Clean Harbors, Inc. (CLH) swung to a net loss for the quarter ended Dec. 31, 2016. The company has made a net loss of $12.71 million, or $ 0.22 a share in the quarter, against a net profit of $0.57 million, or $0.01 a share in the last year period. On an adjusted basis, net loss for the quarter stood at $3.39 million, or $0.06 a share compared with a net profit of $0.57 million, or $0.01 a share in the last year period. Revenue during the quarter went down marginally by 2.94 percent to $692.11 million from $713.04 million in the previous year period. Gross margin for the quarter expanded 158 basis points over the previous year period to 28.24 percent. Total expenses were 96.83 percent of quarterly revenues, up from 96.42 percent for the same period last year. That has resulted in a contraction of 41 basis points in operating margin to 3.17 percent.
Operating income for the quarter was $21.94 million, compared with $25.55 million in the previous year period.
However, the adjusted operating income for the quarter stood at $21.94 million compared to $25.55 million in the prior year period. At the same time, adjusted operating margin contracted 41 basis points in the quarter to 3.17 percent from 3.58 percent in the last year period.
"Our fourth-quarter results were largely in line with our expectations," said Alan S. McKim, chairman, president and chief executive officer. "On the top line, we saw strong revenue growth from our Safety-Kleen business, which helped offset year-end weakness in the energy and industrial markets that affected several other segments. Adjusted EBITDA came in at the lower end of our range, primarily due to higher-than-expected severance costs incurred as we accelerated some cost reductions planned for 2017. Despite the lower revenue, our gross margin in the quarter was 150 basis points higher than a year ago as a result of our comprehensive cost-reduction efforts."
For financial year 2017, Clean Harbors, Inc. projects net income to be in the range of $4 million to $35 million. It expects adjusted net income to be in the range of $24 million to $48 million for the same period.
Working capital increases sharply
Clean Harbors, Inc. has recorded an increase in the working capital over the last year. It stood at $588.20 million as at Dec. 31, 2016, up 45.57 percent or $184.13 million from $404.08 million on Dec. 31, 2015. Current ratio was at 2.17 as on Dec. 31, 2016, up from 1.78 on Dec. 31, 2015. Cash conversion cycle (CCC) has increased to 31 days for the quarter from 26 days for the last year period. Days sales outstanding went up to 35 days for the quarter compared with 34 days for the same period last year.
Days inventory outstanding has increased to 17 days for the quarter compared with 13 days for the previous year period. At the same time, days payable outstanding was almost stable at 21 days for the quarter, when compared with the previous year period.
Debt moves up
Clean Harbors, Inc. has witnessed an increase in total debt over the last one year. It stood at $1,633.27 million as on Dec. 31, 2016, up 18.14 percent or $250.73 million from $1,382.54 million on Dec. 31, 2015. Total debt was 44.36 percent of total assets as on Dec. 31, 2016, compared with 40.29 percent on Dec. 31, 2015. Debt to equity ratio was at 1.51 as on Dec. 31, 2016, up from 1.26 as on Dec. 31, 2015.
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