In the Business Outlook and Financial Guidance section, the end of the last sentence should read, "anticipated 2018 net cash from operating activities in the range of $295 million to $345 million" instead of "anticipated 2018 net cash from operating activities in the range of $290 million to $330 million".

The corrected release reads:

CLEAN HARBORS ANNOUNCES FOURTH-QUARTER AND YEAR-END 2017 FINANCIAL RESULTS
  • Increased Q4 Revenues 8% to $747.4 Million With Growth Across All Segments; Full-Year Revenues Up 7% to $2.94 Billion
  • Delivered Q4 Net Income of $84.2 Million and GAAP EPS of $1.48 Reflecting Significant Net Benefit from U.S. Tax Law Changes; Full-Year Net Income of $100.7 Million and GAAP EPS of $1.76
  • Reported Q4 Adjusted EBITDA of $101.8 Million; Full-Year Adjusted EBITDA of $425.7 Million
  • Achieved Full-Year Net Cash from Operating Activities of $285.7 Million and 2017 Adjusted Free Cash Flow of $140.2 Million
  • Provides 2018 Adjusted EBITDA Guidance of $440 Million to $480 Million
  • Completed Acquisition of Veolia North America's U.S. Industrial Cleaning Services Division

Clean Harbors, Inc. ("Clean Harbors") (NYSE: CLH), the leading provider of environmental, energy and industrial services throughout North America, today announced financial results for the fourth quarter and year ended December 31, 2017.

"We delivered solid fourth-quarter results that were in line with our expectations as we benefited from an improving macroeconomic environment and favorable industry trends," said Alan S. McKim, Chairman, President and Chief Executive Officer. "Our top-line performance reflected a successful execution of our corporate strategy, as all four reporting segments delivered growth in the quarter. Our Adjusted EBITDA improvement was driven by a 23% increase in Safety-Kleen as well as profitable growth in Technical Services."

Fourth-quarter revenues increased 8% to $747.4 million, compared with $692.1 million in the same period a year ago. Income from operations was $27.9 million, compared with $21.9 million in the fourth quarter of 2016.

Net income for the fourth quarter of 2017 was $84.2 million or $1.48 per diluted share. This result included a $93.0 million net benefit due to recent tax law changes, partly offset by charges of $4.9 million related to non-cash valuation allowances on tax loss carryforwards generated by certain Canadian subsidiaries and other tax-related charges. Net loss for the fourth quarter of 2016 was $12.7 million, or $0.22 per share, which included the recognition of non-cash valuation allowances on tax loss carryforwards generated by certain Canadian subsidiaries of $9.6 million .

Adjusted net loss for each of the fourth quarters of 2017 and 2016 was $3.4 million, or $0.06 per share. Net income (loss) and adjusted net loss results for the fourth quarters of 2017 and 2016 included pre-tax integration and severance costs of $5.7 million and $5.9 million, respectively.

Adjusted EBITDA (see description below) in the fourth quarter of 2017 increased 6% to $101.8 million, compared with $95.9 million in the same period of 2016.

"In our Technical Services segment, incinerator utilization was an impressive 92% in the quarter, and landfill volumes rose 18% on a combination of higher base business and project work," McKim said. "Our Safety-Kleen segment delivered increased revenue and Adjusted EBITDA margins of 24.5%, reflecting effective spread management and the continued rebound in energy prices."

Completion of Veolia Transaction

The Company recently completed its previously announced acquisition of Veolia North America's U.S. Industrial Cleaning Services Division. Clean Harbors acquired the business for $120 million in an all-cash transaction, subject to customary post-closing adjustments. The business, which generated revenues of approximately $210 million in 2017, employs approximately 1,300 employees and maintains an extensive fleet of vehicles and equipment at over 60 operating locations across the United States.

"We are excited about the numerous benefits this transaction will deliver for our customers, shareholders and Industrial Services employees," said McKim. "It provides significant scale and industrial services capabilities while more than doubling the size of our existing U.S. Industrial Services business. The acquired business' operational footprint, particularly its strong presence in the Midwest, complements our existing network of locations. The addition of this business will create new cross-selling opportunities and drive incremental volumes into our waste disposal network. We believe this transaction enhances long-term shareholder value and will support our profitable growth momentum in 2018 and beyond. We welcome the Veolia employees to the Clean Harbors team and look forward to working together."

