Clean Harbors(US:CLH)2021-11-03 17:26Financial Data and Key Metrics Changes - Revenue increased by 22% in Q3 2021, driven by over $75 million growth in each segment, with almost all growth being organic [28] - Adjusted EBITDA grew 10% year-over-year, reaching $185.1 million, with a strong EBITDA margin of 19.5% [29] - Adjusted free cash flow for Q3 was $61.1 million, with expectations for full-year adjusted free cash flow in the range of $310 million to $330 million [33][39] Business Line Data and Key Metrics Changes - Environmental Services revenue grew by 15%, driven by favorable mix and pricing in the disposal network, with industrial services growing by 24% [10] - Safety-Kleen Sustainability Solutions (SKSS) revenue surged by 60% to nearly $206 million, with adjusted EBITDA increasing by over $41 million year-over-year [17] - Average incineration price increased by 18% year-over-year, with a notable 11% increase in U.S. incinerators [14] Market Data and Key Metrics Changes - Incineration utilization was at 82%, up from the previous year, with deferred revenue reaching a record high of $86.6 million [13] - Landfill volumes declined by 5%, but average pricing per ton increased by 17% [16] - Waste oil collections exceeded 60 million gallons for the first time since the pandemic began [18] Company Strategy and Development Direction - The company completed the acquisition of HydroChemPSC, expecting at least $40 million in synergies after the first full year of operation [19] - Continued investment in capital expenditures, particularly in disposal, with plans for a new incinerator in Kimball, Nebraska [21][22] - The company is focusing on aggressive pricing initiatives across all business lines to offset rising costs [44] Management's Comments on Operating Environment and Future Outlook - Management acknowledged economic headwinds, including higher supply chain, labor, and transportation costs, but expressed confidence in the company's ability to address these challenges through pricing and cost mitigation strategies [9][26] - The company is optimistic about closing out 2021 strongly and expects to perform well in Q4 and into 2022, driven by market demand [24][26] Other Important Information - Government assistance programs in the Environmental Services segment decreased significantly, from $11.2 million in Q3 2020 to $1.1 million in Q3 2021 [12] - The company is evaluating opportunities for debt reduction following the acquisition of HydroChemPSC [23] Q&A Session Summary Question: Can you discuss the acceleration of pricing initiatives? - Management indicated that pricing needs to come from all business lines, with transportation costs being a significant challenge [43][44] Question: What is the expected pricing cadence for incineration? - Incineration pricing in Q3 was up 11%, with expectations for continued price expansion as contracts come up for renewal [51] Question: How is the integration of HydroChem going? - The integration is proceeding smoothly, with a focus on rationalizing contracts and leveraging synergies [49] Question: What are the expectations for re-refining margins post-IMO 2020? - Management anticipates that while base oil pricing may decline, effective spread management will help maintain profitability [55] Question: What are the labor challenges and how is the company addressing them? - The company is actively recruiting from various sources, including military personnel, and is focused on training and onboarding to fill open positions [72] Question: What is the status of the Vertex Energy acquisition? - The company is responding to a second request from the Federal Trade Commission and continues to operate as a standalone entity until the acquisition closes [96]