¨ | QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934 |
for the Quarterly Period Ended September 30, 2001 |
Massachusetts | 04-2997780 | |
(State of Incorporation) | (IRS Employer Identification No.) |
1501 Washington Street, Braintree, MA | 02184-7535 | |
(Address of Principal Executive Offices) | (Zip Code) |
Common Stock, $.01 par value | 11,476,754 | |
(Class) | (Outstanding at November 5, 2001) |
Pages | ||
ITEM 1: FINANCIAL STATEMENTS | ||
1 | ||
2-3 | ||
4-5 | ||
6 | ||
7-13 | ||
14-22 | ||
PART II: OTHER INFORMATION | ||
23 | ||
24 |
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||
2001 | 2000 | 2001 | 2000 | |||||
Revenues | $61,659 | $60,290 | $175,777 | $175,269 | ||||
Cost of revenues | 45,412 | 42,385 | 126,973 | 124,289 | ||||
Selling, general and administrative expenses | 10,314 | 10,803 | 31,456 | 31,667 | ||||
Depreciation and amortization | 2,794 | 2,736 | 8,342 | 7,915 | ||||
Income from operations | 3,139 | 4,366 | 9,006 | 11,398 | ||||
Interest expense, net | 2,553 | 2,395 | 7,143 | 6,998 | ||||
Income before provision for income taxes | 586 | 1,971 | 1,863 | 4,400 | ||||
Provision for income taxes | 182 | 64 | 102 | 294 | ||||
Net income | $ 404 | $ 1,907 | $ 1,761 | $ 4,106 | ||||
Basic earnings per share | $ 0.03 | $ 0.16 | $ 0.13 | $ 0.34 | ||||
Diluted earnings per share | $ 0.02 | $ 0.15 | $ 0.11 | $ 0.33 | ||||
Weighted average common shares outstanding | 11,441 | 11,139 | 11,380 | 11,041 | ||||
Weighted average common shares plus potentially dilutive common shares | 13,142 | 11,764 | 12,429 | 11,266 | ||||
September 30, 2001 | December 31, 2000 | |||||||
(Unaudited) | ||||||||
A S S E T S | ||||||||
Current assets: | ||||||||
Cash and cash equivalents | $ 2,110 | $ 2,629 | ||||||
Restricted investments | 790 | 768 | ||||||
Accounts receivable, net of allowance for doubtful accounts of $1,677 and $1,549, respectively | 51,119 | 47,201 | ||||||
Prepaid expenses | 1,788 | 1,563 | ||||||
Supplies inventories | 3,773 | 3,379 | ||||||
Income taxes receivable | — | 203 | ||||||
Deferred tax assets | 2,788 | 2,400 | ||||||
Total current assets | 62,368 | 58,143 | ||||||
Property, plant and equipment: | ||||||||
Land | 8,478 | 8,478 | ||||||
Buildings and improvements | 43,690 | 42,700 | ||||||
Vehicles and equipment | 93,648 | 90,794 | ||||||
Furniture and fixtures | 2,228 | 2,225 | ||||||
Construction in progress | 2,222 | 794 | ||||||
150,266 | 144,991 | |||||||
Less—Accumulated depreciation and amortization | 95,948 | 89,389 | ||||||
Net property, plant and equipment | 54,318 | 55,602 | ||||||
Other assets: | ||||||||
Goodwill, net | 19,224 | 19,799 | ||||||
Permits, net | 10,814 | 11,667 | ||||||
Other | 4,301 | 4,357 | ||||||
Total other assets | 34,339 | 35,823 | ||||||
Total assets | $151,025 | $149,568 | ||||||
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(in thousands, except share amounts)
September 30, 2001 | December 31, 2000 | |||||||||
(Unaudited) | ||||||||||
L I A B I L I T I E S A N D S T O C K H O L D E R S ’ E Q U I T Y | ||||||||||
Current liabilities: | ||||||||||
Uncashed checks | $ 2,313 | $ — | ||||||||
Current maturities of long-term obligations | 3,814 | 2,405 | ||||||||
Accounts payable | 20,538 | 19,100 | ||||||||
Accrued disposal costs | 7,600 | 7,479 | ||||||||
Other accrued expenses | 12,803 | 12,601 | ||||||||
Income taxes payable | 29 | 137 | ||||||||
Total current liabilities | 47,097 | 41,722 | ||||||||
Long-term obligations, less current maturities | 56,564 | 64,853 | ||||||||
Other | 1,543 | 1,358 | ||||||||
Total other liabilities | 58,107 | 66,211 | ||||||||
Stockholders’ equity: | ||||||||||
Preferred Stock, $.01 par value: | ||||||||||
Series A Convertible; Authorized-2,000,000 shares; Issued and outstanding—none | — | — | ||||||||
Series B Convertible; Authorized 156,416 shares; Issued and outstanding 112,000 (liquidation preference of $5.6 million) | 1 | 1 | ||||||||
Common Stock, $.01 par value | ||||||||||
Authorized 20,000,000 shares; Issued and outstanding 11,442,966 and 11,216,107 shares, respectively | 114 | 112 | ||||||||
Additional paid-in capital | 64,758 | 61,999 | ||||||||
Accumulated deficit | (19,052 | ) | (20,477 | ) | ||||||
Total stockholders’ equity | 45,821 | 41,635 | ||||||||
