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Clean Harbors (CLH) Down on Wider-than-Expected Q1 Loss

Clean Harbors, Inc.CLH reported a first-quarter 2016 adjusted loss of $13 million or 22 cents per share, compared with a net loss of $7.1 million or 12 cents per share in the prior-year quarter. The net loss was broader than the Zacks Consensus Estimate of a loss of 21 cents. Consequently, the company's shares have fallen by 3.36% to $47.75 as of May 4, 2016.

Clean Harbors Inc. (CLH) Street EPS & Surprise Percent - Last 5 Quarters | FindTheCompany

GAAP loss for the reported quarter was $20.9 million or 36 cents per share compared with a loss $7.1 million or 12 cents per share in the prior year. The deterioration was primarily due to a fall in revenues.

Clean Harbors reported net revenues of $636.1 million in the quarter, down 13.2% from the prior year due to softness in the energy market, base oil pricing and currency headwinds. Revenues also missed the Zacks Consensus Estimate of $658 million. Adjusted EBITDA for the reported quarter decreased to $67.3 million from $78.3 million in the year-ago quarter.

Segment Details

Tech Services was the company's largest contributor of revenues, accounting for 40% of the total. Segment revenues in the quarter declined 8% from the prior year to $254.3 million due to unfavorable currency translation. Adjusted EBITDA declined 4.7% year over year to $60.4 million.

Industrial and Field Services revenues accounted for 18% of total revenues in the reported quarter. Segment revenues declined 18.7% to $114.1 million due to the lackluster sales environment that resulted in customer reluctance to spend on projects, as well as an adverse currency translation effect. Adjusted EBITDA showed a sharp decline of 79.6% to $2.1 million, largely due to lower revenues.

Kleen Performance Products revenues declined 26% to $58.1 million owing to a weak oil industry. However, adjusted EBITDA was up significantly from the year-ago quarter to $4.6 million.

SK Environmental Services revenues accounted for 25% of the total. Segment revenues increased 7.8% year over year to $160.7 million. Adjusted EBITDA for the reported quarter also improved 30.5% to $35.5 million, largely attributable to an improvement in the business mix, pricing and cost reductions.

Lodging Services revenues fell 53.6% year over year to $15.9 million due to decreases in the occupancy rate resulting from overall lower activity in oil-related industries in Western Canada. Adjusted EBITDA showed a considerable decline of 85.5% year over year to $1 million on lower segment revenues.

Oil and Gas Field Services revenues declined 39.9% to $33 million due to slowdown in energy markets both in the U.S. and Canada. Future price uncertainty has resulted in lower activity levels which are negatively impacting the business' results. A major part of the segment's operations are in Canada, and therefore U.S. to Canadian dollar foreign currency translation significantly affects the segment's results. The company incurred a negative adjusted EBITDA of $1.4 million versus positive adjusted EBITDA of $1.4 million in the year-ago quarter due to lower revenues, margin pressure and the effect of currency translation.

Balance Sheet and Cash Flow

In first-quarter 2016, the company's cash and cash equivalents were $355.3 million. Cash flow from operations totaled $39.3 million in the reported quarter, approximately half of last year's total due to the 13% decrease in revenue. Long-term debts were $1,631.6 million. Clean Harbors repurchased shares worth $5 million, while it still has approximately $117 million worth of shares available for buyback under its existing stock repurchase program.

Guidance

For 2016, Clean Harbors reiterated its adjusted EBITDA guidance in the range of $430-$490 million. The company continues to expect cash flow from operations in the range of $350 million to $400 million and free cash flow between $150 million and $200 million.

Clean Harbors carries a Zacks Rank #4 (Sell). Some better-ranked stocks in the same space include Quest Resource Holding Corporation QRHC , Nuverra Environmental Solutions, Inc. NESC and Waste Management, Inc. WM . All three carry a Zacks Rank #2 (Buy).

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WASTE MGMT-NEW (WM): Free Stock Analysis Report

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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.


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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