Clean Harbors Announces Second-Quarter 2003 Financial Results.Business Editors/Environment Writers BRAINTREE, Mass.--(BUSINESS WIRE)--Aug. 14, 2003 Company Completes Largest Emergency Response in Its History; Announces Agreement With Lenders to Amend Loan Covenants A loan covenant is a condition in a commercial loan or bond issue that requires the borrower to fulfill certain conditions or forbids the borrower from undertaking certain actions, or possibly restricts certain activities to circumstances when other conditions are met. Clean Harbors, Inc. ("Clean Harbors") (NASDAQ NASDAQ in full National Association of Securities Dealers Automated Quotations U.S. market for over-the-counter securities. Established in 1971 by the National Association of Securities Dealers (NASD), NASDAQ is an automated quotation system that reports on : CLHB CLHB Cardiff Local Health Board (UK) ), the leading provider of environmental and hazardous waste Hazardous waste Any solid, liquid, or gaseous waste materials that, if improperly managed or disposed of, may pose substantial hazards to human health and the environment. Every industrial country in the world has had problems with managing hazardous wastes. management services throughout North America North America, third largest continent (1990 est. pop. 365,000,000), c.9,400,000 sq mi (24,346,000 sq km), the northern of the two continents of the Western Hemisphere. , today announced financial results for the second quarter ended June 30, 2003. The Company reported second-quarter revenues of $172.0 million, compared with $60.1 million in the same quarter in 2002. The significant increase in revenues is attributable to the acquisition of Safety-Kleen's Chemical Services Division (CSD CSD Commission on Sustainable Development CSD Serbian Dinar (ISO currency code) CSD Christopher Street Day CSD Circuit Switched Data (Sprint) CSD Computer Science Department CSD Community School District ) and a major emergency contract the Company was awarded in the second quarter of 2003 to clean up an oil spill oil spill: see water pollution. on Cape Cod Cape Cod, narrow peninsula of glacial origin, 399 sq mi (1,033 sq km), SE Mass., extending 65 mi (105 km) E and N into the Atlantic Ocean. It is generally flat, with sand dunes, low hills, and numerous lakes. . Net loss for the second quarter of 2003 was ($6.8) million, or ($0.57) per diluted di·lute tr.v. di·lut·ed, di·lut·ing, di·lutes 1. To make thinner or less concentrated by adding a liquid such as water. 2. To lessen the force, strength, purity, or brilliance of, especially by admixture. share, which compares with net income of $483,000, or $0.03 per diluted share, for the same quarter in 2002. First half revenues for 2003 were $314.3 million compared with $113.4 million for the same period in 2002. Net loss for the first six months of 2003 was ($13.9) million, or ($1.17) per diluted share, compared with net income of $241,000, or $0.00 per diluted share, for the same period in 2002. Comments on the Second Quarter "Clean Harbors second-quarter revenues were driven by our lead role in managing a major Cape Cod oil spill clean up, which was the largest emergency response project in the Company's history," said Alan S. McKim, Chairman and Chief Executive Officer of Clean Harbors. "While we exceeded our quarterly revenue guidance, our bottom-line results were below our expectations as a result of substantial volume shortfalls in our landfill business and other softness in waste disposal volumes into our facilities in the second quarter. The drop in volumes to these facilities is an industry-wide phenomenon that our competitors, as well as our remediation and engineering clients are all experiencing." "We also continued to experience a reduction in revenues from our distributors and brokers due to the increased financial pressures they are facing," said McKim. "We expect these volumes to continue to be constrained con·strain tr.v. con·strained, con·strain·ing, con·strains 1. To compel by physical, moral, or circumstantial force; oblige: felt constrained to object. See Synonyms at force. 2. because of the uncertain economic status of some of our traditional brokers and our conservative policy of not incurring any substantial credit risks with these customers. In addition to the significant volume shortfall and a competitive market environment, our bottom-line results were affected by higher-than-expected health care costs, the negative impact associated with the strengthening Canadian dollar Noun 1. Canadian dollar - the basic unit of money in Canada; "the Canadian dollar has the image of loon on one side of the coin" loonie dollar - the basic monetary unit in many countries; equal to 100 cents on U.S. dollar denominated sales in Canada, the settlement of a state sales tax sales tax, levy on the sale of goods or services, generally calculated as a percentage of the selling price, and sometimes called a purchase tax. It is usually collected in the form of an extra charge by the retailer, who remits the tax to the government. audit and final settlement of outstanding invoicing issues with Safety-Kleen. In total, these four additional factors affected our bottom-line by over $4 million in the quarter." "We are intensifying in·ten·si·fy v. in·ten·si·fied, in·ten·si·fy·ing, in·ten·si·fies v.tr. 1. To make intense or more intense: our program to control expenses and eliminate costs," McKim said. "Furthermore, we are continuing our integration efforts of the CSD assets acquired from Safety-Kleen. We are accelerating the internalization Internalization A decision by a brokerage to fill an order with the firm's own inventory of stock. Notes: When a brokerage receives an order they have numerous choices as to how it should be filled. of select transportation and waste disposal functions - steps we previously anticipated taking next year. We are also currently reviewing our network of plants and facilities for areas to further streamline our organization and increase efficiencies. Finally, we are taking more aggressive steps to grow our core revenues, increase EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become and regain profitability as quickly as possible. We are seizing opportunities we have identified in several key vertical markets by hiring additional sales personnel during the third quarter." Revised Loan Agreements Mark Burgess Mark Burgess may refer to:
