The company’s income from operations was $10.7 million in the first quarter of 2009, compared with $20.0 million in the first quarter of 2008. Weighted average diluted shares outstanding used to calculate the net income per share in the first quarter of 2009 were 23.9 million, versus 20.9 million in the first quarter of fiscal 2008.
EBITDA was $25.4 million compared with $33.1 million in the first quarter of 2008.
Comments on the First Quarter of 2009
“While we were anticipating a slow start to 2009, the challenging economic climate throughout North America resulted in a substantial slowdown in certain industries we service, such as chemicals and manufacturing, where some customers temporarily closed plants in an attempt to lower costs,” said Alan S. McKim, chairman and chief executive officer. “Our revenues also were negatively affected on a year-over-year basis by the continued weakness of the Canadian dollar and a reduction in fuel surcharges. Additionally, persistent unfavorable weather conditions during the quarter severely hindered our revenue opportunities in both our Technical and Site Services segments.”
“Despite the overall revenue softness, activity levels across many of our business lines remained high and we built a sizeable backlog of projects,” McKim said. “By quarter end, particularly as the weather improved, many customer locations, including those which had experienced temporary outages, were up and running. As we entered the second quarter, the flow of volumes into our plants has increased and some of the projects that had been delayed are moving forward.”
“During the quarter, we continued to position ourselves for the rebound we expect in the second half of the year. We further streamlined our entire organization and our lean cost structure should enable us to capture the leverage that is inherent in our extensive network of assets. We completed the expansion of our sales force as we began to ramp up an aggressive marketing strategy within the industrial sectors we serve. Our ongoing capacity expansion plans are proceeding on schedule as we intend to bring an additional 10,000 tons of capacity online by mid-year. Lastly, we continued to carefully evaluate a number of prospective acquisition candidates, which resulted in our acquisition of EnviroSORT in late February and culminated in our April 29th announcement of the signing of a definitive agreement to acquire Canadian-based Eveready Inc. in a transaction valued at approximately $387 million.”
The company also reports EBITDA results, which are non-GAAP financial measures, as a complement to results provided in accordance with accounting principles generally accepted in the United States (GAAP) and believes that such information provides additional useful information to investors since the Company’s loan covenants are based upon levels of EBITDA achieved. The Company defines EBITDA in accordance with its existing credit agreement, as described in the following reconciliation showing the differences between reported net income and EBITDA for the first quarter of 2009 and 2008.
Based on its first-quarter performance and current market conditions, Clean Harbors is revising its guidance for 2009. The company currently expects full-year 2009 revenue, exclusive of acquisitions, to be flat to slightly down compared with 2008, and EBITDA in the range of $163 million to $167 million, compared with $163.2 million in 2008. Previously, the company expected 2009 revenue growth in the range of 3 to 4 percent and year-over-year EBITDA growth in the range of 10 to 15 percent.
“While we remain encouraged about our prospects for the full year, our performance in the first quarter, combined with the ongoing economic uncertainty, have led us to adjust our 2009 guidance,” McKim said. “We continue to expect our revenues and EBITDA growth to be skewed toward the second half of this year. Our recently expanded sales force and comprehensive vertical market strategy will yield results as the year progresses. We remain confident that our well-known brand, outstanding reputation, and vertical market expertise will afford us the opportunity to gain market share during this time of economic turmoil.”
“We also expect that the federal economic stimulus package will benefit Clean Harbors in the quarters ahead,” said McKim. “Hundreds of millions of dollars in federal funds have been allocated toward areas in which we specialize, including Superfund site cleanups, environmental work at DOE sites, removal of underground storage tanks and remediating Brownfield locations. The federal government recently published a list of Superfund sites that are being targeted for increased cleanup and those locations include many where Clean Harbors is already an active participant in remediation or revitalization efforts. We are beginning to enter the proposal stage for some of the additional projects at these sites and anticipate significantly increased activity from the federal stimulus later this year.”
“We believe our recently announced agreement to acquire Eveready will generate momentum within our existing Clean Harbors businesses,” McKim said. “The transaction will enhance our presence in industrial services, which has been a growth business for us in recent years. It will broaden our geographic footprint and provide us with valuable new resources in some of our end-markets. Most importantly, we believe it will afford us numerous cross-selling opportunities within our existing customer base as well as with Eveready’s blue-chip customer base, particularly in the refineries and other energy business sectors. We look forward to completing the acquisition during the third quarter and harvesting the benefits of the combined company in the years ahead.”