2017 Financial Results

Clean Harbors revenues for 2017 increased 7% to $2.94 billion, compared with $2.76 billion in 2016.

GAAP net income for 2017 was $100.7 million, or $1.76 per diluted share, which includes the net benefit from U.S. tax law changes, a gain on sale of business, a loss on the early extinguishment of debt, non-cash valuation allowances related to Canadian operations and other tax charges. GAAP net loss for 2016 was $39.9 million, or $0.69 per share, which included non-cash valuation allowances primarily related to Canadian operations, a non-cash goodwill impairment charge and a gain on sale of business.

Excluding these items, the Company reported adjusted net income for 2017 of $11.6 million, or $0.20 per diluted share, compared with adjusted net income of $1.3 million, or $0.02 per diluted share, in 2016. Net income and adjusted net income for 2017 included $11.4 million of pre-tax integration and severance costs; net loss and adjusted net income for 2016 included $24.4 million of pre-tax integration and severance costs.

Adjusted EBITDA (see description below) was $425.7 million in 2017, compared with $400.4 million in 2016.

"Clean Harbors returned to profitable growth in 2017, as we began to harvest the investments we've made in several growth initiatives," said McKim. "During the year, we commercially launched our 70,000-ton hazardous waste incinerator in El Dorado, Arkansas - the first new commercial U.S. incinerator to be permitted and opened in 20 years. Though the incinerator incurred several unplanned outages related to the start-up of the plant, we remain enthusiastic about its long-term potential. We also began the rollout of Safety-Kleen's closed loop offering, selling and delivering lubricants directly to more than 15,000 unique customers. The growth of Safety-Kleen was supported by the opening of our Customer Care Center, which improves efficiencies by centralizing many functions including call operations, routing, collections and customer service."

Business Outlook and Financial Guidance

"We begin 2018 with positive momentum in our key businesses and are excited about our prospects for the year," McKim said. "We are focused on enhancing our margins through better pricing, improving our revenue mix, increasing efficiencies and capitalizing on our growth initiatives. We expect Tech Services to deliver higher profitability due to our new incinerator's second full year of operation and the strength of the industrial economy, particularly the expansion in the chemical space. Safety-Kleen is on track for another solid year of profitable growth. Adding Veolia's U.S. industrial cleaning business should enable our industrial team to gain meaningful traction. The improving energy markets bode well for us in multiple areas. Overall, we anticipate a strong Adjusted EBITDA and adjusted free cash flow performance in 2018."

Based on its 2017 financial performance, current market conditions and the Veolia transaction, Clean Harbors expects full-year 2018 Adjusted EBITDA in the range of $440 million to $480 million. On a GAAP basis, the Company's guidance is based on anticipated 2018 net income in the range of $17 million to $56 million. A reconciliation of the Company's Adjusted EBITDA guidance to net income guidance is included below. For 2018, Clean Harbors expects to generate adjusted free cash flow in the range of $125 million to $155 million, which is based on anticipated 2018 net cash from operating activities in the range of $295 million to $345 million.

Non-GAAP Results

Clean Harbors reports Adjusted EBITDA, which is a non-GAAP financial measure and should not be considered an alternative to net income or other measurements under generally accepted accounting principles (GAAP), but viewed only as a supplement to those measurements. Adjusted EBITDA is not calculated identically by all companies, and therefore the Company's measurements of Adjusted EBITDA may not be comparable to similarly titled measures reported by other companies. Clean Harbors believes that Adjusted EBITDA provides additional useful information to investors since the Company's loan covenants are based upon levels of Adjusted EBITDA achieved and management routinely evaluates the performance of its businesses based upon levels of Adjusted EBITDA. The Company defines Adjusted EBITDA in accordance with its existing credit agreement, as described in the following reconciliation showing the differences between reported net income (loss) and Adjusted EBITDA for the three and twelve months ended December 31, 2017 and 2016 (in thousands):
 

 

For the Three Months Ended:
 

For the Year Ended:
December 31,   December 31, December 31,   December 31,
2017 2016 2017 2016
 
