Clean Harbors(US:CLH)2022-02-23 19:04Financial Data and Key Metrics Changes - Clean Harbors achieved over $1 billion in quarterly revenue for the first time in Q4 2021, with adjusted EBITDA of $174.3 million, marking a 23% increase year-over-year [4][15] - Revenue increased by 41% in Q4, driven by the addition of HydroChemPSC (HPC) and a 20% growth in legacy business [15] - Adjusted EBITDA margins for the SKSS segment topped 29% due to product pricing gains and strong management of collection costs [9] Business Line Data and Key Metrics Changes - Environmental Services revenue grew 36% in Q4, with adjusted EBITDA 8% higher due to revenue growth and the addition of HPC [6][7] - Safety-Kleen Environmental reported a 6% revenue increase from Q4 a year ago, indicating a steady rebound [6] - The SKSS segment saw revenue increase by over 60%, driven by higher base oil pricing and robust demand [9] Market Data and Key Metrics Changes - Incineration utilization was strong at 92% in Q4, up from 84% a year earlier, due to fewer turnaround days and increased project wins [8] - Landfill tonnage grew by 15% year-over-year, supported by a pickup in environmental remediation projects [8] - The average price per pound for disposal remained flat year-over-year, reflecting the mix of projects [8] Company Strategy and Development Direction - The company plans to continue expanding its disposal capabilities and re-refining capacity, with a focus on disciplined organic growth and potential acquisitions [10][11] - Clean Harbors aims to achieve a $40 million run rate of synergies from the HPC integration by the end of 2022 [13] - The company is actively managing inflationary pressures through pricing initiatives and cost control measures [7][41] Management's Comments on Operating Environment and Future Outlook - Management expressed confidence in the strong demand for services across various sectors, driven by labor shortages and a robust project pipeline [12][31] - The company anticipates 2022 to be an active year with numerous initiatives aimed at driving success and shareholder value [13] - Management acknowledged challenges such as inflation and labor availability but remains optimistic about maintaining profitable growth [22] Other Important Information - Cash from operations in Q4 was $177.8 million, with adjusted free cash flow reaching a record $326.3 million for the full year [18] - The company expects 2022 adjusted EBITDA in the range of $755 million to $795 million, with a significant contribution from the HPC business [19][20] - Clean Harbors has a strong balance sheet with cash and short-term marketable securities totaling $534 million at the end of Q4 [17] Q&A Session Summary Question: What is the assumption built into the '22 guide around decon work? - Management expects decon work to contribute less than $10 million in 2022, indicating a decline from previous levels [24] Question: Are core ES margins expected to expand in '22? - Management indicated that while first-half margins may be under pressure, they expect overall margins to improve in the second half of the year due to pricing initiatives [26] Question: What is the outlook for incinerator utilization? - Management expects overall annual utilization to improve in 2022, supported by a strong backlog and project pipeline [27] Question: What are the implications of the RSG acquisition of US Ecology? - Management noted that staffing challenges are affecting the entire industry, leading to less competitive pricing behavior [31] Question: What is the current market share in hazardous landfill volume and incinerator capacity? - Management stated that their market share remains consistent, with approximately 70% in incinerator capacity and around 30% in hazardous landfill volume [36] Question: How is the company managing inflationary pressures? - Management is actively driving price increases to cover inflationary costs, with customers being receptive to these adjustments [41][63]