Recent Quotes View Full List My Watchlist Create Watchlist Indicators DJI Nasdaq Composite SPX Gold Crude Oil Hydroworld Market Index Markets Stocks ETFs Tools Overview News Currencies International Treasuries Clean Harbors Announces Fourth-Quarter and Full-Year 2022 Financial Results By: Clean Harbors, Inc. via Business Wire March 01, 2023 at 07:30 AM EST Posts Q4 Revenue Growth of 14% to $1.28 Billion; Full-Year Revenues of $5.17 Billion Generates Q4 Net Income of $82.5 Million, or EPS of $1.52, with Adjusted EPS of $1.44; Full-Year Net Income of $411.7 Million, or EPS of $7.56, with Adjusted EPS of $7.15 Achieves Q4 Adjusted EBITDA Growth of 29% to $224.2 Million; Generates Full-Year Adjusted EBITDA of $1,022 Million Delivers Full-Year Net Cash from Operating Activities of $626.2 Million and Adjusted Free Cash Flow of $289.9 Million Provides Full-Year 2023 Adjusted EBITDA and Adjusted Free Cash Flow Guidance Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the fourth quarter and year ended December 31, 2022. “We concluded a record 2022 with strong fourth-quarter results, led by our Environmental Services segment,” said Alan S. McKim, Chairman, President and Chief Executive Officer. “Favorable market dynamics continued to drive considerable demand for our disposal and recycling assets, while our broad range of service offerings also performed well in the quarter. Revenues grew $159 million from a combination of pricing and volume. By leveraging that growth and controlling our costs, we delivered Q4 Adjusted EBITDA growth of 29% and improved our margins by 190 basis points from the same period a year ago.” Fourth-Quarter Results Revenues increased 14% to $1.28 billion from $1.12 billion in the same period of 2021. Income from operations grew 55% to $127.4 million from $82.2 million in the fourth quarter of 2021. Net income was $82.5 million, or $1.52 per diluted share. This compared with net income of $49.0 million, or $0.90 per diluted share, for the same period in 2021. Adjusted for certain items in both periods, adjusted net income was $78.5 million, or $1.44 per diluted share, for the fourth quarter of 2022, compared with adjusted net income of $48.6 million, or $0.89 per diluted share, for the same period of 2021. (See reconciliation tables below). Net income and adjusted net income results for the fourth quarter of 2022 included pre-tax integration and severance costs of $0.3 million. Comparable costs in the fourth quarter of 2021 were $8.6 million, reflecting costs associated with the HydroChemPSC acquisition, which was completed in October 2021. Adjusted EBITDA (see description below) increased 29% to $224.2 million from $174.3 million in the same period of 2021. Q4 2022 Segment Review “Environmental Services (ES) revenues increased 15% year-over-year, and Adjusted EBITDA in the segment rose 35% resulting in a 22.9% margin for the quarter which represents a 340-basis-point improvement over the prior year quarter,” McKim said. “Utilization of our incinerator network was lower than recent quarters at 84% because of unplanned outages at several locations due to severe weather experienced in December. Volumes of higher-value waste streams and overall incineration demand remained strong resulting in a 21% increase in average incineration pricing from a year ago. Landfill volumes increased 28%, along with a small increase in average pricing, as we continued to capture more remediation and waste projects. Our Industrial Services business performed well in the quarter and closed out the year strong with increased customer needs related to the severe weather. Safety-Kleen Environmental revenue grew more than 20% for the third consecutive quarter; demand for its core offerings has now surpassed pre-pandemic levels. Field Services revenue was up 8% from pricing and branch growth initiatives. “Safety-Kleen Sustainability Solutions (SKSS) revenues grew 9% in the fourth quarter, while Adjusted EBITDA decreased 12% from a year ago,” McKim said. “We experienced a seasonal slowdown in base oil demand in the fourth quarter after a record-breaking third quarter. While our re-refinery spread remained wide, we sold lower volumes of both base oil and blended products as customers depleted their inventories to close out the year. Segment profitability was affected by overall revenue mix and severe weather at multiple locations, which impacted production and resulted in higher costs. We also made investments in the business to accelerate lubricant sales in 2023 and beyond. Waste oil collections were strong in the quarter at 57 million gallons. The new Georgia plant we acquired in June has been running well after initiating multiple throughput enhancements.” 2022 Financial Results Clean Harbors’ revenues increased 36% to $5.17 billion compared with $3.81 billion in 2021. Income from operations increased 82% to $634.7 million from $347.9 million in 2021. Net income was $411.7 million, or $7.56 per diluted share, compared with net income of $203.2 million, or $3.71 per diluted share for 2021. Adjusted for certain items in both periods, the Company reported adjusted net income for 2022 of $389.5 million, or $7.15 per diluted share, compared with adjusted net income of $199.6 million, or $3.64 per diluted share, for 2021. (See reconciliation table below). Net income and adjusted net income results for 2022 included pre-tax integration and severance costs of $3.0 million. Comparable costs in 2021 were $19.7 million, with the HPC acquisition representing the largest contributing factor. Adjusted EBITDA (see description below) increased 51% to $1,022.1 million, compared with Adjusted EBITDA of $676.6 million in 2021, which included $12.0 million of benefits from government assistance programs. The Company generated adjusted free cash flow of $289.9 million in 2022, compared with $326.3 million in 2021. The decrease is largely attributable to higher working capital related to our rapid growth and increased capital expenditures including $45 million of spend associated with the construction of our new incinerator in Nebraska. “2022 was another terrific year for Clean Harbors, from our outstanding safety results to our record financial performance and notable operating achievements,” said McKim. “In safety, we vastly exceeded our goal of delivering a Total Recordable Incident Rate (TRIR) of below 1.0. We concluded the year with a TRIR of 0.73, which is our best annual safety performance by a wide margin, as the team worked diligently to keep themselves and their colleagues safe. Financially, we expanded our Adjusted EBITDA margins by 200 basis points on the strength of a 36% top-line increase and 51% Adjusted EBITDA growth. We generated more than one billion dollars of Adjusted EBITDA for the first time in our history – while improving our ROIC for the fifth consecutive year. On the operational side, we successfully integrated HPC, advanced construction of our next incinerator, acquired our eighth re-refinery facility, launched our KLEEN+ brand in the base oil market, significantly lowered voluntary turnover while increasing the hiring of billable headcount, and issued our ground-breaking PFAS incineration study.” Business Outlook and Financial Guidance “We enter 2023 with momentum across all our key businesses,” McKim said. “Within ES, our record backlog of waste and deferred revenue grew during the quarter, which positions us well for this year. Based on the diversity of our customer base, we expect healthy demand for our network of disposal and recycling assets to continue in 2023. Our service businesses all registered robust growth in 2022 and, with the expansion of our billable headcount throughout the year, we should benefit from those hires in 2023. We also expect ample project opportunities this year as monies from the U.S. infrastructure bill, the CHIPS Act and other programs supporting domestic spending are released. In addition, we expect to benefit from the manufacturing reshoring trend. “Within SKSS, we continue to closely manage both ends of