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Clean Harbors (CLH) Down 0.2% Since Last Earnings Report: Can It Rebound?

Zacks Equity Research
·4 min read

A month has gone by since the last earnings report for Clean Harbors (CLH). Shares have lost about 0.2% in that time frame, underperforming the S&P 500.

Will the recent negative trend continue leading up to its next earnings release, or is Clean Harbors due for a breakout? Before we dive into how investors and analysts have reacted as of late, let's take a quick look at its most recent earnings report in order to get a better handle on the important drivers.

Clean Harbors' Q1 Earnings & Revenue Surpass Estimates

Clean Harbors reported solid first-quarter 2022 results wherein earnings and revenues surpassed the Zacks Consensus Estimate.

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Adjusted earnings per share of 83 cents outpaced the Zacks Consensus Estimate by 31.8% and the year-ago quarter figure by 97.6%. Total revenues of $1.17 billion beat the consensus mark by 10.5% and grew 45% year over year.

Revenues by Segment

Environmental Services’ revenues of $947.45 million grew 45% year over year. The uptick was backed by contributions from the HydroChemPSC acquisition, higher volumes in the company’s disposal and recycling facilities, pricing initiatives, solid demand across its service businesses, and strength across its Industrial Services businesses.

Safety-Kleen Sustainability Solutions’ revenues of $221.59 million grew 44% year over year. The uptick was backed by solid demand for the company’s base oil and blended products.

Profitability Performance

Adjusted EBITDA of $180.3 million increased 39% year over year. The adjusted EBITDA margin fell to 15.4% from 16% in the year-ago quarter.

Segment-wise, Environmental Services’ adjusted EBITDA was $183.60 million, up 30.9% year over year. Safety-Kleen Sustainability Solutions’ adjusted EBITDA was $51.88 million, up 64% year over year.

Balance Sheet & Cash Flow

Clean Harbors exited first-quarter 2022 with cash and cash equivalents of $339.58 million compared with $452.58 million at the end of the prior quarter. Inventories and supplies were $264.73 million compared with $250.69 million in the prior quarter. Long-term debt was $2.51 billion compared with $2.52 billion at the end of the prior quarter.

The company used $38.6 million of net cash from operating activities in the reported quarter. Adjusted free cash flow was $107.6 million.

Guidance

Clean Harbors has raised its 2022 guidance for adjusted EBITDA while reaffirming the same for adjusted free cash flow and net cash from operating activities. Adjusted EBITDA is now anticipated between $800 million and $830 million compared with the prior guidance of $765-$795 million. Adjusted free cash flow is expected between $250 million and $290 million. Net cash from operating activities is projected to be between $560 million and $620 million.

How Have Estimates Been Moving Since Then?

It turns out, estimates revision have trended upward during the past month.

The consensus estimate has shifted 22.07% due to these changes.

VGM Scores

At this time, Clean Harbors has a nice Growth Score of B, though it is lagging a bit on the Momentum Score front with a C. However, the stock was allocated a grade of A on the value side, putting it in the top quintile 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. Notably, Clean Harbors has a Zacks Rank #3 (Hold). We expect an in-line return from the stock in the next few months.

Performance of an Industry Player

Clean Harbors belongs to the Zacks Waste Removal Services industry. Another stock from the same industry, Waste Connections (WCN), has gained 2.2% over the past month. More than a month has passed since the company reported results for the quarter ended March 2022.

Waste Connections reported revenues of $1.65 billion in the last reported quarter, representing a year-over-year change of +17.9%. EPS of $0.82 for the same period compares with $0.70 a year ago.

For the current quarter, Waste Connections is expected to post earnings of $0.95 per share, indicating a change of +17.3% from the year-ago quarter. The Zacks Consensus Estimate has changed +0.2% over the last 30 days.

The overall direction and magnitude of estimate revisions translate into a Zacks Rank #3 (Hold) for Waste Connections. Also, the stock has a VGM Score of B.


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