Clean Harbors releases Q1 2022 financial results

Clean Harbors Inc. Norwell, Massachusetts, has announced financial results for the first quarter ended March 31, 2022. The report shows that the company saw a 45 percent increase in revenue and a 71 percent increase in income.  

“We opened 2022 with a strong first quarter on robust demand for our services and sustainable products,” says Alan S. McKim, president and CEO of Clean Harbors. “Our record revenue and adjusted earnings before interest, taxation, depreciation and amortization (EBITDA) in the quarter reflected a continuation of the momentum that supported our business throughout 2021, including demand for our hazardous waste disposal capabilities, industrial services and re-refined products, as well as our October 2021 acquisition of HydroChemPSC (HPC).”  

First-quarter results for the company show revenues increased 45 percent to $1.17 billion from $808.1 million in Q1 2021. Operational income grew 71 percent to $87.1 million from $50.9 million in Q1 2021.  

Net income was $45.3 million, or 83 cents per diluted share. This compared with a net income of $21.7 million, or 39 cents per diluted share, for Q1 2021. Adjusted for certain items in both periods, adjusted net income was $45.4 million, or 83 cents per diluted share, for the first quarter of 2022, compared with an adjusted net income of $23.4 million, or 42 cents per diluted share, for the same period of 2021.  

Adjusted EBITDA increased 39 percent to $180.3 million from $129.5 million in the same period of 2021. There were no benefits from government assistance programs in the first quarter of 2022, compared with a combined $5.4 million in benefits from Canadian and U.S. government programs in Q1 2021.  

“Environmental Services (ES) revenues increased 45 percent year-over-year, reflecting the contribution of HPC, higher volumes in our disposal and recycling facilities, pricing initiatives and steady demand across our service businesses,” McKim says. “Utilization of our incinerator network was 85 percent in the quarter, up to five points from the prior year when utilization was negatively impacted by a deep freeze in the Gulf region. Average incineration pricing was up slightly from a year ago, reflecting the mix of waste in the quarter that included some project volumes. A modest pickup in remediation projects helped increase our landfill volumes by 14 percent.”  

The company says Safety-Kleen Environmental continued its growth trajectory, increasing 9 percent through pricing and new business wins across its core service offerings. Safety-Kleen Sustainability Solutions (SKSS) revenues grew 44 percent while adjusted EBITDA rose 64 percent from a year ago, McKim says.  

"Global supply disruptions led to favorable market dynamics in the U.S. and substantial price increases late in the quarter,” McKim says. “In addition to the higher pricing on the back end of our re-refining spread, we continued to actively manage the front end to minimize collection costs while maintaining collection volumes. SKSS collected 53 million gallons of waste oil in the quarter, up 13 percent from a year ago.”  

The company says within its disposal network, it has a healthy backlog of volume due to its level of deferred revenue at the end of Q1. The company says it has a robust pipeline of waste project opportunities that should support the growing volumes it is experiencing in its base business.   

Underlying trends such as U.S. regulations, infrastructure spending, chemical manufacturing and reshoring multiple industries also provide a backdrop for its entire environmental services segment. As a result, the company continues investing in its plants to increase throughput across its network, including constructing a new incinerator in Nebraska.   

“We are also hiring as rapidly as possible to meet demand while lowering our third-party costs. In Q1, we added a significant number of employees on a net basis and expect to extend our recruitment efforts in the coming quarters,” McKim says.  

In the second quarter of 2022, Clean Harbors expects adjusted EBITDA to increase 25 percent to 30 percent from the prior-year period. This reflects the addition of HPC and higher profitability in both the ES and SKSS segments.  

Based on its first-quarter 2022 performance and current market conditions, Clean Harbors is raising the midpoint of its 2022 Adjusted EBITDA guidance by $35 million. For the year, the company now expects adjusted EBITDA will be $800 million to $830 million. This range is based on anticipated generally accepted accounting principles net income of $225 million to $258 million. The company also expects adjusted free cash flow of $250 million to $290 million, based on anticipated net cash from operating activities in the range of $560 million to $620 million.