our re-refining spread and collect the waste oil volumes needed to support our plants. While base oil demand slowed from heightened summer levels in the fourth quarter, we are beginning to experience the normal seasonal pickup in the early part of this year and are confident overall market conditions will remain favorable for 2023. We also see numerous opportunities to enhance our profitability in this segment including raising production from 2022 levels, increasing sales of blended products and capitalizing on growing interest in our sustainable products. Our new KLEEN+ base oil brand is helping to facilitate discussions with customers seeking solutions that lower the environmental impact of their automotive and industrial lubricant products,” McKim concluded. For the first quarter of 2023, Clean Harbors expects Adjusted EBITDA to increase approximately 20% from the prior year. For full-year 2023, Clean Harbors expects: Adjusted EBITDA in the range of $1,010 million to $1,050 million or a midpoint of $1,030 million. This range is based on anticipated GAAP net income in the range of $355 million to $391 million; and Adjusted free cash flow in the range of $305 million to $345 million, or a midpoint of $325 million, based on anticipated net cash from operating activities in the range of $705 million to $765 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 since the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved and management routinely evaluates the performance of its businesses based upon levels of Adjusted EBITDA. The Company defines Adjusted EBITDA in accordance with its existing revolving credit agreement, as described in the following reconciliation showing the differences between reported net income and Adjusted EBITDA for the three and twelve months ended December 31, 2022 and 2021 (in thousands, except percentages): For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Net income $ 82,474 $ 48,993 $ 411,744 $ 203,247 Accretion of environmental liabilities 3,344 3,120 12,943 11,745 Stock-based compensation 6,469 6,053 26,844 18,839 Depreciation and amortization 87,034 82,929 347,594 298,135 Other (income) expense, net (399) (1,994) (2,472) 515 Loss on early extinguishment of debt 422 — 422 — Gain on sale of business — — (8,864) — Interest expense, net of interest income 28,309 23,704 107,663 77,657 Provision for income taxes 16,591 11,495 126,254 66,468 Adjusted EBITDA $ 224,244 $ 174,300 $ 1,022,128 $ 676,606 Adjusted EBITDA Margin 17.5 % 15.6 % 19.8 % 17.8 % This press release includes a discussion of net income and earnings per share adjusted for the loss on early extinguishment of debt, gain on sale of business and the impacts of tax-related valuation allowances and other items as identified in the reconciliations provided below. The Company believes that discussion of these additional non-GAAP measures provides investors with meaningful comparisons of current results to prior periods’ results by excluding items that the Company does not believe reflect its fundamental business performance. The following shows the difference between net income and adjusted net income, and the difference between earnings per share and adjusted earnings per share, for the three and twelve months ended December 31, 2022 and 2021 (in thousands, except per share amounts): For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Adjusted net income Net income $ 82,474 $ 48,993 $ 411,744 $ 203,247 Loss on early extinguishment of debt 422 — 422 — Gain on sale of business — — (8,864) — Tax-related valuation allowances and other* (4,354) (428) (13,848) (3,649) Adjusted net income $ 78,542 $ 48,565 $ 389,454 $ 199,598 Adjusted earnings per share Earnings per share $ 1.52 $ 0.90 $ 7.56 $ 3.71 Loss on early extinguishment of debt 0.01 — 0.01 — Gain on sale of business — — (0.16) — Tax-related valuation allowances and other* (0.09) (0.01) (0.26) (0.07) Adjusted earnings per share $ 1.44 $ 0.89 $ 7.15 $ 3.64 * For the three and twelve months ended December 31, 2022, other amounts include ($0.1) million and $1.5 million, or $0.03 per share, of tax impacts from the loss on early extinguishment of debt and gain on sale of business, respectively. Adjusted Free Cash Flow Reconciliation Clean Harbors reports adjusted free cash flow, which it considers 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. The Company excludes cash impacts of items derived from non-operating activities. Adjusted free cash flow should not be considered an alternative to net cash from operating activities or other measurements under GAAP. 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 net cash from operating activities and adjusted free cash flow is as follows for the three and twelve months ended December 31, 2022 and 2021 (in thousands): For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Adjusted free cash flow Net cash from operating activities $ 268,672 $ 177,771 $ 626,214 $ 545,997 Additions to property, plant and equipment (100,509) (95,202) (345,056) (241,856) Proceeds from sale and disposal of fixed assets 3,661 5,732 8,779 22,156 Adjusted free cash flow $ 171,824 $ 88,301 $ 289,937 $ 326,297 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, 2023 Projected GAAP net income $ 355 to $ 391 Adjustments: Accretion of environmental liabilities 14 to 13 Stock-based compensation 26 to 29 Depreciation and amortization 355 to 345 Loss on early extinguishment of debt 2 2 Interest expense, net 128 to 123 Provision for income taxes 130 to 147 Projected Adjusted EBITDA $ 1,010 to $ 1,050 Adjusted Free Cash Flow Guidance Reconciliation An itemized reconciliation between projected net cash from operating activities and projected adjusted free cash flow is as follows (in millions): For the Year Ending December 31, 2023 Projected net cash from operating activities $ 705 to $ 765 Additions to property, plant and equipment (410) to (430) Proceeds from sale and disposal of fixed assets 10 to 10 Projected adjusted free cash flow $ 305 to $ 345 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 201.689.8881 or 877.709.8155 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, energy and manufacturing, 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 North America’s largest re-refiner and recycler of used oil and a leading provider of parts washers and environmental services to commercial, industrial and automotive customers. 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,” or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors’ management as of this date 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 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 CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Revenues $ 1,278,098 $ 1,119,481 $ 5,166,605 $ 3,805,566 Cost of revenues: (exclusive of items shown separately below) 891,424 792,183 3,543,930 2,609,837 Selling, general and administrative expenses 168,899 159,051 627,391 537,962 Accretion of environmental liabilities 3,344 3,120 12,943 11,745 Depreciation and amortization 87,034 82,929 347,594 298,135 Income from operations 127,397 82,198 634,747 347,887 Other income (expense), net 399 1,994 2,472 (515) Loss on early extinguishment of debt (422) — (422) — Gain on sale of business — — 8,864 — Interest expense, net (28,309) (23,704) (107,663) (77,657) Income before provision for income taxes 99,065 60,488 537,998 269,715 Provision for income taxes 16,591 11,495 126,254 66,468 Net income $ 82,474 $ 48,993 $ 411,744 $ 203,247 Earnings per share: Basic $ 1.53 $ 0.90 $ 7.59 $ 3.73 Diluted $ 1.52 $ 0.90 $ 7.56 $ 3.71 Shares used to compute earnings per share – Basic 54,059 54,398 54,223 54,514 Shares used to compute earnings per share – Diluted 54,378 54,658 54,487 54,761 CLEAN HARBORS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 31, 2022 December 31, 2021 Current assets: Cash and cash equivalents $ 492,603 $ 452,575 Short-term marketable securities 62,033 81,724 Accounts receivable, net 964,603 792,734 Unbilled accounts receivable 107,010 94,963 Inventories and supplies 324,994 