Environmental services firm Clean Harbors CLH reported third-quarter results that continue to show the firm's susceptibility to the economic downturn. The weakened state of the economy has caused many of Clean Harbors' clients to postpone the cleanup of hazardous waste. Despite project delays for hazardous waste removal, we still think Clean Harbors is well positioned to benefit from a rebound in the economy. Many of the projects that have been delayed will eventually come to market, providing additional growth in later years. Further, the company's recent acquisition of Eveready expands its footprint into the industrial and exploration industries, which the firm did not service before the acquisition. We think the firm is better positioned to expand its industrial disposal capacity while diversifying its revenue. Clean Harbors also has an investment-grade balance sheet with plenty of cash on hand. As such, we are leaving our fair value estimate unchanged. Compared with the year-ago quarter, revenue increased roughly 12% to $306 million, largely because of the acquisition of Eveready. Stripping out revenue related to the acquisition, internal growth declined roughly 16.5%. Similar to the second quarter of this year, a slowdown in several industries that the company services--primarily refineries and manufacturing--has put stress on the firm's top line. Further, event-driven business (disposal services that are typically one-time in nature or relate to an emergency cleanup) have been lighter than previous quarters. The acquisition of Eveready pushed operating costs higher in the quarter. A combination of lower revenue and higher costs lowered earnings before interest, taxes, depreciation, and amortization by 80 basis points to 15.8%.
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Analyst Notes
08-03-09 | 12:43PM Clean Harbors Reports 2Q
05-06-09 | 11:18AM Clean Harbors Reports 1Q
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