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Clean Harbors (CLH) Up 13.7% Since Last Earnings Report: Can It Continue?
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It has been about a month since the last earnings report for Clean Harbors (CLH - Free Report) . Shares have added about 13.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Clean Harbors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
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. However, the figure declined 12.6% year over year due to the unprecedented market conditions.
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.
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).
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 35.19% due to these changes.
VGM Scores
Currently, Clean Harbors has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Clean Harbors has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.
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Clean Harbors (CLH) Up 13.7% Since Last Earnings Report: Can It Continue?
It has been about a month since the last earnings report for Clean Harbors (CLH - Free Report) . Shares have added about 13.7% in that time frame, outperforming the S&P 500.
Will the recent positive trend continue leading up to its next earnings release, or is Clean Harbors due for a pullback? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at the most recent earnings report in order to get a better handle on the important catalysts.
Clean Harbors Surpasses Q3 Earnings & Revenue Estimates
Clean Harbors 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. However, the figure declined 12.6% year over year due to the unprecedented market conditions.
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.
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).
How Have Estimates Been Moving Since Then?
It turns out, estimates review have trended upward during the past month. The consensus estimate has shifted 35.19% due to these changes.
VGM Scores
Currently, Clean Harbors has a nice Growth Score of B, however its Momentum Score is doing a bit better with an A. However, the stock was allocated a grade of C on the value side, putting it in the middle 20% for this investment strategy.
Overall, the stock has an aggregate VGM Score of A. If you aren't focused on one strategy, this score is the one you should be interested in.
Outlook
Estimates have been trending upward for the stock, and the magnitude of these revisions looks promising. It comes with little surprise Clean Harbors has a Zacks Rank #1 (Strong Buy). We expect an above average return from the stock in the next few months.