Clean Harbors shares fall on cautious '08 outlook

BANGALORE (Reuters) - Waste management company Clean Harbors Inc CLHB.O reported quarterly results that beat analysts' expectations, but a conservative full-year 2008 earnings forecast pushed the company's shares lower.

The stock fell more than 13 percent to $68.01 in the early morning session, but recouped losses and were down $2.03 at $76.55 in afternoon trade on Nasdaq.

The company raised its full-year 2008 revenue and earnings before interest, taxes, depreciation and amortization outlook, saying it now expects revenue to grow at the high-end of its previously announced range of 8 percent to 10 percent. Analysts on average were expecting 2008 revenue of $1.78 billion, according to Reuters Estimates.

Clean Harbors, which collects, transports, treats, and disposes hazardous and non-hazardous wastes, expects 2008 EBITDA to grow at the high end of its previously announced range of 20 to 22 percent.

Even though the company guided 2008 EBITDA in the $160 million to $163 million range, Needham and Co analyst Theodor Kundtz said he expected the company to report between $164 and $165 million.

“I think they are being overly cautious on that number and that might have spooked people a little bit,” Kundtz said by phone.

Kundtz said the decline in the company’s shares could also be because they had been trading at all-time high levels for some time, touching their lifetime high of $81.19 on July 25.

Shares of the company, which competes with larger rival Waste Management Inc WMI.N, have risen 52 percent this year.

“We are pretty positive. We think the story is good,” Kundtz said.

But the company’s positive results were slightly offset by weakness in its landfill disposal facilities segment.

“We did experience some softness in our landfill disposal facilities, primarily due to the timing of projects, as well as our strategic decision to selectively increase pricing, which resulted in lower volumes,” Chief Executive Alan McKim said in a statement.

But its leading position in the highly regulated North American hazardous waste industry affords the company a wide economic moat, Robert W. Baird and Co analyst David Manthey said in a note to clients.

Maintaining an “outperform” rating and an $85 price target on the stock, Manthey said he saw the company continuing to drive revenue and profitability through increased pricing, expanding capacity, improving profitability at existing landfills, continued cost reductions, as well as acquisitions.


The company reported a 44 percent jump in second-quarter net income helped by growth across all segments, and higher utilization of its domestic incinerators.

Utilization at its domestic incinerators grew to 88 percent for the quarter, despite scheduled maintenance performed at several of its facilities, the company said.

For the quarter, the Norwell, Massachusetts-based company reported net income of $16 million, or 70 cents a share, compared with $11.1 million, or 54 cents a share, a year ago. Revenue rose 11 percent to $265.3 million.

Analysts were expecting earnings, before special items, of 66 cents a share, on revenue of $264 million.

The company forecast third quarter revenue between $270 million and $275 million, while analysts were expecting $268.6 million.

Editing by Bernard Orr