250,692 Prepaid expenses and other current assets 82,518 68,483 Total current assets 2,033,761 1,741,171 Property, plant and equipment, net 1,980,302 1,863,175 Other assets: Operating lease right-of-use assets 166,181 161,797 Goodwill 1,246,878 1,227,042 Permits and other intangibles, net 620,782 644,912 Other 81,803 15,602 Total other assets 2,115,644 2,049,353 Total assets $ 6,129,707 $ 5,653,699 Current liabilities: Current portion of long-term debt $ 10,000 $ 17,535 Accounts payable 446,629 359,866 Deferred revenue 94,094 83,749 Accrued expenses and other current liabilities 396,716 391,414 Current portion of closure, post-closure and remedial liabilities 23,123 25,136 Current portion of operating lease liabilities 49,532 47,614 Total current liabilities 1,020,094 925,314 Other liabilities: Closure and post-closure liabilities, less current portion 105,596 87,088 Remedial liabilities, less current portion 106,372 98,752 Long-term debt, less current portion 2,414,828 2,517,024 Operating lease liabilities, less current portion 119,259 117,991 Deferred tax liabilities 350,389 314,853 Other long-term liabilities 90,847 78,790 Total other liabilities 3,187,291 3,214,498 Total stockholders’ equity, net 1,922,322 1,513,887 Total liabilities and stockholders’ equity $ 6,129,707 $ 5,653,699 CLEAN HARBORS, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Year Ended December 31, 2022 December 31, 2021 Cash flows from operating activities: Net income $ 411,744 $ 203,247 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 347,594 298,135 Allowance for doubtful accounts 7,783 8,018 Amortization of deferred financing costs and debt discount 6,301 4,245 Accretion of environmental liabilities 12,943 11,745 Changes in environmental liability estimates 8,272 2,979 Deferred income taxes 17,549 1,482 Other (income) expense, net (2,472) 515 Stock-based compensation 26,844 18,839 Gain on sale of business (8,864) — Loss on early extinguishment of debt 422 — Environmental expenditures (13,946) (15,506) Changes in assets and liabilities, net of acquisitions: Accounts receivable and unbilled accounts receivable (201,087) (96,551) Inventories and supplies (74,547) (31,689) Other current and non-current assets (17,303) 9,268 Accounts payable 74,460 108,398 Other current and long-term liabilities 30,521 22,872 Net cash from operating activities 626,214 545,997 Cash flows used in investing activities: Additions to property, plant and equipment (345,056) (241,856) Proceeds from sale and disposal of fixed assets 8,779 22,156 Acquisitions, net of cash acquired (86,278) (1,253,232) Additions to intangible assets including costs to obtain or renew permits (1,966) (3,848) Purchases of available-for-sale securities (49,845) (129,234) Proceeds from sale of available-for-sale securities 68,611 98,412 Proceeds from sale of business, net of transactional costs 16,811 — Net cash used in investing activities (388,944) (1,507,602) Cash flows (used in) from financing activities: Change in uncashed checks 552 (1,806) Tax payments related to withholdings on vested restricted stock (8,801) (10,805) Repurchases of common stock (50,183) (54,410) Deferred financing costs paid (410) (13,737) Payments on finance leases (12,821) (8,458) Principal payments on debt (115,652) (7,535) Proceeds from issuance of debt, net of discount — 995,000 Net cash (used in) from financing activities (187,315) 898,249 Effect of exchange rate change on cash (9,927) (3,170) Increase (decrease) in cash and cash equivalents 40,028 (66,526) Cash and cash equivalents, beginning of year 452,575 519,101 Cash and cash equivalents, end of year $ 492,603 $ 452,575 Supplemental information: Cash payments for interest and income taxes: Interest paid $ 105,643 $ 73,440 Income taxes paid, net of refunds 78,526 65,192 Non-cash investing activities: Property, plant and equipment accrued 30,950 19,264 Remedial liability assumed in acquisition of property, plant and equipment 8,092 — Supplemental Segment Data (in thousands) For the Three Months Ended Revenue December 31, 2022 December 31, 2021 Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Environmental Services $ 1,039,637 $ 7,397 $ 1,047,034 $ 906,051 $ 2,071 $ 908,122 Safety-Kleen Sustainability Solutions 238,388 (7,397) 230,991 213,348 (2,071) 211,277 Corporate Items 73 — 73 82 — 82 Total $ 1,278,098 $ — $ 1,278,098 $ 1,119,481 $ — $ 1,119,481 For the Twelve Months Ended Revenue December 31, 2022 December 31, 2021 Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Environmental Services $ 4,144,973 $ 26,733 $ 4,171,706 $ 3,025,907 $ 6,547 $ 3,032,454 Safety-Kleen Sustainability Solutions 1,021,125 (26,733) 994,392 779,360 (6,547) 772,813 Corporate Items 507 — 507 299 — 299 Total $ 5,166,605 $ — $ 5,166,605 $ 3,805,566 $ — $ 3,805,566 For the Three Months Ended For the Twelve Months Ended Adjusted EBITDA December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Environmental Services $ 239,423 $ 176,952 $ 953,053 $ 659,718 Safety-Kleen Sustainability Solutions 54,284 61,598 306,327 227,354 Corporate Items (69,463) (64,250) (237,252) (210,466) Total $ 224,244 $ 174,300 $ 1,022,128 $ 676,606 View source version on businesswire.com: https://www.businesswire.com/news/home/20230301005164/en/Contacts Michael L. Battles 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 Data & News supplied by www.cloudquote.io Stock quotes supplied by Barchart Quotes delayed at least 20 minutes. By accessing this page, you agree to the following Privacy Policy and Terms and Conditions.
Clean Harbors Announces Fourth-Quarter and Full-Year 2022 Financial Results By: Clean Harbors, Inc. via Business Wire March 01, 2023 at 07:30 AM EST Posts Q4 Revenue Growth of 14% to $1.28 Billion; Full-Year Revenues of $5.17 Billion Generates Q4 Net Income of $82.5 Million, or EPS of $1.52, with Adjusted EPS of $1.44; Full-Year Net Income of $411.7 Million, or EPS of $7.56, with Adjusted EPS of $7.15 Achieves Q4 Adjusted EBITDA Growth of 29% to $224.2 Million; Generates Full-Year Adjusted EBITDA of $1,022 Million Delivers Full-Year Net Cash from Operating Activities of $626.2 Million and Adjusted Free Cash Flow of $289.9 Million Provides Full-Year 2023 Adjusted EBITDA and Adjusted Free Cash Flow Guidance Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the fourth quarter and year ended December 31, 2022. “We concluded a record 2022 with strong fourth-quarter results, led by our Environmental Services segment,” said Alan S. McKim, Chairman, President and Chief Executive Officer. “Favorable market dynamics continued to drive considerable demand for our disposal and recycling assets, while our broad range of service offerings also performed well in the quarter. Revenues grew $159 million from a combination of pricing and volume. By leveraging that growth and controlling our costs, we delivered Q4 Adjusted EBITDA growth of 29% and improved our margins by 190 basis points from the same period a year ago.” Fourth-Quarter Results Revenues increased 14% to $1.28 billion from $1.12 billion in the same period of 2021. Income from operations grew 55% to $127.4 million from $82.2 million in the fourth quarter of 2021. Net income was $82.5 million, or $1.52 per diluted share. This compared with net income of $49.0 million, or $0.90 per diluted share, for the same period in 2021. Adjusted for certain items in both periods, adjusted net income was $78.5 million, or $1.44 per diluted share, for the fourth quarter of 2022, compared with adjusted net income of $48.6 million, or $0.89 per diluted share, for the same period of 2021. (See reconciliation tables below). Net income and adjusted net income results for the fourth quarter of 2022 included pre-tax integration and severance costs of $0.3 million. Comparable costs in the fourth quarter of 2021 were $8.6 million, reflecting costs associated with the HydroChemPSC acquisition, which was completed in October 2021. Adjusted EBITDA (see description below) increased 29% to $224.2 million from $174.3 million in the same period of 2021. Q4 2022 Segment Review “Environmental Services (ES) revenues increased 15% year-over-year, and Adjusted EBITDA in the segment rose 35% resulting in a 22.9% margin for the quarter which represents a 340-basis-point improvement over the prior year quarter,” McKim said. “Utilization of our incinerator network was lower than recent quarters at 84% because of unplanned outages at several locations due to severe weather experienced in December. Volumes of higher-value waste streams and overall incineration demand remained strong resulting in a 21% increase in average incineration pricing from a year ago. Landfill volumes increased 28%, along with a small increase in average pricing, as we continued to capture more remediation and waste projects. Our Industrial Services business performed well in the quarter and closed out the year strong with increased customer needs related to the severe weather. Safety-Kleen Environmental revenue grew more than 20% for the third consecutive quarter; demand for its core offerings has now surpassed pre-pandemic levels. Field Services revenue was up 8% from pricing and branch growth initiatives. “Safety-Kleen Sustainability Solutions (SKSS) revenues grew 9% in the fourth quarter, while Adjusted EBITDA decreased 12% from a year ago,” McKim said. “We experienced a seasonal slowdown in base oil demand in the fourth quarter after a record-breaking third quarter. While our re-refinery spread remained wide, we sold lower volumes of both base oil and blended products as customers depleted their inventories to close out the year. Segment profitability was affected by overall revenue mix and severe weather at multiple locations, which impacted production and resulted in higher costs. We also made investments in the business to accelerate lubricant sales in 2023 and beyond. Waste oil collections were strong in the quarter at 57 million gallons. The new Georgia plant we acquired in June has been running well after initiating multiple throughput enhancements.” 2022 Financial Results Clean Harbors’ revenues increased 36% to $5.17 billion compared with $3.81 billion in 2021. Income from operations increased 82% to $634.7 million from $347.9 million in 2021. Net income was $411.7 million, or $7.56 per diluted share, compared with net income of $203.2 million, or $3.71 per diluted share for 2021. Adjusted for certain items in both periods, the Company reported adjusted net income for 2022 of $389.5 million, or $7.15 per diluted share, compared with adjusted net income of $199.6 million, or $3.64 per diluted share, for 2021. (See reconciliation table below). Net income and adjusted net income results for 2022 included pre-tax integration and severance costs of $3.0 million. Comparable costs in 2021 were $19.7 million, with the HPC acquisition representing the largest contributing factor. Adjusted EBITDA (see description below) increased 51% to $1,022.1 million, compared with Adjusted EBITDA of $676.6 million in 2021, which included $12.0 million of benefits from government assistance programs. The Company generated adjusted free cash flow of $289.9 million in 2022, compared with $326.3 million in 2021. The decrease is largely attributable to higher working capital related to our rapid growth and increased capital expenditures including $45 million of spend associated with the construction of our new incinerator in Nebraska. “2022 was another terrific year for Clean Harbors, from our outstanding safety results to our record financial performance and notable operating achievements,” said McKim. “In safety, we vastly exceeded our goal of delivering a Total Recordable Incident Rate (TRIR) of below 1.0. We concluded the year with a TRIR of 0.73, which is our best annual safety performance by a wide margin, as the team worked diligently to keep themselves and their colleagues safe. Financially, we expanded our Adjusted EBITDA margins by 200 basis points on the strength of a 36% top-line increase and 51% Adjusted EBITDA growth. We generated more than one billion dollars of Adjusted EBITDA for the first time in our history – while improving our ROIC for the fifth consecutive year. On the operational side, we successfully integrated HPC, advanced construction of our next incinerator, acquired our eighth re-refinery facility, launched our KLEEN+ brand in the base oil market, significantly lowered voluntary turnover while increasing the hiring of billable headcount, and issued our ground-breaking PFAS incineration study.” Business Outlook and Financial Guidance “We enter 2023 with momentum across all our key businesses,” McKim said. “Within ES, our record backlog of waste and deferred revenue grew during the quarter, which positions us well for this year. Based on the diversity of our customer base, we expect healthy demand for our network of disposal and recycling assets to continue in 2023. Our service businesses all registered robust growth in 2022 and, with the expansion of our billable headcount throughout the year, we should benefit from those hires in 2023. We also expect ample project opportunities this year as monies from the U.S. infrastructure bill, the CHIPS Act and other programs supporting domestic spending are released. In addition, we expect to benefit from the manufacturing reshoring trend. “Within SKSS, we continue to closely manage both ends of our re-refining spread and collect the waste oil volumes needed to support our plants. While base oil demand slowed from heightened summer levels in the fourth quarter, we are beginning to experience the normal seasonal pickup in the early part of this year and are confident overall market conditions will remain favorable for 2023. We also see numerous opportunities to enhance our profitability in this segment including raising production from 2022 levels, increasing sales of blended products and capitalizing on growing interest in our sustainable products. Our new KLEEN+ base oil brand is helping to facilitate discussions with customers seeking solutions that lower the environmental impact of their automotive and industrial lubricant products,” McKim concluded. For the first quarter of 2023, Clean Harbors expects Adjusted EBITDA to increase approximately 20% from the prior year. For full-year 2023, Clean Harbors expects: Adjusted EBITDA in the range of $1,010 million to $1,050 million or a midpoint of $1,030 million. This range is based on anticipated GAAP net income in the range of $355 million to $391 million; and Adjusted free cash flow in the range of $305 million to $345 million, or a midpoint of $325 million, based on anticipated net cash from operating activities in the range of $705 million to $765 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 since the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved and management routinely evaluates the performance of its businesses based upon levels of Adjusted EBITDA. The Company defines Adjusted EBITDA in accordance with its existing revolving credit agreement, as described in the following reconciliation showing the differences between reported net income and Adjusted EBITDA for the three and twelve months ended December 31, 2022 and 2021 (in thousands, except percentages): For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Net income $ 82,474 $ 48,993 $ 411,744 $ 203,247 Accretion of environmental liabilities 3,344 3,120 12,943 11,745 Stock-based compensation 6,469 6,053 26,844 18,839 Depreciation and amortization 87,034 82,929 347,594 298,135 Other (income) expense, net (399) (1,994) (2,472) 515 Loss on early extinguishment of debt 422 — 422 — Gain on sale of business — — (8,864) — Interest expense, net of interest income 28,309 23,704 107,663 77,657 Provision for income taxes 16,591 11,495 126,254 66,468 Adjusted EBITDA $ 224,244 $ 174,300 $ 1,022,128 $ 676,606 Adjusted EBITDA Margin 17.5 % 15.6 % 19.8 % 17.8 % This press release includes a discussion of net income and earnings per share adjusted for the loss on early extinguishment of debt, gain on sale of business and the impacts of tax-related valuation allowances and