Clean Ports (CLH) Up 4.3% Since Last Earnings Report: Can It Continue?

It’s been a month since Clean Harbors’ (CLH) last earnings report. Shares have risen about 4.3% in that time, outperforming the S&P 500.

Will the recent positive trend continue leading up to its next earnings release, or is Clean Harbors headed for a decline? Before we dive into how investors and analysts have reacted as of late, let’s take a quick look at the company’s most recent earnings report in order to better understand the important catalysts.

Clean Harbors’ first-quarter earnings topped estimates

Clean ports limited liability company announced impressive first-quarter 2024 results, with earnings and revenues surpassing the Zacks Consensus Estimate.

CLH’s earnings of $1.3 per share beat the Zacks Consensus Estimate by 11.2%, but declined 5.2% from the year-ago quarter. Total revenues of $1.4 billion topped the consensus estimate by 2.8% and increased 5.3% year-over-year.

Segment revenues

Environmental Services (ES) revenues of $1.2 billion increased 9.5% from the year-ago quarter, exceeding guidance of $1.1 billion. This growth was supported by organic growth driven by volumes and pricing and the acquisition of HEPACO and Thompson.

Safety-Kleen Sustainability Solutions (SKSS) revenues were $204.1 million, down 13.7% from Q4 2023 and missing our estimate of $231.8 million. Sustained demand for both base oils and lubricants resulting in lower prices, particularly for uncontracted volumes sold on the spot market, resulted in a decline in revenues for this segment.

Efficiency and profitability

Adjusted EBITDA of $230.1 million increased 7% from the prior-year quarter and exceeded our expectations of $220.9 million. Adjusted EBITDA margin was 16.7%, an increase of 20 basis points from the prior quarter’s actual margin.

On a segment basis, adjusted ES EBITDA was $264.5 million, up 15.8% year-over-year. This amount exceeded our estimate of $240.3 million. SKSS adjusted EBITDA was $29.7 million, down 28.4% from the prior year quarter and missing the expected $37.8 million.

Balance sheet and cash flow

Clean Harbors ended the quarter with cash and cash equivalents of $337.9 million, compared to $444.7 million at the end of the prior quarter. Inventories and deliveries were $354.3 million compared to $327.5 million in Q4 2023.

Long-term debt (net of current portion) was $2.8 billion compared to $2.3 billion in the prior quarter. CLH generated $18.5 million of net cash from operations. Capital expenditure amounted to USD 137.9 million. Adjusted free cash flow used was $118.4 million.

The story continues

Guidelines 2024

For 2024, CLH raised its adjusted EBITDA guidance to a range of $1.1 billion to $1.15 billion from its previously stated range of $1.05 billion to $1.11 billion. Adjusted free cash flow is expected to be between $340 million and $400 million. CapEx is expected to be $410-440 million, compared to previous expectations of $400-430 million.

How have estimates changed since then?

It turns out that new estimates have been trending downward over the past month.

VGM results

Right now, Clean Harbors has an average growth score of C, a rating with the same momentum score. Charting a somewhat similar path, the stock was rated a B for value, putting it in the top 40% for this investment strategy.

Overall, the stock has a Total VGM Score of B. If you’re not focused on one strategy, this score should interest you.

Perspectives

Estimates for this company generally show a downward trend, and the scale of these corrections looks promising. Notably, Clean Harbors carries a Zacks Rank #2 (Buy). We expect an above-average rate of return on shares in the coming months.

Industry player performance

Clean Harbors is part of the Zacks Waste Removal Services industry. Over the past month, shares of the same industry Stericycle (SRCL) have gained 10.1%. More than a month ago, the company published its results for the quarter ended March 2024.

In the most recent quarter, Stericycle reported revenue of $664.9 million, representing a year-over-year change of -2.8%. EPS of $0.57 for the same period compared to $0.49 a year ago.

For the current quarter, Stericycle is expected to report earnings per share of $0.57, representing a change of +32.6% from the prior-year quarter. The Zacks Consensus Estimate has changed +0.4% over the past 30 days.

Stericycle carries a Zacks Rank #3 (Hold) based on the overall direction and magnitude of estimate revisions. Additionally, the stock has a VGM Rating of D.

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