"Our revised covenants require the Company to generate approximately $60 million in EBITDA over the next four quarters, and more realistically reflect the lower sales levels we are experiencing versus those projected a year ago. Our fixed charge ratio has also been amended to incorporate the Company's expectations over the coming quarters on EBITDA generation, as well as environmental and capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. requirements." Non-GAAP Second Quarter Results The Company reported EBITDA for the second quarter of 2003 of $9.2 million compared with EBITDA of $6.1 million in the second quarter of 2002. Clean Harbors reports EBITDA results, which are non-GAAP, as a complement to results provided in accordance Accordance is Bible Study Software for Macintosh developed by OakTree Software, Inc.[] As well as a standalone program, it is the base software packaged by Zondervan in their Bible Study suites for Macintosh. with accounting principles generally accepted in the United States United States, officially United States of America, republic (2005 est. pop. 295,734,000), 3,539,227 sq mi (9,166,598 sq km), North America. The United States is the world's third largest country in population and the fourth largest country in area. (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ) and believes that such information provides an additional measurement of the Company's performance. The Company defines EBITDA in accordance with its outstanding loan agreements, as described in the following reconciliation showing the differences between reported income (loss) and EBITDA for the second quarter ended June 30, 2003 (in thousands):
For the three For the six
months ended months ended
June 30, June 30,
--------------- -----------------
2003 2002 2003 2002
--------------- -----------------
Income (loss) before change in
accounting principle $(6,799) $483 $(13,935) $241
Depreciation and amortization 6,439 2,649 13,087 5,344
Interest expense, net 5,979 2,483 11,489 4,756
Accretion of environmental
liabilities 2,783 - 5,516 -
Provision for income taxes 1,262 441 2,250 161
Other income (429) - (446) -
Restructuring - - (124) -
--------------- -----------------
EBITDA $9,235 $6,056 $17,837 $10,502
=============== =================
Outlook "Clean Harbors continues to operate in a challenging environment, but we are taking aggressive actions to address the shortfall in our landfill and incineration incineration the act of burning to ashes. businesses," said McKim. "We remain confident about the opportunity that the CSD acquisition affords us. We will continue to leverage our broad asset infrastructure, which is unmatched in the industry. While we do not anticipate an immediate turnaround in waste volumes, we are optimistic op·ti·mist n. 1. One who usually expects a favorable outcome. 2. A believer in philosophical optimism. op about our long-term prospects based on our growing sales pipeline." "Our site services business is performing well, and our growth initiatives in this segment are beginning to show in the top line," said McKim. "In addition, we anticipate that new government standards (MACT MACT Maximum Achievable Control Technology MACT Maximum Available Control Technology MACT Men of All Colors Together MACT Minnesota Association of Community Theatres MACT Maulana Azad College of Technology (Bhopal, India) ), which become effective in September, will benefit Clean Harbors by potentially forcing some competitors to shut down certain facilities thereby reducing capacity in the marketplace and causing the owners of captive incinerators to consider outsourcing (1) Contracting with outside consultants, software houses or service bureaus to perform systems analysis, programming and datacenter operations. Contrast with insourcing. See netsourcing, ASP, SSP and facilities management. as a solution to their incineration needs." Financial Guidance Based on its second-quarter results, Company expectations and current economic conditions, Clean Harbors is establishing the following third-quarter and full-year revenue guidance, and rescinding its previously announced 2003 full-year guidance for EBITDA and EPS (Encapsulated PostScript) A PostScript file format used to transfer a graphic image between applications and platforms. EPS files contain PostScript code as well as an optional preview image in TIFF, WMF, PICT or EPSI, the latter being an ASCII-only format. : Third Quarter -- Revenues of $155 million to $170 million Full-Year 2003 -- Revenues of $630 million to $660 million Conference Call Information Clean Harbors will conduct a conference call for investors to discuss the information contained in this news release today, Thursday, August 14, 2003 at 9:00 a.m. (ET). Investors who want to hear a Webcast of the call should log onto http://www.cleanharbors.com and select "Investor Relations Investor relations The process by which the corporation communicates with its investors. " at least 15 minutes prior to the broadcast. Investors should then follow the instructions provided to assure