other items as identified in the reconciliations provided below. The Company believes that discussion of these additional non-GAAP measures provides investors with meaningful comparisons of current results to prior periods’ results by excluding items that the Company does not believe reflect its fundamental business performance. The following shows the difference between net income and adjusted net income, and the difference between earnings per share and adjusted earnings per share, for the three and twelve months ended December 31, 2022 and 2021 (in thousands, except per share amounts): For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Adjusted net income Net income $ 82,474 $ 48,993 $ 411,744 $ 203,247 Loss on early extinguishment of debt 422 — 422 — Gain on sale of business — — (8,864) — Tax-related valuation allowances and other* (4,354) (428) (13,848) (3,649) Adjusted net income $ 78,542 $ 48,565 $ 389,454 $ 199,598 Adjusted earnings per share Earnings per share $ 1.52 $ 0.90 $ 7.56 $ 3.71 Loss on early extinguishment of debt 0.01 — 0.01 — Gain on sale of business — — (0.16) — Tax-related valuation allowances and other* (0.09) (0.01) (0.26) (0.07) Adjusted earnings per share $ 1.44 $ 0.89 $ 7.15 $ 3.64 * For the three and twelve months ended December 31, 2022, other amounts include ($0.1) million and $1.5 million, or $0.03 per share, of tax impacts from the loss on early extinguishment of debt and gain on sale of business, respectively. Adjusted Free Cash Flow Reconciliation Clean Harbors reports adjusted free cash flow, which it considers 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. The Company excludes cash impacts of items derived from non-operating activities. Adjusted free cash flow should not be considered an alternative to net cash from operating activities or other measurements under GAAP. 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 net cash from operating activities and adjusted free cash flow is as follows for the three and twelve months ended December 31, 2022 and 2021 (in thousands): For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Adjusted free cash flow Net cash from operating activities $ 268,672 $ 177,771 $ 626,214 $ 545,997 Additions to property, plant and equipment (100,509) (95,202) (345,056) (241,856) Proceeds from sale and disposal of fixed assets 3,661 5,732 8,779 22,156 Adjusted free cash flow $ 171,824 $ 88,301 $ 289,937 $ 326,297 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, 2023 Projected GAAP net income $ 355 to $ 391 Adjustments: Accretion of environmental liabilities 14 to 13 Stock-based compensation 26 to 29 Depreciation and amortization 355 to 345 Loss on early extinguishment of debt 2 2 Interest expense, net 128 to 123 Provision for income taxes 130 to 147 Projected Adjusted EBITDA $ 1,010 to $ 1,050 Adjusted Free Cash Flow Guidance Reconciliation An itemized reconciliation between projected net cash from operating activities and projected adjusted free cash flow is as follows (in millions): For the Year Ending December 31, 2023 Projected net cash from operating activities $ 705 to $ 765 Additions to property, plant and equipment (410) to (430) Proceeds from sale and disposal of fixed assets 10 to 10 Projected adjusted free cash flow $ 305 to $ 345 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 201.689.8881 or 877.709.8155 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, energy and manufacturing, 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 North America’s largest re-refiner and recycler of used oil and a leading provider of parts washers and environmental services to commercial, industrial and automotive customers. 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,” or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors’ management as of this date 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 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 CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Revenues $ 1,278,098 $ 1,119,481 $ 5,166,605 $ 3,805,566 Cost of revenues: (exclusive of items shown separately below) 891,424 792,183 3,543,930 2,609,837 Selling, general and administrative expenses 168,899 159,051 627,391 537,962 Accretion of environmental liabilities 3,344 3,120 12,943 11,745 Depreciation and amortization 87,034 82,929 347,594 298,135 Income from operations 127,397 82,198 634,747 347,887 Other income (expense), net 399 1,994 2,472 (515) Loss on early extinguishment of debt (422) — (422) — Gain on sale of business — — 8,864 — Interest expense, net (28,309) (23,704) (107,663) (77,657) Income before provision for income taxes 99,065 60,488 537,998 269,715 Provision for income taxes 16,591 11,495 126,254 66,468 Net income $ 82,474 $ 48,993 $ 411,744 $ 203,247 Earnings per share: Basic $ 1.53 $ 0.90 $ 7.59 $ 3.73 Diluted $ 1.52 $ 0.90 $ 7.56 $ 3.71 Shares used to compute earnings per share – Basic 54,059 54,398 54,223 54,514 Shares used to compute earnings per share – Diluted 54,378 54,658 54,487 54,761 CLEAN HARBORS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 31, 2022 December 31, 2021 Current assets: Cash and cash equivalents $ 492,603 $ 452,575 Short-term marketable securities 62,033 81,724 Accounts receivable, net 964,603 792,734 Unbilled accounts receivable 107,010 94,963 Inventories and supplies 324,994 250,692 Prepaid expenses and other current assets 82,518 68,483 Total current assets 2,033,761 1,741,171 Property, plant and equipment, net 1,980,302 1,863,175 Other assets: Operating lease right-of-use assets 166,181 161,797 Goodwill 1,246,878 1,227,042 Permits and other intangibles, net 620,782 644,912 Other 81,803 15,602 Total other assets 2,115,644 2,049,353 Total assets $ 6,129,707 $ 5,653,699 Current liabilities: Current portion of long-term debt $ 10,000 $ 17,535 Accounts payable 446,629 359,866 Deferred revenue 94,094 83,749 Accrued expenses and other current liabilities 396,716 391,414 Current portion of closure, post-closure and remedial liabilities 23,123 25,136 Current portion of operating lease liabilities 49,532 47,614 Total current liabilities 1,020,094 925,314 Other liabilities: Closure and post-closure liabilities, less current portion 105,596 87,088 Remedial liabilities, less current portion 106,372 98,752 Long-term debt, less current portion 2,414,828 2,517,024 Operating lease liabilities, less current portion 119,259 117,991 Deferred tax liabilities 350,389 314,853 Other long-term liabilities 90,847 78,790 Total other liabilities 3,187,291 3,214,498 Total stockholders’ equity, net 1,922,322 1,513,887 Total liabilities and stockholders’ equity $ 6,129,707 $ 5,653,699 CLEAN HARBORS, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Year Ended December 31, 2022 December 31, 2021 Cash flows from operating activities: Net income $ 411,744 $ 203,247 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 347,594 298,135 Allowance for doubtful accounts 7,783 8,018 Amortization of deferred financing costs and debt discount 6,301 4,245 Accretion of environmental liabilities 12,943 11,745 Changes in environmental liability estimates 8,272 2,979 Deferred income taxes 17,549 1,482 Other (income) expense, net (2,472) 515 Stock-based compensation 26,844 18,839 Gain on sale of business (8,864) — Loss on early extinguishment of debt 422 — Environmental expenditures (13,946) (15,506) Changes in assets and liabilities, net of acquisitions: Accounts receivable and unbilled accounts receivable (201,087) (96,551) Inventories and supplies (74,547) (31,689) Other current and non-current assets (17,303) 9,268 Accounts payable 74,460 108,398 Other current and long-term liabilities 30,521 22,872 Net cash from operating activities 626,214 545,997 Cash flows used in investing activities: Additions to property, plant and equipment (345,056) (241,856) Proceeds from sale and disposal of fixed assets 8,779 22,156 Acquisitions, net of cash acquired (86,278) (1,253,232) Additions to intangible assets including costs to obtain or renew permits (1,966) (3,848) Purchases of available-for-sale securities (49,845) (129,234) Proceeds from sale of available-for-sale securities 68,611 98,412 Proceeds from sale of business, net of transactional costs 16,811 — Net cash used in investing activities (388,944) (1,507,602) Cash flows (used in) from financing activities: Change in uncashed checks 552 (1,806) Tax payments related to withholdings on vested restricted stock (8,801) (10,805) Repurchases of common stock (50,183) (54,410) Deferred financing costs paid (410) (13,737) Payments on finance leases (12,821) (8,458) Principal payments on debt (115,652) (7,535) Proceeds from issuance of debt, net of discount — 995,000 Net cash (used in) from financing activities (187,315) 898,249 Effect of exchange rate change on cash (9,927) (3,170) Increase (decrease) in cash and cash equivalents 40,028 (66,526) Cash and cash equivalents, beginning of year 452,575 519,101 Cash and cash equivalents, end of year $ 492,603 $ 452,575 Supplemental information: Cash payments for interest and income taxes: Interest paid $ 105,643 $ 73,440 Income taxes paid, net of refunds 78,526 65,192 Non-cash investing activities: Property, plant and equipment accrued 30,950 19,264 Remedial liability assumed in acquisition of property, plant and equipment 8,092 — Supplemental Segment Data (in thousands) For the Three Months Ended Revenue December 31, 2022 December 31, 2021 Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Environmental Services $ 1,039,637 $ 7,397 $ 1,047,034 $ 906,051 $ 2,071 $ 908,122 Safety-Kleen Sustainability Solutions 238,388 (7,397) 230,991 213,348 (2,071) 211,277 Corporate Items 73 — 73 82 — 82 Total $ 1,278,098 $ — $ 1,278,098 $ 1,119,481 $ — $ 1,119,481 For the Twelve Months Ended Revenue December 31, 2022 December 31, 2021 Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Environmental Services $ 4,144,973 $ 26,733 $ 4,171,706 $ 3,025,907 $ 6,547 $ 3,032,454 Safety-Kleen Sustainability Solutions 1,021,125 (26,733) 994,392 779,360 (6,547) 772,813 Corporate Items 507 — 507 299 — 299 Total $ 5,166,605 $ — $ 5,166,605 $ 3,805,566 $ — $ 3,805,566 For the Three Months Ended For the Twelve Months Ended Adjusted EBITDA December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Environmental Services $ 239,423 $ 176,952 $ 953,053 $ 659,718 Safety-Kleen Sustainability Solutions 54,284 61,598 306,327 227,354 Corporate Items (69,463) (64,250) (237,252) (210,466) Total $ 224,244 $ 174,300 $ 1,022,128 $ 676,606 View source version on businesswire.com: https://www.businesswire.com/news/home/20230301005164/en/Contacts Michael L. Battles 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
Posts Q4 Revenue Growth of 14% to $1.28 Billion; Full-Year Revenues of $5.17 Billion Generates Q4 Net Income of $82.5 Million, or EPS of $1.52, with Adjusted EPS of $1.44; Full-Year Net Income of $411.7 Million, or EPS of $7.56, with Adjusted EPS of $7.15 Achieves Q4 Adjusted EBITDA Growth of 29% to $224.2 Million; Generates Full-Year Adjusted EBITDA of $1,022 Million Delivers Full-Year Net Cash from Operating Activities of $626.2 Million and Adjusted Free Cash Flow of $289.9 Million Provides Full-Year 2023 Adjusted EBITDA and Adjusted Free Cash Flow Guidance
Clean Harbors, Inc. (“Clean Harbors”) (NYSE: CLH), the leading provider of environmental and industrial services throughout North America, today announced financial results for the fourth quarter and year ended December 31, 2022. “We concluded a record 2022 with strong fourth-quarter results, led by our Environmental Services segment,” said Alan S. McKim, Chairman, President and Chief Executive Officer. “Favorable market dynamics continued to drive considerable demand for our disposal and recycling assets, while our broad range of service offerings also performed well in the quarter. Revenues grew $159 million from a combination of pricing and volume. By leveraging that growth and controlling our costs, we delivered Q4 Adjusted EBITDA growth of 29% and improved our margins by 190 basis points from the same period a year ago.” Fourth-Quarter Results Revenues increased 14% to $1.28 billion from $1.12 billion in the same period of 2021. Income from operations grew 55% to $127.4 million from $82.2 million in the fourth quarter of 2021. Net income was $82.5 million, or $1.52 per diluted share. This compared with net income of $49.0 million, or $0.90 per diluted share, for the same period in 2021. Adjusted for certain items in both periods, adjusted net income was $78.5 million, or $1.44 per diluted share, for the fourth quarter of 2022, compared with adjusted net income of $48.6 million, or $0.89 per diluted share, for the same period of 2021. (See reconciliation tables below). Net income and adjusted net income results for the fourth quarter of 2022 included pre-tax integration and severance costs of $0.3 million. Comparable costs in the fourth quarter of 2021 were $8.6 million, reflecting costs associated with the HydroChemPSC acquisition, which was completed in October 2021. Adjusted EBITDA (see description below) increased 29% to $224.2 million from $174.3 million in the same period of 2021. Q4 2022 Segment Review “Environmental Services (ES) revenues increased 15% year-over-year, and Adjusted EBITDA in the segment rose 35% resulting in a 22.9% margin for the quarter which represents a 340-basis-point improvement over the prior year quarter,” McKim said. “Utilization of our incinerator network was lower than recent quarters at 84% because of unplanned outages at several locations due to severe weather experienced in December. Volumes of higher-value waste streams and overall incineration demand remained strong resulting in a 21% increase in average incineration pricing from a year ago. Landfill volumes increased 28%, along with a small increase in average pricing, as we continued to capture more remediation and waste projects. Our Industrial Services business performed well in the quarter and closed out the year strong with increased customer needs related to the severe weather. Safety-Kleen Environmental revenue grew more than 20% for the third consecutive quarter; demand for its core offerings has now surpassed pre-pandemic levels. Field Services revenue was up 8% from pricing and branch growth initiatives. “Safety-Kleen Sustainability Solutions (SKSS) revenues grew 9% in the fourth quarter, while Adjusted EBITDA decreased 12% from a year ago,” McKim said. “We experienced a seasonal slowdown in base oil demand in the fourth quarter after a record-breaking third quarter. While our re-refinery spread remained wide, we sold lower volumes of both base oil and blended products as customers depleted their inventories to close out the year. Segment profitability was affected by overall revenue mix and severe weather at multiple locations, which impacted production and resulted in higher costs. We also made investments in the business to accelerate lubricant sales in 2023 and beyond. Waste oil collections were strong in the quarter at 57 million gallons. The new Georgia plant we acquired in June has been running well after initiating multiple throughput enhancements.” 