Net income (loss) $ 84,194 ($12,713 ) $ 100,739 ($39,873 )
Accretion of environmental liabilities 2,407 2,648 9,460 10,177
Depreciation and amortization 71,490 71,347 288,422 287,002
Goodwill impairment charge 34,013
Other expense (income), net 3,305 (6,932 ) 6,119 (6,195 )
Loss on early extinguishment of debt 7,891
Loss (gain) on sale of businesses 913 (453 ) (30,732 ) (16,884 )
Interest expense, net 20,065 21,333 85,808 83,525
(Benefit) provision for income taxes   (80,542 )   20,708     (42,050 )   48,589  
Adjusted EBITDA $ 101,832   $ 95,938   $ 425,657   $ 400,354  
 

This press release includes a discussion of income from operations, net income (loss) and earnings (loss) per share adjusted for the loss on goodwill impairment charge, loss on early extinguishment of debt, (loss) gain on sale of businesses, the impact of recent U.S. tax law changes, non-cash tax-related valuation allowances and other tax-related changes as identified in the reconciliations provided below. The Company believes that discussion of these additional non-GAAP measures provides investors with meaningful comparisons of current results to prior periods' results by excluding items that the Company does not believe reflect its fundamental business performance. The following shows the difference between income from operations and adjusted income from operations, net income (loss) to adjusted net (loss) income, and earnings (loss) per share to adjusted (loss) earnings per share for the three and twelve months ended December 31, 2017 and 2016 (in thousands, except per share amounts):
  For the Three Months Ended:   For the Year Ended:
December 31,   December 31, December 31,   December 31,
2017 2016 2017 2016
Adjusted income from operations
Income from operations $ 27,935 $ 21,943 $ 127,775 $ 69,162
Goodwill impairment charge               34,013  
Adjusted income from operations $ 27,935   $ 21,943   $ 127,775   $ 103,175  
 
Adjusted net (loss) income
Net income (loss) $ 84,194 ($12,713 ) $ 100,739 ($39,873 )
Goodwill impairment charge, net of $0 taxes 34,013
Loss on early extinguishment of debt, net of tax 4,735
Loss (gain) on sale of businesses, net of tax 548 (289 ) (17,919 ) (15,380 )
Adjustments related to tax law changes (93,009 ) (93,009 )
Tax-related valuation allowances and other*   4,905     9,609     17,050     22,564  
Adjusted net (loss) income   ($3,362 )   ($3,393 ) $ 11,596   $ 1,324  
 

Adjusted (loss) earnings per share
Earnings (loss) per share $ 1.48 ($0.22 ) $ 1.76 ($0.69 )
Goodwill impairment charge, net of $0 taxes 0.59
Loss on early extinguishment of debt, net of tax 0.08
Loss (gain) on sale of businesses, net of tax 0.01 (0.01 ) (0.31 ) (0.27 )
Adjustments related to tax law changes (1.63 ) (1.63 )
Tax-related valuation allowances and other*   0.08     0.17     0.30     0.39  
Adjusted (loss) earnings per share   ($0.06 )   ($0.06 ) $ 0.20   $ 0.02  
*   For the three and twelve months ended December 31, 2017, other amounts include a $2.6 million charge, or $0.04 per share, related to unrecognized tax benefits associated with prior year tax positions taken by the Company.
 

Adjusted Free Cash Flow Reconciliation

Clean Harbors reports adjusted free cash flow, which it considers to be a measurement of liquidity which provides useful information to investors about our ability to generate cash. The Company defines adjusted free cash flow as net cash from operating activities excluding cash impacts of items derived from non-operating activities, such as taxes paid in connection with divestitures, less additions to property, plant and equipment plus proceeds from sales of fixed assets. Adjusted free cash flow should not be considered an alternative to net cash from operating activities or other measurements under GAAP. Adjusted free cash flow is not calculated identically by all companies, and therefore our measurements of adjusted free cash flow may not be comparable to similarly titled measures reported by other companies.