that the necessary audio applications are downloaded and installed. The call will be available on the investor relations section of http://www.cleanharbors.com for one week. About Clean Harbors, Inc. Clean Harbors, Inc. through its subsidiaries provides a wide range of environmental and waste management services to a diversified diversified (di·verˑ·s customer base including a majority of the Fortune 500 companies, thousands of smaller private entities and numerous governmental agencies. Within its international footprint, Clean Harbors has service and sales offices located in 36 states, six Canadian provinces Noun 1. Canadian province - Canada is divided into 12 provinces for administrative purposes province, state - the territory occupied by one of the constituent administrative districts of a nation; "his state is in the deep south" , Mexico, and Puerto Rico Puerto Rico (pwār`tō rē`kō), island (2005 est. pop. 3,917,000), 3,508 sq mi (9,086 sq km), West Indies, c.1,000 mi (1,610 km) SE of Miami, Fla. , and operates 52 waste management facilities strategically located throughout North America. For more information, visit our Web site at www.cleanharbors.com. Safe Harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. Statement Any statements contained herein that are not historical facts are forward-looking statements forward-looking statement A projected financial statement based on management expectations. A forward-looking statement involves risks with regard to the accuracy of assumptions underlying the projections. within the meaning of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, and involve risks and uncertainties. These forward-looking statements are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. These forward-looking statements are subject to certain risks and uncertainties that could cause actual results to differ materially from those reflected in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements, which reflect management's opinions only as of the date hereof here·of adv. Of this. hereof Adverb Formal or law of or concerning this Adv. 1. hereof - of or concerning this; "the twigs hereof are physic" . The Company undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements. Information on the potential factors that could affect the Company's actual results of operations is included in its filings with the Securities and Exchange Commission, including but not limited to its Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 30, 2003 and its Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the fiscal year ended December 31, 2002.
CLEAN HARBORS, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
(unaudited)
(in thousands, except per share data)
Three Months Six Months
Ended Ended
June 30, June 30,
------------------------------------
2003 2002 2003 2002
-------- -------- -------- ---------
Revenues $172,035 $60,105 $314,340 $113,424
Cost of revenues 131,797 42,048 238,411 80,990
Selling, general and
administrative expenses 31,003 12,001 58,092 21,932
Accretion of environmental
liabilities 2,783 -- 5,516 --
Depreciation and amortization 6,439 2,649 13,087 5,344
Restructuring -- -- (124) --
-------- -------- -------- ---------
Income (loss) from operations 13 3,407 (642) 5,158
Other income 429 -- 446 --
Interest expense, net 5,979 2,483 11,489 4,756
-------- -------- -------- ---------
Income (loss) before provision for
income taxes and cumulative
effect of change in accounting
principle (5,537) 924 (11,685) 402
Provision for income taxes 1,262 441 2,250 161
-------- -------- -------- ---------
Income (loss) before cumulative
effect of change in accounting
principle (6,799) 483 (13,935) 241
Cumulative effect of change in
accounting principle, net of
$0 taxes -- -- 8 --
-------- -------- -------- ---------
Net income (loss) (6,799) 483 (13,943) 241
Dividends and accretion on
preferred stock 814 112 1,618 224
-------- -------- -------- ---------
Net income (loss) attributable to
common shareholders $(7,613) $371 $(15,561) $17
======== ======== ======== =========
Basic income (loss) per share:
Income (loss) before
cumulative effect of change
in accounting principle $(0.57) $0.03 $(1.17) $0.00
======== ======== ======== =========
Cumulative effect of change
in accounting principle, net
of income taxes -- -- -- --
======== ======== ======== =========
Income (loss) attributable
to common shareholders $(0.57) $0.03 $(1.17) $0.00
======== ======== ======== =========
Diluted loss per share:
Income (loss) before change
in accounting principle $(0.57) $0.03 $(1.17) $0.00
======== ======== ======== =========
Cumulative effect of change
in accounting principle, net
of income taxes -- -- -- --
======== ======== ======== =========
Income (loss) attributable
to common shareholders $(0.57) $0.03 $(1.17) $0.00
======== ======== ======== =========
Weighted average common shares
outstanding 13,436 12,064 13,353 11,932
======== ======== ======== =========
Weighted average common shares
outstanding plus potentially
dilutive common shares 13,436 14,362 13,353 14,213
======== ======== ======== =========
CLEAN HARBORS, INC.
SUMMARIZED CONSOLIDATED BALANCE SHEET
(unaudited)
(in thousands)
June 30, Dec. 31,
2003 2002
--------- ---------
Current assets $168,616 $190,622
Net property, plant and equipment 167,172 181,674
Other assets 197,916 187,394
--------- ---------
Total assets $533,704 $559,690
========= =========
Current liabilities $183,334 $163,213
Other liabilities 322,324 361,152
Redeemable preferred stock 14,187 13,543
Stockholders' equity 13,859 21,782
--------- ---------
Total liabilities, redeemable preferred
stock and stockholders' equity $533,704 $559,690
========= =========
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