2022 Financial Results Clean Harbors’ revenues increased 36% to $5.17 billion compared with $3.81 billion in 2021. Income from operations increased 82% to $634.7 million from $347.9 million in 2021. Net income was $411.7 million, or $7.56 per diluted share, compared with net income of $203.2 million, or $3.71 per diluted share for 2021. Adjusted for certain items in both periods, the Company reported adjusted net income for 2022 of $389.5 million, or $7.15 per diluted share, compared with adjusted net income of $199.6 million, or $3.64 per diluted share, for 2021. (See reconciliation table below). Net income and adjusted net income results for 2022 included pre-tax integration and severance costs of $3.0 million. Comparable costs in 2021 were $19.7 million, with the HPC acquisition representing the largest contributing factor. Adjusted EBITDA (see description below) increased 51% to $1,022.1 million, compared with Adjusted EBITDA of $676.6 million in 2021, which included $12.0 million of benefits from government assistance programs. The Company generated adjusted free cash flow of $289.9 million in 2022, compared with $326.3 million in 2021. The decrease is largely attributable to higher working capital related to our rapid growth and increased capital expenditures including $45 million of spend associated with the construction of our new incinerator in Nebraska. “2022 was another terrific year for Clean Harbors, from our outstanding safety results to our record financial performance and notable operating achievements,” said McKim. “In safety, we vastly exceeded our goal of delivering a Total Recordable Incident Rate (TRIR) of below 1.0. We concluded the year with a TRIR of 0.73, which is our best annual safety performance by a wide margin, as the team worked diligently to keep themselves and their colleagues safe. Financially, we expanded our Adjusted EBITDA margins by 200 basis points on the strength of a 36% top-line increase and 51% Adjusted EBITDA growth. We generated more than one billion dollars of Adjusted EBITDA for the first time in our history – while improving our ROIC for the fifth consecutive year. On the operational side, we successfully integrated HPC, advanced construction of our next incinerator, acquired our eighth re-refinery facility, launched our KLEEN+ brand in the base oil market, significantly lowered voluntary turnover while increasing the hiring of billable headcount, and issued our ground-breaking PFAS incineration study.” Business Outlook and Financial Guidance “We enter 2023 with momentum across all our key businesses,” McKim said. “Within ES, our record backlog of waste and deferred revenue grew during the quarter, which positions us well for this year. Based on the diversity of our customer base, we expect healthy demand for our network of disposal and recycling assets to continue in 2023. Our service businesses all registered robust growth in 2022 and, with the expansion of our billable headcount throughout the year, we should benefit from those hires in 2023. We also expect ample project opportunities this year as monies from the U.S. infrastructure bill, the CHIPS Act and other programs supporting domestic spending are released. In addition, we expect to benefit from the manufacturing reshoring trend. “Within SKSS, we continue to closely manage both ends of our re-refining spread and collect the waste oil volumes needed to support our plants. While base oil demand slowed from heightened summer levels in the fourth quarter, we are beginning to experience the normal seasonal pickup in the early part of this year and are confident overall market conditions will remain favorable for 2023. We also see numerous opportunities to enhance our profitability in this segment including raising production from 2022 levels, increasing sales of blended products and capitalizing on growing interest in our sustainable products. Our new KLEEN+ base oil brand is helping to facilitate discussions with customers seeking solutions that lower the environmental impact of their automotive and industrial lubricant products,” McKim concluded. For the first quarter of 2023, Clean Harbors expects Adjusted EBITDA to increase approximately 20% from the prior year. For full-year 2023, Clean Harbors expects: Adjusted EBITDA in the range of $1,010 million to $1,050 million or a midpoint of $1,030 million. This range is based on anticipated GAAP net income in the range of $355 million to $391 million; and Adjusted free cash flow in the range of $305 million to $345 million, or a midpoint of $325 million, based on anticipated net cash from operating activities in the range of $705 million to $765 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 since the Company’s loan covenants are based upon levels of Adjusted EBITDA achieved and management routinely evaluates the performance of its businesses based upon levels of Adjusted EBITDA. The Company defines Adjusted EBITDA in accordance with its existing revolving credit agreement, as described in the following reconciliation showing the differences between reported net income and Adjusted EBITDA for the three and twelve months ended December 31, 2022 and 2021 (in thousands, except percentages): For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Net income $ 82,474 $ 48,993 $ 411,744 $ 203,247 Accretion of environmental liabilities 3,344 3,120 12,943 11,745 Stock-based compensation 6,469 6,053 26,844 18,839 Depreciation and amortization 87,034 82,929 347,594 298,135 Other (income) expense, net (399) (1,994) (2,472) 515 Loss on early extinguishment of debt 422 — 422 — Gain on sale of business — — (8,864) — Interest expense, net of interest income 28,309 23,704 107,663 77,657 Provision for income taxes 16,591 11,495 126,254 66,468 Adjusted EBITDA $ 224,244 $ 174,300 $ 1,022,128 $ 676,606 Adjusted EBITDA Margin 17.5 % 15.6 % 19.8 % 17.8 % This press release includes a discussion of net income and earnings per share adjusted for the loss on early extinguishment of debt, gain on sale of business and the impacts of tax-related valuation allowances and other items as identified in the reconciliations provided below. The Company believes that discussion of these additional non-GAAP measures provides investors with meaningful comparisons of current results to prior periods’ results by excluding items that the Company does not believe reflect its fundamental business performance. The following shows the difference between net income and adjusted net income, and the difference between earnings per share and adjusted earnings per share, for the three and twelve months ended December 31, 2022 and 2021 (in thousands, except per share amounts): For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Adjusted net income Net income $ 82,474 $ 48,993 $ 411,744 $ 203,247 Loss on early extinguishment of debt 422 — 422 — Gain on sale of business — — (8,864) — Tax-related valuation allowances and other* (4,354) (428) (13,848) (3,649) Adjusted net income $ 78,542 $ 48,565 $ 389,454 $ 199,598 Adjusted earnings per share Earnings per share $ 1.52 $ 0.90 $ 7.56 $ 3.71 Loss on early extinguishment of debt 0.01 — 0.01 — Gain on sale of business — — (0.16) — Tax-related valuation allowances and other* (0.09) (0.01) (0.26) (0.07) Adjusted earnings per share $ 1.44 $ 0.89 $ 7.15 $ 3.64 * For the three and twelve months ended December 31, 2022, other amounts include ($0.1) million and $1.5 million, or $0.03 per share, of tax impacts from the loss on early extinguishment of debt and gain on sale of business, respectively. Adjusted Free Cash Flow Reconciliation Clean Harbors reports adjusted free cash flow, which it considers 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. The Company excludes cash impacts of items derived from non-operating activities. Adjusted free cash flow should not be considered an alternative to net cash from operating activities or other measurements under GAAP. 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 net cash from operating activities and adjusted free cash flow is as follows for the three and twelve months ended December 31, 2022 and 2021 (in thousands): For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Adjusted free cash flow Net cash from operating activities $ 268,672 $ 177,771 $ 626,214 $ 545,997 Additions to property, plant and equipment (100,509) (95,202) (345,056) (241,856) Proceeds from sale and disposal of fixed assets 3,661 5,732 8,779 22,156 Adjusted free cash flow $ 171,824 $ 88,301 $ 289,937 $ 326,297 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, 2023 Projected GAAP net income $ 355 to $ 391 Adjustments: Accretion of environmental liabilities 14 to 13 Stock-based compensation 26 to 29 Depreciation and amortization 355 to 345 Loss on early extinguishment of debt 2 2 Interest expense, net 128 to 123 Provision for income taxes 130 to 147 Projected Adjusted EBITDA $ 1,010 to $ 1,050 Adjusted Free Cash Flow Guidance Reconciliation An itemized reconciliation between projected net cash from operating activities and projected adjusted free cash flow is as follows (in millions): For the Year Ending December 31, 2023 Projected net cash from operating activities $ 705 to $ 765 Additions to property, plant and equipment (410) to (430) Proceeds from sale and disposal of fixed assets 10 to 10 Projected adjusted free cash flow $ 305 to $ 345 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 201.689.8881 or 877.709.8155 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, energy and manufacturing, 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 North America’s largest re-refiner and recycler of used oil and a leading provider of parts washers and environmental services to commercial, industrial and automotive customers. 