An itemized reconciliation between net cash from operating activities and adjusted free cash flow is as follows (in thousands):

 
  For the Three Months Ended:   For the Year Ended:
December 31,   December 31, December 31,   December 31,
2017 2016 2017 2016
Adjusted free cash flow
Net cash from operating activities $ 64,229 $ 80,797 $ 285,698 $ 259,624
Additions to property, plant and equipment (39,271 ) (44,036 ) (167,007 ) (219,384 )
Proceeds from sale and disposal of fixed assets 1,749 16,835 7,124 20,817
Tax liability on sale of business   14,423         14,423      
Adjusted free cash flow $ 41,130   $ 53,596   $ 140,238   $ 61,057  
 

Adjusted EBITDA Guidance Reconciliation

An itemized reconciliation between projected net income and projected Adjusted EBITDA is as follows (in millions):
 
For the Year Ending
December 31, 2018
Projected GAAP net income $17       to       $56
Adjustments:
Accretion of environmental liabilities 11 to 10
Depreciation and amortization 300 to 290
Interest expense, net 86 to 82
Provision for income taxes 26       to       42
Projected Adjusted EBITDA $440       to       $480
 

Adjusted Free Cash Flow Guidance Reconciliation

An itemized reconciliation between projected cash from operating activities and projected adjusted free cash flow is as follows (in millions):
 
 

For the Year Ending

December 31, 2018
Projected cash from operating activities $295       to       $345
Additions to property, plant and equipment (180) to (200)
Proceeds from sale and disposal of fixed assets 10       to       10
Projected adjusted free cash flow $125       to       $155
 

Conference Call Information

Clean Harbors will conduct a conference call for investors today at 9:00 a.m. (ET) to discuss the information contained in this press release. During the call, management will discuss Clean Harbors' financial results, business outlook and growth strategy. Investors who wish to listen to the webcast and view the accompanying slides should visit the Investor Relations section of the Company's website at www.cleanharbors.com. The live call also can be accessed by dialing 201.689.8881 or 877.709.8155 prior to the start time. If you are unable to listen to the live conference call, the webcast will be archived on the Company's website.

About Clean Harbors

Clean Harbors (NYSE: CLH) is North America's leading provider of environmental, energy and industrial services. The Company serves a diverse customer base, including a majority of the Fortune 500, across the chemical, energy, manufacturing and additional markets, as well as numerous government agencies. These customers rely on Clean Harbors to deliver a broad range of services such as end-to-end hazardous waste management, emergency spill response, industrial cleaning and maintenance, and recycling services. Through its Safety-Kleen subsidiary, Clean Harbors also is North America's largest re-refiner and recycler of used oil and a leading provider of parts washers and environmental services to commercial, industrial and automotive customers. Founded in 1980 and based in Massachusetts, Clean Harbors operates throughout the United States, Canada, Mexico and Puerto Rico. For more information, visit www.cleanharbors.com.

Safe Harbor Statement

Any statements contained herein that are not historical facts are forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are generally identifiable by use of the words "believes," "expects," "intends," "anticipates," "plans to," "estimates," "projects," or similar expressions. Such statements may include, but are not limited to, statements about future financial and operating results, and other statements that are not historical facts. Such statements are based upon the beliefs and expectations of Clean Harbors' management as of this date only and are subject to certain risks and uncertainties that could cause actual results to differ materially including, without limitation, those items identified as "risk factors" in Clean Harbors' most recently filed Form 10-K and Form 10-Q. Therefore, readers are cautioned not to place undue reliance on these forward-looking statements. Clean Harbors undertakes no obligation to revise or publicly release the results of any revision to these forward-looking statements other than through its filings with the Securities and Exchange Commission, which may be viewed in the "Investors" section of Clean Harbors' website at www.cleanharbors.com.
 

CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONSOLIDATED STATEMENTS OF OPERATIONS
(in thousands except per share amounts)
 
  For the Three Months Ended:   For the Year Ended:

