Clean Harbors Announces Second-Quarter Results; Company on Track to Close Acquisition of Safety-Kleen's Chemical Services Division in August 2002.Business Editors BRAINTREE, Mass.--(BUSINESS WIRE)--July 23, 2002 Clean Harbors, Inc. ("Clean Harbors") (Nasdaq: CLHB CLHB Cardiff Local Health Board (UK) ), a leading provider of environmental services The various combinations of scientific, technical, and advisory activities (including modification processes, i.e., the influence of manmade and natural factors) required to acquire, produce, and supply information on the past, present, and future states of space, atmospheric, throughout 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. 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. , today announced results for the second quarter ended June 30, 2002. The Company reported second-quarter revenues of $60.1 million, compared with $62.3 million for the same quarter of 2001. Clean Harbors recorded net income of $483,000, or $0.03 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, for the second quarter of 2002 compared with net income of $2.4 million, or $0.18 per diluted share, for the second quarter of 2001. Included in second quarter 2002 net income are expenses of $1.1 million relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc the acquisition of the Chemical Services Division of Safety-Kleen Corp. 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 for the second quarter of 2002, excluding the $1.1 million acquisition costs was $6.9 million in 2002 compared with $7.8 million for the same period in 2001. First half revenues for 2002 were $113.4 million compared with $114.1 million for the same period in 2001. Net income for the first six months of 2002 was $241,000, or $0.00 per diluted share, compared with net income of $1.4 million, or $0.09 per diluted share, for the same period in 2001. Alan S. McKim, Clean Harbors' Chairman and Chief Executive Officer, stated, "Despite significant slowness in the market related to the nation's sluggish economy Sluggish Economy A state in the economy in which the growth is slow, flat or declining. The term can refer to the economy as a whole or a component of the economy, such as weak housing starts. and decisions by some of our customers to delay major environmental expenditures, our base business proved to be resilent in the second quarter. Our revenues also were encouraging given the absence of any significant emergency response work by our Field Services group, as well as the amount of management's time and attention required to successfully move forward with 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 )." McKim continued, "Our profitability in the second quarter was affected by the costs of our effort to smoothly effectuate ef·fec·tu·ate tr.v. ef·fec·tu·at·ed, ef·fec·tu·at·ing, ef·fec·tu·ates To bring about; effect. [Medieval Latin effectu the CSD acquisition. In addition, the Company experienced some extraordinary expenses in the cost of our employee health insurance." "We remain on track to close the CSD acquisition in the third quarter," said McKim. "As of today, we have submitted approximately 300 permit transfer requests covering virtually all the CSD facilities we will be acquiring and we expect to have all but a few finalized See finalization. by the closing of the transaction. In addition, we are confident that our focus on IT throughout the acquisition process will pay off immediately, as we anticipate running on the same platform from our first day as a combined company." Clean Harbors expects to close the CSD acquisition in late August and will host a conference call shortly thereafter to discuss operational milestones for the combined company going forward, as well as the final terms of its financing agreements Financing Agreements In the context of project financing, the documents which provide the project financing and sponsor support for the project as defined in the project contracts. . The Company has received commitments from certain financial institutions for $260 million, consisting of a $100 million three-year revolving credit Revolving Credit A line of credit where the customer pays a commitment fee and is then allowed to use the funds when they are needed. It is usually used for operating purposes, fluctuating each month depending on the customers current cash flow needs. facility at LIBOR LIBOR See: London Interbank Offered Rate LIBOR See London interbank offered rate (LIBOR). plus 3%, a $100 million three-year non-amortizing term loan facility at LIBOR plus 7.25%, a $35 million non-amortizing five-year subordinated term loan facility with an annual interest rate of 22%, and $25 million of convertible preferred stock Convertible Preferred Stock Preferred stock that includes an option for the holder to convert the preferred shares into a fixed number of common shares, usually anytime after a predetermined date. Also known as "convertible preferred shares". . The convertible preferred stock will pay a 6% dividend, will be subject to a mandatory redemption after seven years and will be convertible at the holder's option at $10.50 per share into approximately 19.8% of the total number of the Company's currently outstanding primary shares of common stock. The commitments contain various other terms and conditions and documents are now being prepared based on the commitment letters. Clean Harbors is continuing to pursue modifications to the structure of the financing. As a result, the amounts and terms are subject to change. The Company expects to have approximately $130 million of outstanding debt at closing along with Letters of Credit of between $90 million and $100 million within six months of the closing. "We are sharply focused on a crisp execution of the acquisition and a smooth transition for our customers and employees, including the implementation of our sophisticated information systems across the Company's entire asset infrastructure," stated McKim. "During the remainder of 2002, we will follow through on our plans to recognize operational and financial synergies as we move to firmly establish our position as the largest provider of 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. services in 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. . As a result of our extensive due-diligence process, we are currently raising our expected EBITDA for 2003 from $100 million to $115 million based on the synergies that we believe are available to Clean Harbors from this transaction." Conference Call Information Clean Harbors will conduct a conference call for investors to discuss the information contained in this news release today, Tuesday, July 23, 2002 at 11:00 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 customer base including a majority of the Fortune 500 companies, thousands of smaller private entities and numerous governmental agencies. Within its national footprint, the Company currently has service and sales offices located in 26 states and Puerto Rico, and operates 11 waste management facilities strategically located throughout the country. Following the expected close of the CSD acquisition, Clean Harbors will have service and sales offices located in 40 states, Puerto Rico, Canada and Mexico, and will operate 44 waste management facilities strategically located throughout North America. For more information, visit our Website 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. 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 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, 2001.
CLEAN HARBORS, INC
CONSOLIDATED STATEMENTS OF OPERATIONS
Unaudited
(in thousands, except per share data)
Three Months Ended Six Months Ended
June 30, June 30,
2002 2001 2002 2001
Revenues $ 60,105 $ 62,300 $ 113,424 $ 114,118
Cost of revenues 42,048 43,110 80,990 81,561
Selling, general and
administrative expenses 11,143 11,362 21,226 21,142
Acquisition expenses 1,098 -- 1,105 --
Depreciation and
amortization 2,649 2,759 5,344 5,548
Income from operations 3,167 5,069 4,759 5,867
Interest expense, net 2,243 2,462 4,357 4,590
Income before provision
for income taxes 924 2,607 402 1,277
Provision for
income taxes 441 218 161 (80)
Net income $ 483 $ 2,389 $ 241 $ 1,357
Diluted earnings
per share $ 0.03 $ 0.18 $ 0.00 $ 0.09
Weighted average common
shares outstanding
plus potentially
dilutive common shares 14,362 12,703 14,213 12,052
CLEAN HARBORS, INC. AND SUBSIDIARIES
SUMMARIZED CONSOLIDATED BALANCE SHEET
(in thousands)
June 30, December 31,
2002 2001
Current assets $ 64,783 $ 64,367
Net property, plant and equipment 53,273 53,424
Other assets 33,373 33,930
Total assets $151,429 $151,721
Current liabilities $ 45,381 $ 53,088
Other liabilities 54,642 49,064
Stockholders' equity 51,406 49,569
Total liabilities and stockholders' equity $151,429 $151,721
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