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,” or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors’ management as of this date 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 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 CONSOLIDATED STATEMENTS OF OPERATIONS (in thousands, except per share amounts) For the Three Months Ended For the Twelve Months Ended December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Revenues $ 1,278,098 $ 1,119,481 $ 5,166,605 $ 3,805,566 Cost of revenues: (exclusive of items shown separately below) 891,424 792,183 3,543,930 2,609,837 Selling, general and administrative expenses 168,899 159,051 627,391 537,962 Accretion of environmental liabilities 3,344 3,120 12,943 11,745 Depreciation and amortization 87,034 82,929 347,594 298,135 Income from operations 127,397 82,198 634,747 347,887 Other income (expense), net 399 1,994 2,472 (515) Loss on early extinguishment of debt (422) — (422) — Gain on sale of business — — 8,864 — Interest expense, net (28,309) (23,704) (107,663) (77,657) Income before provision for income taxes 99,065 60,488 537,998 269,715 Provision for income taxes 16,591 11,495 126,254 66,468 Net income $ 82,474 $ 48,993 $ 411,744 $ 203,247 Earnings per share: Basic $ 1.53 $ 0.90 $ 7.59 $ 3.73 Diluted $ 1.52 $ 0.90 $ 7.56 $ 3.71 Shares used to compute earnings per share – Basic 54,059 54,398 54,223 54,514 Shares used to compute earnings per share – Diluted 54,378 54,658 54,487 54,761 CLEAN HARBORS, INC. AND SUBSIDIARIES UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS (in thousands) December 31, 2022 December 31, 2021 Current assets: Cash and cash equivalents $ 492,603 $ 452,575 Short-term marketable securities 62,033 81,724 Accounts receivable, net 964,603 792,734 Unbilled accounts receivable 107,010 94,963 Inventories and supplies 324,994 250,692 Prepaid expenses and other current assets 82,518 68,483 Total current assets 2,033,761 1,741,171 Property, plant and equipment, net 1,980,302 1,863,175 Other assets: Operating lease right-of-use assets 166,181 161,797 Goodwill 1,246,878 1,227,042 Permits and other intangibles, net 620,782 644,912 Other 81,803 15,602 Total other assets 2,115,644 2,049,353 Total assets $ 6,129,707 $ 5,653,699 Current liabilities: Current portion of long-term debt $ 10,000 $ 17,535 Accounts payable 446,629 359,866 Deferred revenue 94,094 83,749 Accrued expenses and other current liabilities 396,716 391,414 Current portion of closure, post-closure and remedial liabilities 23,123 25,136 Current portion of operating lease liabilities 49,532 47,614 Total current liabilities 1,020,094 925,314 Other liabilities: Closure and post-closure liabilities, less current portion 105,596 87,088 Remedial liabilities, less current portion 106,372 98,752 Long-term debt, less current portion 2,414,828 2,517,024 Operating lease liabilities, less current portion 119,259 117,991 Deferred tax liabilities 350,389 314,853 Other long-term liabilities 90,847 78,790 Total other liabilities 3,187,291 3,214,498 Total stockholders’ equity, net 1,922,322 1,513,887 Total liabilities and stockholders’ equity $ 6,129,707 $ 5,653,699 CLEAN HARBORS, INC. AND SUBSIDIARIES UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) For the Year Ended December 31, 2022 December 31, 2021 Cash flows from operating activities: Net income $ 411,744 $ 203,247 Adjustments to reconcile net income to net cash from operating activities: Depreciation and amortization 347,594 298,135 Allowance for doubtful accounts 7,783 8,018 Amortization of deferred financing costs and debt discount 6,301 4,245 Accretion of environmental liabilities 12,943 11,745 Changes in environmental liability estimates 8,272 2,979 Deferred income taxes 17,549 1,482 Other (income) expense, net (2,472) 515 Stock-based compensation 26,844 18,839 Gain on sale of business (8,864) — Loss on early extinguishment of debt 422 — Environmental expenditures (13,946) (15,506) Changes in assets and liabilities, net of acquisitions: Accounts receivable and unbilled accounts receivable (201,087) (96,551) Inventories and supplies (74,547) (31,689) Other current and non-current assets (17,303) 9,268 Accounts payable 74,460 108,398 Other current and long-term liabilities 30,521 22,872 Net cash from operating activities 626,214 545,997 Cash flows used in investing activities: Additions to property, plant and equipment (345,056) (241,856) Proceeds from sale and disposal of fixed assets 8,779 22,156 Acquisitions, net of cash acquired (86,278) (1,253,232) Additions to intangible assets including costs to obtain or renew permits (1,966) (3,848) Purchases of available-for-sale securities (49,845) (129,234) Proceeds from sale of available-for-sale securities 68,611 98,412 Proceeds from sale of business, net of transactional costs 16,811 — Net cash used in investing activities (388,944) (1,507,602) Cash flows (used in) from financing activities: Change in uncashed checks 552 (1,806) Tax payments related to withholdings on vested restricted stock (8,801) (10,805) Repurchases of common stock (50,183) (54,410) Deferred financing costs paid (410) (13,737) Payments on finance leases (12,821) (8,458) Principal payments on debt (115,652) (7,535) Proceeds from issuance of debt, net of discount — 995,000 Net cash (used in) from financing activities (187,315) 898,249 Effect of exchange rate change on cash (9,927) (3,170) Increase (decrease) in cash and cash equivalents 40,028 (66,526) Cash and cash equivalents, beginning of year 452,575 519,101 Cash and cash equivalents, end of year $ 492,603 $ 452,575 Supplemental information: Cash payments for interest and income taxes: Interest paid $ 105,643 $ 73,440 Income taxes paid, net of refunds 78,526 65,192 Non-cash investing activities: Property, plant and equipment accrued 30,950 19,264 Remedial liability assumed in acquisition of property, plant and equipment 8,092 — Supplemental Segment Data (in thousands) For the Three Months Ended Revenue December 31, 2022 December 31, 2021 Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Environmental Services $ 1,039,637 $ 7,397 $ 1,047,034 $ 906,051 $ 2,071 $ 908,122 Safety-Kleen Sustainability Solutions 238,388 (7,397) 230,991 213,348 (2,071) 211,277 Corporate Items 73 — 73 82 — 82 Total $ 1,278,098 $ — $ 1,278,098 $ 1,119,481 $ — $ 1,119,481 For the Twelve Months Ended Revenue December 31, 2022 December 31, 2021 Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Third Party Revenues Intersegment Revenues (Expense), net Direct Revenues Environmental Services $ 4,144,973 $ 26,733 $ 4,171,706 $ 3,025,907 $ 6,547 $ 3,032,454 Safety-Kleen Sustainability Solutions 1,021,125 (26,733) 994,392 779,360 (6,547) 772,813 Corporate Items 507 — 507 299 — 299 Total $ 5,166,605 $ — $ 5,166,605 $ 3,805,566 $ — $ 3,805,566 For the Three Months Ended For the Twelve Months Ended Adjusted EBITDA December 31, 2022 December 31, 2021 December 31, 2022 December 31, 2021 Environmental Services $ 239,423 $ 176,952 $ 953,053 $ 659,718 Safety-Kleen Sustainability Solutions 54,284 61,598 306,327 227,354 Corporate Items (69,463) (64,250) (237,252) (210,466) Total $ 224,244 $ 174,300 $ 1,022,128 $ 676,606 View source version on businesswire.com: https://www.businesswire.com/news/home/20230301005164/en/
Michael L. Battles 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