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Clean Harbors (CLH) Beats on Q3 Earnings, Raises 2020 View

Clean Harbors, Inc. CLH reported better-than-expected third-quarter 2020 results.

Adjusted earnings (excluding 9 cents from non-recurring items) per share of 90 cents outpaced the Zacks Consensus Estimate by more than 100% and increased 25% year over year.

Total revenues of $779.3 million also beat the consensus mark marginally. Howevert, the figure declined 12.6% year over year due to the unprecedented market conditions.

So far this year, shares of Clean Harbors have lost 28.8% compared with 15.8% decline of the industry.

Let’s check out the numbers in detail.

Revenues by Segment

Environmental Services revenues of $527.97 million declined 10.1% year over year owing to lower utilization rate of 80% at incinerators during the quarter due to the timing of turnarounds and a production lag.

Safety-Kleen revenues of $251.6 million fell 17.8% year over year.

Clean Harbors, Inc. Price, Consensus and EPS Surprise

Clean Harbors, Inc. price-consensus-eps-surprise-chart | Clean Harbors, Inc. Quote

Profitability Performance

Adjusted EBITDA of $161.17 million increased 2.9% year over year. Adjusted EBITDA margin increased 310 basis points (bps) year over year to 20.7%.

Adjusted EBITDA includes $13.3 million of assistance from government programs.

Segment wise, Environmental Services’ adjusted EBITDA was $140.85 million, up 15.8% year over year. The uptick was backed by cost-reduction efforts, productivity improvements, healthy mix of higher margin work and the two government programs that accounted for $10 million in this segment.

Safety-Kleen’s adjusted EBITDA of $68.76 million declined 15.5% primarily due to lower revenues, partly offset by cost-reduction efforts as well as government-assistance programs that provided $2.5 million to this segment during the third quarter.

Balance Sheet & Cash Flow

Clean Harbors exited third-quarter 2020 with cash and cash equivalents of $475.7 million compared with $447.4 million at the end of the prior quarter. Inventories and supplies were $220.9 million, up from $219.81 million in the prior quarter. Long-term debt was $1.55 billion compared with $1.63 billion in the prior quarter.

The company generated $143.9 million in cash from operating activities in the reported quarter.

Raised 2020 Guidance

Clean Harbors expects adjusted EBITDA of $530-$550 million (previous guidance: $470-$500 million).

Segment wise, adjusted EBITDA for Environmental Services is anticipated to rise in the low-teens percentage above 2019's level of $446 million. Safety-Kleen’s adjusted EBITDA is expected to decline in the high-teens percentage from 2019’s $282 million.

Net income is anticipated to be $104-$130 million (previous guidance: $53-$84 million). Adjusted free cash flow is expected between $250 million and $270 million (previous guidance: $200 million and $230 million). Net cash from operating activities is projected between $405 million and $445 million (previous guidance: $355 million and $405 million).

Currently, Clean Harbors carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Performance of Other Business Services Companies

Equifax EFX reported better-than-expected third-quarter 2020 results, with adjusted earnings of $1.87 per share beating the Zacks Consensus Estimate by 16.2% and rising 26.4% on a year-over-year basis. The reported figure exceeded the company’s guidance of $1.30-$1.40.

The Interpublic Group of Companies IPG reported better-than-expected third-quarter 2020 adjusted earnings of 53 cents per share, which beat the Zacks Consensus Estimate by 43.2% and rose 8.2% on a year-over-year basis.

IQVIA Holdings IQV reported solid third-quarter 2020 adjusted earnings per share of $1.63, which beat the consensus mark by 8% and inched up 1.9% on a year-over-year basis. The reported figure was above the company’s guidance of $1.47-$1.55.

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