Date: August 8, 2007
Source: Clean Harbors, Inc.
Demand for Services and Teris Acquisition Drive 20% Growth as Company Achieves Record Revenues
Clean Harbors, Inc. (NASDAQ: CLHB), the leading provider of environmental and hazardous waste management services throughout North America, today announced financial results for the second quarter ended June 30, 2007.
For the second quarter of 2007, Clean Harbors reported a 20 percent increase in revenue to a record $238.7 million from $199.6 million reported in the second quarter of 2006. Income from operations rose 32 percent to $23.6 million from $17.8 million in the second quarter of 2006. Net income attributable to common stockholders was $11.1 million, or $0.54 per diluted share, for the second quarter of 2007 compared with $11.3 million, or $0.55 per diluted share, in the same period of 2006. The Company's provision for income taxes was $8.7 million for the second quarter of 2007 versus $3.5 million in the corresponding quarter of last year. The effective tax rate in the second quarter of 2007 was 44 percent compared to 23 percent in the same period of last year. The provision for income taxes includes $1.4 million, or $0.07 per diluted share, related to the Company's first-quarter 2007 adoption of Financial Accounting Interpretation No. 48 ("FIN 48") "Accounting for Uncertainty in Income Taxes." EBITDA (see description below) increased 24 percent to $35.2 million in the second quarter of 2007, from $28.3 million for the quarter ended June 30, 2006.
Comments on the Second Quarter
"It was another record setting quarter for Clean Harbors," said Alan S. McKim, Chairman and Chief Executive Officer. "Strength across our U.S. incinerators and landfills, including another full quarter of contribution from Teris, coupled with steady growth across all service lines fueled a 20 percent increase in our top line. Landfill volumes rebounded from seasonal lows in the first quarter of the year. Our U.S. incinerators ran at high utilization levels with a favorable product mix. Our Site Services segment also continued its recent growth pattern with another solid performance, even with very little emergency response work in the second quarter."
"Higher revenues and our ongoing operational cost initiatives enabled us to meet the high end of our EBITDA guidance range, despite the impact of unusually high healthcare costs and the significant net foreign exchange loss associated with the strengthening of the Canadian dollar," McKim said.
"Cash generation was a key financial highlight for Clean Harbors in the second quarter," continued McKim. "Our cash and marketable securities balance increased by $20 million during the quarter to $89 million. This increase was mainly derived from enhanced productivity in operations and working capital, and careful management of our environmental and capital spending."
"In July, we announced the acquisition of certain assets owned by Romic Environmental Technologies Corporation, including business generated at seven service centers," said McKim. "This acquisition, which we recently closed, will expand our presence in certain underpenetrated West Coast markets. We believe we can derive significant leverage from these locations through our existing infrastructure of landfills, incinerators and wastewater treatment centers."
Non-GAAP Second-Quarter Results
Clean Harbors reports EBITDA results, which are non-GAAP financial measures, as a complement to results provided in accordance with accounting principles generally accepted in the United States (GAAP) and believes that such information provides additional useful information to investors since the Company's loan covenants are based upon levels of EBITDA achieved. The Company defines EBITDA in accordance with its existing credit agreement, as described in the following reconciliation showing the differences between reported net income and EBITDA for the second quarter and first six months of 2007 and 2006 (in thousands):
| For the three months ended: June 30, |
For the six months ended: June 30, |
|||
| 2007 | 2006 | 2007 | 2006 | |
| Net income | $11,188 | $11,372 | $14,689 | $14,177 |
| Accretion of environmental liabilities | 2,554 | 2,543 | 5,028 | 5,053 |
| Depreciation and amortization | 9,049 | 7,954 | 17,987 | 15,233 |
| Loss on early extinguishment of debt | - | - | - | 8,290 |
| Interest expense, net | 3,695 | 2,876 | 6,879 | 6,049 |
| Provision for income taxes | 8,739 | 3,469 | 12,713 | 4,164 |
| Other (income) expense | 5 | 132 | (1) | 162 |
| EBITDA | $35,230 | $28,346 | $57,295 | $53,128 |
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