (Clean Harbors) (NYSE: CLH), the leading provider of environmental, energy and industrial services throughout North America, today announced financial results for its fis cal third quarter ended September 30, 2015.

Based on extensive emergency response activity and strong contributions from several businesses, Clean Harbors delivered the highest quarterly Adjusted EBITDA in our history, said Alan S. McKim, Chairman and Chief Executive Officer. Our third-quarter results, which were in line with our previously announced guidance, were achieved despite considerable headwinds. These include weakness in the energy sector, declines in base oil pricing and the effects of a strong U.S. dollar on some domestic customers who rely on exporting, as well as its impact on foreign currency translation.

Revenues for the third quarter of 2015 were $893.4 million, up 5% from $851.5 million in the same period in 2014. Income from operations was $94.0 million in the third quarter of 2015, compared with a loss from operations for the third quarter of 2014 of $42.7 million, which included a non-cash, pre-tax goodwill impairment charge of $123.4 million. Excluding the impairment charge, the Company reported adjusted income from operations for the third quarter of 2014 of $80.7 million.

Third-quarter 2015 net income was $40.2 million, or $0.69 per diluted share, which includes $2.3 million of pre-tax integration and severance costs. This compares with a third-quarter 2014 net loss of $93.3 million, or $1.55 per share, which included the $123.4 million non-cash, pre-tax impairment charge, as well as $1.8 million of pre-tax integration and severance costs. Excluding the impairment charge, the Company reported adjusted net income for the third quarter of 2014 of $27.4 million, or $0.45 per diluted share.

Adjusted EBITDA (see description below) in the third quarter of 2015 increased 8% to a record $165.6 million from $153.4 million in the same period of 2014. Adjusted EBITDA margin rose 50 basis points to 18.5%, compared with 18.0% in the third quarter of 2014.

42 Longwater Drive

P.O. Box 9149

Norwell, Massachusetts 02061-9149

781.792.5000

www.cleanharbors.com

Press Release

Clean Harbors Reports Third-Quarter 2015 Financial Results

Comments on the Third Quarter

We generated nearly $145 million in emergency response work during the third quarter, McKim said. This sizeable emergency response revenue produced substantial growth in our Industrial and Field Services segment, which also benefited from an increase in turnaround activity at U.S. refineries. SK Environmental Services again contributed to our growth in profitability, posting a 30% increase that reflected volume gains, as well as the addition of Thermo Fluids (TFI). The growth in these segments more than offset the year-over-year decreases we experienced in our other businesses.

Technical Services declined in both revenue and profitability from a year ago due to a reduction in oil and gas production waste streams, waste project deferrals, reduction in pricing of our recycled products and lower volumes from some key verticals, including Chemicals. Landfill volumes were down 28% year-over-year. However, increases in our drum volume and in some of our bulk business enabled us to achieve incineration utilization of 92% in the quarter compared to 90% a year ago. Profitability in our recently rebranded Kleen Performance Products segment formerly Oil Re-refining and Recycling was down as multiple declines in base oil pricing compressed margins. As expected, profitability in our Oil and Gas Field Services and Lodging Services segments fell as a result of the continued weakness in the energy market, particularly in the Oil Sands region.

Business Outlook and Financial Guidance

The external challenges we are facing this year may be with us for some time, McKim said. As a result, we are taking aggressive action to reduce our operating expenses and realign our cost structure to succeed in an environment that has been materially changed by the low price of crude oil and resulting slowdown, particularly in Western Canada. While we are not providing specific 2016 guidance at this time, as we enter our budgeting process, our goal will be to meet or exceed this years Adjusted EBITDA results in 2016. In conjunction with that goal, we are setting a target of $100 million in cost takeouts that will be achieved over the course of the next year through reduced G&A spending, office and real estate consolidation, and gains in operational efficiencies. We will...


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