Clean Harbors Announces First-Quarter 2021 Financial Results

Rhea-AI Summary

Clean Harbors (NYSE: CLH) reported Q1 2021 results with revenues down 6% to $808.1 million and net income rising to $21.7 million, or $0.39 per diluted share, compared to $11.6 million in Q1 2020. Adjusted EBITDA increased 3% to $129.5 million, reflecting a 130 basis-point improvement in margin. The newly formed Safety-Kleen Sustainability Solutions segment aims at promoting sustainable lubricant offerings, despite a decline in waste oil collection by 14%. The company anticipates stronger growth driven by an improving economy and enhanced market penetration strategies.

Positive

• Net income rose 87% year-over-year to $21.7 million.
• Adjusted EBITDA increased 3% to $129.5 million.
• 130 basis-point improvement in Adjusted EBITDA margin.
• Establishment of the Sustainability Solutions segment expected to drive further growth.

Negative

• Revenues decreased 6% from $858.6 million in Q1 2020.
• Waste oil collection declined by 14% to 47 million gallons.
• Adverse weather and pandemic impacts affected service lines.

Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the first quarter ended March 31, 2021.

“We opened 2021 with a better-than-expected first-quarter performance,” said Alan S. McKim, Chairman, President and Chief Executive Officer. “We delivered Adjusted EBITDA that exceeded our guidance driven by a combination of greater volumes of high-value waste streams in our disposal network and a rising pricing environment for base oil. These factors, combined with ongoing cost controls and productivity initiatives, contributed to a 130 basis-point improvement in our Adjusted EBITDA margin. Overall, we experienced favorable trends across many of our key industry verticals, supported by the improving macroeconomic environment.”

First-Quarter 2021 Results

Revenues decreased 6% to $808.1 million from $858.6 million in the same period of 2020. Income from operations grew 12% to $50.9 million from $45.5 million.

Net income was $21.7 million, or $0.39 per diluted share. This compares with net income of $11.6 million, or $0.21 per diluted share, for the same period in 2020. Adjusted for certain items in both periods, adjusted net income was $23.4 million, or $0.42 per diluted share, for the first quarter of 2021, compared with adjusted net income of $15.6 million, or $0.28 per diluted share, in the same period of 2020. (See reconciliation table below)

Adjusted EBITDA (see description below) increased 3% to $129.5 million from $125.9 million in the same period of 2020.

New Safety-Kleen Sustainability Solutions Segment

Effective January 2021, the Company reorganized its Safety-Kleen business with a goal of better positioning Safety-Kleen’s sustainable lubricant and bulk product offerings for growth in the marketplace. The newly formed Safety-Kleen Sustainability Solutions (SKSS) segment consists of collection services for waste oil, used oil filters, antifreeze and related items, which will all be more tightly managed under a standalone organization. SKSS encompasses both sides of the spread the Company manages in its re-refinery business, and this change will drive additional growth in its sustainable lubricant products and related services.

In conjunction with the formation of this new segment, the Company completed the consolidation of the Safety-Kleen branches’ core offerings into its legacy Clean Harbors Environmental Services sales and service operations. Clean Harbors expects this change to foster enhanced cross-selling opportunities and enable greater overall market penetration of small quantity generators of hazardous waste. In addition, the Company anticipates productivity gains, cost savings and stronger management through this consolidation.

Q1 2021 Review

“Within our Environmental Services segment, as expected, revenues were down from prior year due to the lingering impacts of the pandemic on project work and certain service lines, compounded by the deep freeze that hit the Gulf region in late February,” McKim said. “That adverse weather resulted in incineration utilization in our network of 80% as both our Texas and Arkansas sites had unplanned shutdowns in the first quarter. However, the volume of high-value waste streams from customers continued to grow considerably resulting in an 8% increase in average price per pound. Many of our service businesses that were negatively impacted by the pandemic a year ago, including the Safety-Kleen branches, saw a steady climb in activity during the quarter as the U.S. economy continues to slowly re-open. For example, our number of parts washer services grew 6% sequentially from the fourth quarter of 2020.

“Our newly formed SKSS segment reported flat revenue compared with the prior year as increased base oil pricing, along with higher charge-for-oil (CFO) rates offset lower volumes sold and waste oil collected,” McKim continued. “Profitability and margins in the segment rose due to favorable market conditions that enabled us to widen our re-refining spread. Adjusted EBITDA in the segment grew 31% from a year ago with a 480 basis-point improvement in margin. Waste oil collection declined 14% to 47 million gallons in the quarter. The formation of SKSS reflects the greater emphasis we want to place on our green offerings within Safety-Kleen, including our high-quality recycled lubricants. We expect customer demand for these types of environmentally friendly solutions to grow in the years ahead. This new organizational structure also will enable us to collect more waste oil, optimize the supply to our re-refineries and grow sales of our sustainable SK products and services.”

Business Outlook and Financial Guidance

“We begin the second quarter with positive momentum across multiple markets

FAQ

What were Clean Harbors' Q1 2021 financial results?

Clean Harbors reported revenues of $808.1 million and net income of $21.7 million, or $0.39 per diluted share.

How did Clean Harbors' adjusted EBITDA perform in Q1 2021?

Adjusted EBITDA for Q1 2021 was $129.5 million, an increase of 3% compared to Q1 2020.

What challenges did Clean Harbors face in Q1 2021?

The company experienced a 6% revenue decline, a 14% drop in waste oil collection, and operational impacts from adverse weather.

What is the new segment introduced by Clean Harbors?

The Safety-Kleen Sustainability Solutions segment was formed to promote sustainable lubricant offerings and enhance business growth.

What is the outlook for Clean Harbors following Q1 2021?

Clean Harbors begins Q2 2021 with positive momentum and anticipates growth driven by an improving economy and enhanced service strategies.