Evergreen Oil is a California-based environmental services company that is one of the state's largest collectors of waste oil and runs the only re-refinery in the state. Clean Harbors is funding the $60 million transaction through available cash on its balance sheet.
In the announcement, Clean Harbors' management pointed out that the acquisition of Evergreen Oil is beneficial to the company in a number of ways.
It expands Clean Harbors' geographic footprint in re-refining to include coverage in the Western U.S. -- complementing its Indiana facility in the Midwest and Breslau facility in Eastern Canada;Analysts will have to go back to their number-crunching machines to see how the acquisition might impact CLH's EPS estimates for the current year. Analysts had been anticipating close to a 13% increase in EPS and an impressive 60% increase in revenue. Concerning the Evergreen Oil purchase, Clean Harbors' CEO explained, "We believe that we are purchasing this asset at a favorable price for our shareholders. While we plan to invest some capital into the re-refinery to enhance its layout and productivity, the plant is relatively new, with major portions of it having been rebuilt following a fire at the facility in 2011." Here's a one-year look at how Clean Harbors' stock has performed. You'll see that its return on invested capital hasn't been able to pay off yet, but its quarterly revenue per share numbers have improved nicely. CLH data by YCharts
It provides Clean Harbors with the second-largest collector of waste oil in California; andIt provides Clean Harbors with a number of valuable ancillary waste assets, including a permitted Treatment, Storage and Disposal Facility, or TSDF.
Whether global warming is your cup of tea or not really doesn't matter. What matters is that environmental disasters are occurring with unfortunate regularity and super-destructive storms like Sandy and Katrina have given us examples of the devastation they cause. Droughts, wildfires, floods and normal atrophy will continue to make rebuilding and infrastructure replacements a bigger opportunity for companies like Siemens, GE and Clean Harbors. If there are multiple "Big Ones" in the months and years ahead, there's no telling how astronomical the clean-up and restoration costs may be. It'll be a nightmare for the people affected and the insurance companies that insure them. Siemens, General Electric and Clean Harbors are sensible investment themes, just in case. Here's hoping for the best while we all prepare for the worst!
At the time of publication the author had no position in any of the stocks mentioned. Follow @m8a2r1 This article was written by an independent contributor, separate from TheStreet's regular news coverage.