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Clean Harbors (CLH) Beats on Q1 Earnings, Withdraws View

Zacks Equity Research

Clean Harbors, Inc.CLH reported solid first-quarter 2020 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate.

Adjusted earnings per share of 28 cents outpaced the consensus mark as well as the year-ago quarter by more than 100%. Total revenues of $858.6 million beat the consensus estimate by 7.7% and increased 10% year over year on the back of solid growth across its both operating segments.

As a response to the coronavirus outbreak, the company has taken several actions to orient its cost structure with the current market conditions and safeguard its balance sheet. These include downsizing its workforce through furloughs and other actions, implementing a non-billable hiring freeze, travel restrictions and wage freeze, shuttering almost half of its re-refinery production due to supply constraints and market demand, lowering its revolving credit facility by $150 million, reducing its expected net capital expenditures by more than $50 million for 2020 and withdrawal of 2020 annual guidance until market conditions stabilize

So far this year, shares of Clean Harbors have lost 32.3% compared with 24.6% decline of the industry.

 

Let’s check out the numbers in detail.

Revenues by Segment

Environmental Services revenues of $566.36 million increased 11.3% year over year. The segment benefited from contributions from facilities network, Field Services group and warmer weather during the reported quarter.

Safety-Kleen revenues of $293.21 million increased 7.6% year over year on the back of growth in the Safety-Kleen Oil business.

Profitability Performance

Adjusted EBITDA of $122.6 million increased 21% year over year. Adjusted EBITDA margin increased 130 basis points (bps) year over year to 14.3%.

Segment wise, Environmental Services’ adjusted EBITDA was $108.9 million, up 21.6% year over year. Adjusted EBITDA margin improved 160 bps. The uptick was backed by business mix, disposal volumes and emergency response revenue.

Safety-Kleen’s adjusted EBITDA of $61.1 million improved 11.6% year over year and adjusted EBITDA margin improved 80 bps. The uptick was backed by lower Safety-Kleen Oil transportation costs and higher re-refining production

Clean Harbors, Inc. Price, Consensus and EPS Surprise

 

Clean Harbors, Inc. Price, Consensus and EPS Surprise

Clean Harbors, Inc. price-consensus-eps-surprise-chart | Clean Harbors, Inc. Quote

Balance Sheet & Cash Flow

Clean Harbors exited first-quarter 2020 with cash and cash equivalents of $432.21 million compared with $371.99 million at the end of the prior quarter. Inventories and supplies were $216.53 million, up from $214.74 million in the prior quarter. Long-term debt was $1.70 billion compared with $1.55 billion in the prior quarter.

The company generated $33.7 million in cash from operating activities in the reported quarter.

During the reported quarter, the company repurchased nearly 300,000 shares for an average price of $57.41 per share for a total of $17.3 million.

2020 Guidance

Considering the current uncertainty prevailing in the market, Clean Harbors has withdrawn its 2020 guidance. The company expects to unveil the same during its second-quarter 2020 earnings release if markets stabilize.

Currently, Clean Harbors carries a Zacks Rank #5 (Strong Sell).

You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

The Interpublic Group of Companies, Inc. IPG reported first-quarter 2020 adjusted earnings of 11 cents per share, which beat the consensus mark by 22.2% but remained flat on a year-over-year basis.

Equifax Inc. EFX reported first-quarter 2020 adjusted earnings of $1.40 per share, which beat the consensus mark by 8.5% and improved 16% on a year-over-year basis.

ManpowerGroup Inc. MAN reported first-quarter 2020 adjusted earnings of 71 cents per share, which missed the Zacks Consensus Estimate by 2.7% and slumped 48.9% year over year.

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