December 31, 2017
 

December 31, 2016

December 31, 2017
 

December 31, 2016
 
Revenues $ 747,403 $ 692,113 $ 2,944,978 $ 2,755,226
Cost of revenues (exclusive of items shown separately below) 526,690 496,661 2,062,673 1,932,857
Selling, general and administrative expenses 118,881 99,514 456,648 422,015
Accretion of environmental liabilities 2,407 2,648 9,460 10,177
Depreciation and amortization 71,490 71,347 288,422 287,002
Goodwill impairment charge               34,013  
Income from operations 27,935 21,943 127,775 69,162
Other (expense) income, net (3,305 ) 6,932 (6,119 ) 6,195
Loss on early extinguishment of debt (7,891 )
(Loss) gain on sale of businesses (913 ) 453 30,732 16,884
Interest expense, net   (20,065 )   (21,333 )   (85,808 )   (83,525 )
Income before (benefit) provision for income taxes 3,652 7,995 58,689 8,716
(Benefit) provision for income taxes   (80,542 )   20,708     (42,050 )   48,589  
Net income (loss) $ 84,194     ($12,713 ) $ 100,739     ($39,873 )
Earnings (loss) per share:
Basic $ 1.48     ($0.22 ) $ 1.77     ($0.69 )
Diluted $ 1.48     ($0.22 ) $ 1.76     ($0.69 )
 
Shares used to compute earnings (loss) per share — Basic   56,810     57,350     57,072     57,532  
Shares used to compute earnings (loss) per share — Diluted   56,955     57,350     57,200     57,532  
 
CLEAN HARBORS, INC. AND SUBSIDIARIES
UNAUDITED CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands)
 
  December 31,   December 31,
2017 2016
Current assets:
Cash and cash equivalents

$

319,399
$ 306,997
Short-term marketable securities 38,179
Accounts receivable, net 528,924 496,226
Unbilled accounts receivable 35,922 36,190
Deferred costs 20,445 18,914
Inventories and supplies 176,012 178,428
Prepaid expenses and other current assets   35,175   56,116
Total current assets   1,154,056   1,092,871
Property, plant and equipment, net   1,587,365   1,611,827
Other assets:
Goodwill 478,523 465,154
Permits and other intangibles, net 469,128 498,721
Other   17,498   13,347
Total other assets   965,149   977,222
Total assets $ 3,706,570 $ 3,681,920
Current liabilities:
Current portion of long-term obligations $ 4,000 $
Accounts payable 224,231 229,534
Deferred revenue 67,822 64,397
Accrued expenses 187,982 190,721
Current portion of closure, post-closure and remedial liabilities   19,782   20,016
Total current liabilities 503,817 504,668
Other liabilities:
Closure and post-closure liabilities, less current portion 54,593 52,111
Remedial liabilities, less current portion 111,130 114,211
Long-term obligations, less current portion 1,625,537 1,633,272
Deferred taxes, unrecognized tax benefits and other long-term liabilities   223,291   293,417
Total other liabilities   2,014,551   2,093,011
Total stockholders' equity, net   1,188,202   1,084,241
Total liabilities and stockholders' equity $ 3,706,570 $ 3,681,920
 
 

CLEAN HARBORS, INC. AND SUBSIDIARIES

UNAUDITED CONSOLIDATED STATEMENTS OF CASH FLOWS

(in thousands)
 
  For the Year Ended:
December 31, 2017   December 31, 2016
Cash flows from operating activities:
Net income (loss) $ 100,739 ($39,873 )
Adjustments to reconcile net income (loss) to net cash from operating activities:
Depreciation and amortization 288,422 287,002
Goodwill impairment charge 34,013
Allowance for doubtful accounts 7,901 6,907
Amortization of deferred financing costs and debt discount 3,482 3,537
Accretion of environmental liabilities 9,460 10,177
Changes in environmental liability estimates (195 ) (4,254 )
Deferred income taxes (83,335 ) 15,184
Other expense (income), net 6,119 (5,685 )
Stock-based compensation 13,146 10,481
Excess tax benefit of stock-based compensation (1,198 )
Net tax benefit on stock-based awards 1,165
Gain on sale of businesses (30,732 ) (16,884 )
Loss on early extinguishment of debt 7,891
Environmental expenditures (12,965 ) (12,170 )
Changes in assets and liabilities, net of acquisitions
Accounts receivable and unbilled accounts receivable (33,764 ) (15,009 )
Inventories and supplies (5,002 ) (16,080 )
Other current assets 16,720 (8,036 )
Accounts payable (10,684 ) (3,503 )
Other current and long-term liabilities   8,495       13,850  
Net cash from operating activities   285,698       259,624  
Cash flows used in investing activities:
Additions to property, plant and equipment (167,007 ) (219,384)_
Proceeds from sale and disposal of fixed assets 7,124 20,817
Acquisitions, net of cash acquired (49,227 ) (206,915 )
Additions to intangible assets, including costs to obtain or renew permits (1,617 ) (2,831 )
Purchases of available-for-sale securities (38,342 ) (598 )
Proceeds on sale of businesses, net of transactional costs 45,426 47,134
Proceeds from sale of investments   376        
Net cash used in investing activities   (203,267 )     (361,777 )
Cash flows (used in) from financing activities:
Change in uncashed checks (5,940 ) (3,177 )
Proceeds from exercise of stock options 46 627
Tax payments related to withholdings on vested restricted stock (3,149 ) (2,819 )
Repurchases of common stock (48,971 ) (22,188 )
Excess tax benefit of stock-based compensation 1,198
Deferred financing costs paid (5,718 ) (4,031 )
Premiums paid on early extinguishment of debt (6,028 )
Principal payments on debt (402,000 )
Issuance of senior secured notes, net of discount 399,000
Issuance of senior unsecured notes, including premium         250,625  

