Clean Harbors (CLH) Up 4.3% Since Last Earnings Report: Can It Continue?

A month has gone by since the last earnings report for Clean Harbors (CLH). Shares have added about 4.3% in that time frame, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Clean Harbors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important catalysts.

Clean Harbors' Q1 Earnings Beat Estimates

Clean Harbors, Inc. reported impressive first-quarter 2024 results, wherein earnings and revenues beat the Zacks Consensus Estimate.

CLH’s earnings of $1.3 per share beat the Zacks Consensus Estimate by 11.2% but declined 5.2% from the year-ago quarter. Total revenues of $1.4 billion surpassed the consensus estimate by 2.8% and increased 5.3% on a year-over-year basis.

Segmental Revenues

Environmental Services’ (ES) revenues of $1.2 billion increased 9.5% from the year-ago quarter, beating our anticipated $1.1 billion. The uptick was backed by organic growth from volumes and pricing, and the acquisition of HEPACO and Thompson.

Revenues from Safety-Kleen Sustainability Solutions’ (SKSS) amounted to $204.1 million, down 13.7% from fourth-quarter 2023 and missing our estimate of $231.8 million. Challenging demand in both base oil and lubricants leading to lower pricing, specifically for non-contracted volumes sold in the spot market, resulted in the decline of this segment’s revenues.

Profitability Performance

Adjusted EBITDA of $230.1 million grew 7% from the year-ago quarter and surpassed our expectation of $220.9 million. The adjusted EBITDA margin was 16.7%, up 20 basis points from the year-ago quarter’s actual.

Segment-wise, ES adjusted EBITDA amounted to $264.5 million, increasing 15.8% year over year. The figure beat our estimated $240.3 million. Adjusted EBITDA for SKSS was $29.7 million, down 28.4% from the year-ago quarter and missing our anticipated $37.8 million.

Balance Sheet & Cash Flow

Clean Harbors exited the quarter with cash and cash equivalents of $337.9 million compared with $444.7 million at the end of the preceding quarter. Inventories and supplies were $354.3 million compared with $327.5 million in fourth-quarter 2023.

Long-term debt (less current portion) was $2.8 billion compared with the previous quarter’s $2.3 billion. CLH generated $18.5 million in net cash from operating activities. The capital expenditure amounted to $137.9 million. The adjusted free cash flow utilized was $118.4 million.

2024 Guidance

For 2024, CLH raised the guidance for adjusted EBITDA to be within the range of $1.1-$1.15 billion from the previously guided range of $1.05-$1.11 billion. The adjusted free cash flow is expected to be between $340 million and $400 million. CapEx is projected to be within the range of $410-$440 million compared with the previous expectation of $400-$430 million.

How Have Estimates Been Moving Since Then?

It turns out, fresh estimates have trended downward during the past month.

VGM Scores

At this time, Clean Harbors has an average Growth Score of C, a grade with the same score on the momentum front. Charting a somewhat similar path, the stock was allocated a grade of B on the value side, putting it in the top 40% for this investment strategy.

Overall, the stock has an aggregate VGM Score of B. If you aren't focused on one strategy, this score is the one you should be interested in.

Outlook

Estimates have been broadly trending downward for the stock, and the magnitude of these revisions looks promising. Notably, Clean Harbors has a Zacks Rank #2 (Buy). We expect an above average return from the stock in the next few months.

Performance of an Industry Player

Clean Harbors is part of the Zacks Waste Removal Services industry. Over the past month, Stericycle (SRCL), a stock from the same industry, has gained 10.1%. The company reported its results for the quarter ended March 2024 more than a month ago.

Stericycle reported revenues of $664.9 million in the last reported quarter, representing a year-over-year change of -2.8%. EPS of $0.57 for the same period compares with $0.49 a year ago.

For the current quarter, Stericycle is expected to post earnings of $0.57 per share, indicating a change of +32.6% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.4% over the last 30 days.

Stericycle has a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Score of D.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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