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Mar 31, 2020
Clean Harbors Q1 2020 Earnings Report
Clean Harbors reported record Adjusted EBITDA with strong growth in both operating segments.
Key Takeaways
Clean Harbors' Q1 2020 results showed a 10% increase in revenue to $858.6 million and a 21% increase in Adjusted EBITDA to $122.6 million. The company's profitability was driven by strong performance in both its Environmental Services and Safety-Kleen segments.
Revenues increased 10% to $858.6 million.
Income from operations grew 92% to $45.5 million.
Adjusted EBITDA increased 21% to $122.6 million.
Profitability in Environmental Services increased 22% with 11% top-line growth.
Clean Harbors
Clean Harbors
Forward Guidance
Clean Harbors expects Environmental Services to weather the current downturn well and anticipates a rebound in its branch business when shelter-in-place mandates are lifted. However, the pandemic is limiting near-term demand for Safety-Kleen offerings, and re-refining capacity has been shuttered due to decreased demand for base oil.
Positive Outlook
- Prudent cost actions position us well for the anticipated reopening of the U.S. and Canadian economies in the second half of 2020.
- We exited Q1 with a healthy backlog of waste streams in our disposal network and have not seen a meaningful decline from most of our large quantity generators.
- We are continuing to perform COVID-19 decontamination work and handling growing volumes of infectious waste for a variety of customers.
- Low gasoline prices and a reduction in air travel encourage a steady increase in driving.
- Our market leadership, financial liquidity and positive free cash flow will enable us to navigate this global crisis.
Challenges Ahead
- The impact of COVID-19 on our Q1 results was limited, it progressively worsened toward quarter end as shelter in place orders took hold in the United States and Canada.
- With stay-at-home orders greatly reducing vehicle travel across North America, the pandemic is limiting near-term demand for our core Safety-Kleen offerings, including used motor oil (UMO) collection.
- We expect our branch business to rebound when shelter-in-place mandates are lifted.
- Our re-refining spread has contracted with the drop in crude prices.
- Near-term demand for base oil has dropped precipitously, prompting us to shutter some re-refining capacity until the markets improve.