Clean Harbors Inc (CLH) Q3 2020 Earnings Call Transcript

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Clean Harbors Inc (NYSE:CLH)
Q3 2020 Earnings Call
Nov 4, 2020, 9:00 a.m. ET

Contents:

• Prepared Remarks
• Questions and Answers
• Call Participants

Prepared Remarks:

Operator

Greetings and welcome to the Clean Harbors, Inc. Third Quarter 2020 Conference Call. [Operator Instructions] As a reminder, this conference is being recorded.

It is now my pleasure to introduce your host Michael McDonald, General Counsel for Clean Harbors, Inc. Thank you. Mr. McDonald, you may begin.

Michael McDonald — General Counsel

Thank you, Christine, and good morning everyone. With me on today’s call are Chairman, President and Chief Executive Officer, Alan S. McKim; EVP and Chief Financial Officer, Mike Battles; and SVP of Investor Relations, Jim Buckley. Slides for today’s call are posted on our website and we invite you to follow along.

Matters we are discussing today that are not historical facts are considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Participants are cautioned not to place undue reliance on these statements, which reflect management’s opinions only as of today, November 4, 2020. Information on potential factors and risks that could affect our actual results of operations is included in our SEC filings. The company undertakes no obligation to revise or publicly release the results of any revision to the statements made in today’s call, other than through filings made concerning this reporting period.

In addition, today’s discussion will include references to non-GAAP measures. Clean Harbors believes that such information provides an additional measurement and consistent historical comparison of its performance. Reconciliations of non-GAAP measures to the most directly comparable GAAP measures are available in today’s news release, on our website, and in the appendix of today’s presentation.

And now I’d like to turn the call over to our CEO, Alan McKim. Alan?

Alan S. McKim — Chairman, President and Chief Executive Officer

Thanks, Michael. Good morning everyone and thank you for joining us. Starting on Slide 3. We delivered exceptional results in Q3. And I can’t say enough about the efforts of our team in driving these outstanding performance. Since the outset of the pandemic in March, everyone from really the top levels of the organization to our frontline workers have excelled in response to this challenge, and it’s truly been a team effort. At its core, Clean Harbors is a crisis response company and we can still thrive in difficult environments like the one we have all faced over the past eight months. And the resiliency of our organization and the versatility of our business model clearly were evident here in Q3.

Revenue, while down year-over-year due to the unprecedented market conditions, was up nearly $70 million on a sequential basis. This growth was driven by an accelerated recovery in several core lines of business in our Environmental Services segment. At the same time, we also saw a strong sequential pick up within Safety-Kleen. Adjusted EBITDA of $161.2 million included $13.3 million in government programs, primarily from the revised CEWS legislation in Canada. The high level of EBITDA supported by controlled capital spending resulted in adjusted free cash flow of $123.5 million, a quarterly record for the company.

Mike will review the P&L in more details in his remarks.

Turning to our segment results on Slide 4. Environmental Service revenues declined 10% from a year ago but were up 6% from Q2. As many of our service businesses bounced back from the early days of the pandemic, adjusted EBITDA grew 16%. This increase was attributable in part to our cost reduction efforts, productivity improvements and a healthy mix of higher margin work. The two…