Net cash (used in) from financing activities
  (72,760 )   220,235  
Effect of exchange rate change on cash   2,731     4,207  
Increase in cash and cash equivalents 12,402 122,289
Cash and cash equivalents, beginning of year   306,997     184,708  
Cash and cash equivalents, end of year $ 319,399   $ 306,997  
 

Supplemental information:
Cash payments for interest and income taxes:
Interest paid $ 93,174 $ 88,669
Income taxes paid 18,682 29,255
Non-cash investing activities:
Property, plant and equipment accrued 16,109 9,214
Transfer of inventory to property, plant and equipment 12,641
Receivable for estimated purchase price adjustment 1,910
 

Supplemental Segment Data (in thousands)
 
  For the Three Months Ended:
Revenue December 31, 2017   December 31, 2016
 

Intersegment
 

 
 

Intersegment
 
Third Party

Revenues
Direct

Third Party

Revenues
Direct
Revenues  

(Expense), net
  Revenues Revenues  

(Expense), net
  Revenues
Technical Services $ 249,198 $ 40,739 $ 289,937 $ 225,778 $ 39,476 $ 265,254
Industrial and Field Services 165,952 (9,822 ) 156,130 151,226 (10,218 ) 141,008
Safety-Kleen 302,818 (30,356 ) 272,462 288,969 (28,683 ) 260,286
Oil, Gas and Lodging Services 27,849 391 28,240 25,137 327 25,464
Corporate Items   1,586     (952 )     634   1,003     (902 )     101
Total $ 747,403   $     $ 747,403 $ 692,113   $     $ 692,113
 
  For the Year Ended:
Revenue December 31, 2017   December 31, 2016
 

Intersegment
 

 
 

Intersegment
 
Third Party

Revenues
Direct

Third Party

Revenues
Direct
Revenues

(Expense), net
Revenues Revenues

(Expense), net
Revenues
Technical Services $ 980,232 $ 163,917 $ 1,144,149 $ 906,495 $ 150,240 $ 1,056,735
Industrial and Field Services 631,216 (37,494 ) 593,722 618,245 (36,030 ) 582,215
Safety-Kleen 1,213,703 (125,817 ) 1,087,886 1,110,727 (114,644 ) 996,083
Oil, Gas and Lodging Services 117,252 2,351 119,603 116,692 3,191 119,883
Corporate Items   2,575     (2,957 )     (382 )   3,067     (2,757 )     310
Total $ 2,944,978  

$

   

$

2,944,978
  $ 2,755,226   $     $ 2,755,226
 
  For the Three Months Ended:   For the Year Ended:
December 31,   December 31, December 31,   December 31,
Adjusted EBITDA 2017 2016 2017 2016
 
Technical Services $ 72,686 $ 69,554 $ 276,592 $ 271,176
Industrial and Field Services 6,358 12,564 43,010 51,191
Safety-Kleen 66,857 54,204 249,811 219,546
Oil, Gas and Lodging Services 739 (3,427 ) 1,708 (3,292 )
Corporate Items   (44,808 )   (36,957 )   (145,464 )   (138,267 )
Total $ 101,832   $ 95,938   $ 425,657   $ 400,354  

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