Clean Harbors, Inc. CLH reported strong second-quarter 2018 results wherein both earnings and revenues surpassed the Zacks Consensus Estimate.
Earnings of 54 cents per share beat the consensus mark by 24 cents and exceeded the year-ago figure of 24 cents. The improvement came on the back of pricing initiatives, improved mix of waste streams and effective spread management.
Total revenues of $849.1 million beat the consensus estimate by $11.9 million and increased 12.8% year over year on strong organic growth and Veolia acquisition. Veolia assets accounted for almost half of the company's top-line growth in the quarter.
Notably, shares of Clean Harbors have declined around 2.3% since its earnings release on Aug 1. So far this year, shares of Clean Harbors have gained 14.4% compared with the 4.1% rise of the industry it belongs to.
Revenues by Segment
Environmental Services revenues increased 15.2% year over year to $554.8 million. Growth was driven by strength in Industrial Services lines of business in both the United States and Canada, Veolia acquisition, higher volumes in the company's disposal network, pricing improvements, organic growth in base business and project work within Field Services business. The segment benefited from improving industrial economy that boosted key industry verticals like chemical and manufacturing. The segment accounted for 65% of total revenues.
Safety-Kleen revenues increased 8.5% year over year to $294.4 million. The growth was buoyed by higher base oil and blended pricing and growth in the company's branch network. The segment contributed 35% to total revenues.
Adjusted EBITDA in the second quarter increased 15.6% year over year to $139.6 million. The upside was driven by solid waste volume, improved pricing and higher revenues. Adjusted EBITDA margin increased 40 basis points (bps) year over year to 16.4%.
Segment-wise, Environmental Services' adjusted EBITDA was $109.2 million, up 15.1% year over year. Safety-Kleen's adjusted EBITDA of $73.1 million showed an improvement of 21.2% year over year.
Clean Harbors, Inc. Price, Consensus and EPS Surprise
Clean Harbors, Inc. Price, Consensus and EPS Surprise | Clean Harbors, Inc. Quote
Balance Sheet, Cash Flow, Share Repurchase
Clean Harbors exited the second quarter with cash and cash equivalents of $197.1 million compared with $186.4 million at the end of the prior quarter. Inventories and supplies were $193.5 million, up from $181.4 million in the prior quarter. Long-term debt of $1.62 billion was in line with the prior quarter.
The company generated $77.7 million of cash from operating activities in the quarter. Adjusted free cash flow was $29.7 million. CapEx (net of disposals) came in at $48.1 million.
In the quarter, the company repurchased 0.2 million shares for a total cost of $12.2 million.
Clean Harbors raised its 2018 guidance. The company now expects adjusted EBITDA in the range of $460-$490 million compared with the previously guided range of $440-$480 million. Segment-wise, adjusted EBITDA for Environmental Services segment is anticipated to increase in low-teens in 2018. Veolia's U.S. Industrial business is expected to add $10-$13 million in adjusted EBITDA. Safety-Kleen's adjusted EBITDA is expected to register almost mid-teens growth.
Adjusted free cash flow is expected in the range of $135-$165 million compared with the previously guided range of $125-$155 million.
Net cash from operating activities is projected between $305 million and $355 million. The previous guidance was in the range of $295-$345 million.
Zacks Rank & Upcoming Releases
Clean Harbors currently carries a Zacks Rank #3 (Hold). You can see the complete list of today's Zacks #1 Rank (Strong Buy) stocks here .
Investors interested in the broader Business Services sector are keenly awaiting second-quarter earnings reports from key players like Dun & Bradstreet Corporation DNB , Delphi Technologies DLPH and Worldpay WP . While Dun & Bradstreet and Delphi Technologies will report their quarterly numbers on Aug 8, Worldpay will release results on Aug 9.
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