Total liabilities and stockholders’equity | $151,025 | $149,568 | ||||||||
Nine Months Ended September 30, | ||||||
2001 | 2000 | |||||
CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||
Net income | $1,761 | $4,106 | ||||
Adjustments to reconcile net income to net cash provided by operating activities: | ||||||
Depreciation and amortization | 8,342 | 7,915 | ||||
Allowance for doubtful accounts | 513 | 513 | ||||
Amortization of deferred financing costs | 489 | 259 | ||||
Deferred income taxes | (388 | ) | — | |||
Gain on sale of fixed assets | (47 | ) | (20 | ) | ||
Changes in assets and liabilities: | ||||||
Accounts receivable | (4,431 | ) | (7,196 | ) | ||
Refundable income taxes | 203 | (81 | ) | |||
Prepaid expenses | (225 | ) | (679 | ) | ||
Supplies inventories | (394 | ) | (52 | ) | ||
Other assets | 56 | (160 | ) | |||
Accounts payable | 606 | (560 | ) | |||
Accrued disposal costs | 121 | 2,267 | ||||
Other accrued expenses | 202 | 1,891 | ||||
Income tax payable | (108 | ) | 298 | |||
Other liabilities | 185 | 75 | ||||
Net cash provided by operating activities | 6,885 | 8,576 | ||||
CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||
Additions to property, plant and equipment | (4,859 | ) | (6,114 | ) | ||
Proceeds from sale and maturities of restricted investments | — | 1,152 | ||||
Cost of restricted investments acquired | (22 | ) | (504 | ) | ||
Proceeds from the sale of fixed assets | 108 | 101 | ||||
Net cash used in investing activities | $(4,773 | ) | $(5,365 | ) | ||
CLEAN HARBORS, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
Unaudited
(in thousands)
Nine Months Ended September 30, | ||||||
2001 | 2000 | |||||
CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||
Repayment of Senior Notes | $(50,000 | ) | $ — | |||
Issuance of Subordinated Notes | 35,000 | — | ||||
Additional borrowings under term notes | 19,000 | 3,000 | ||||
Uncashed checks | 2,313 | — | ||||
Net borrowings (repayments) under long-term Revolver | 17 | (6,717 | ) | |||
Payments on long-term obligations | (6,181 | ) | (1,417 | ) | ||
Additions to deferred financing costs | (2,884 | ) | — | |||
Proceeds from exercise of stock options | 75 | 156 | ||||
Proceeds from employee stock purchase plan | 141 | 102 | ||||
Dividend payment on preferred stock | (112 | ) | — | |||
Net cash used in financing activities | (2,631 | ) | (4,876 | ) | ||
DECREASE IN CASH AND CASH EQUIVALENTS: | (519 | ) | (1,665 | ) | ||
Cash and cash equivalents, beginning of year | 2,629 | 2,783 | ||||
Cash and cash equivalents, end of period | $ 2,110 | $1,118 | ||||
Supplemental Information: | ||||||
Non cash investing and financing activities: | ||||||
Stock dividend on preferred stock | $ 224 | $ 336 |
Series B Preferred Stock | Common Stock | Additional Paid-in Capital | Accumulated Deficit | Total Stockholders’ Equity | ||||||||||||||||||||||||||
Number of Shares | $0.01 Par Value | Number of Shares | $0.01 Par Value | |||||||||||||||||||||||||||
Balance at December 31, 2000 | 112 | $ 1 | 11,216 | $112 | $61,999 | $(20,477 | ) | $41,635 | ||||||||||||||||||||||
Net income | — | — | — | — | — | 1,761 | 1,761 | |||||||||||||||||||||||
Warrants issued | — | — | — | — | 2,321 | — | 2,321 | |||||||||||||||||||||||
Preferred stock dividends: | ||||||||||||||||||||||||||||||
Series B | — | — | 105 | 1 | 223 | (336 | ) | (112 | ) | |||||||||||||||||||||
Proceeds from exercise of stock options | — | — | 39 | — | 75 | — | 75 | |||||||||||||||||||||||
Employee stock purchase plan | — | — | 83 | 1 | 140 | — | 141 | |||||||||||||||||||||||
Balance at September 30, 2001 | 112 | $ 1 | 11,443 | $114 | $64,758 | $(19,052 | ) | $45,821 | ||||||||||||||||||||||
(a) Uncashed Checks: |
(b) Reclassifications: |
September 30, 2001 | December 31, 2000 | |||||||
(in thousands) | ||||||||
Long–term obligations consist of the following: | ||||||||
Economic development revenue bonds, bearing interest at 10.75% | $ 9,700 | $ 9,800 | ||||||
Revolving credit with a financial institution, bearing interest at the Eurodollar rate (3.06% at September 30, 2001) plus 3.00% or the “prime” rate (6.50% at September 30, 2001) plus 1.50%, collateralized by substantially all assets | 1,411 | 1,394 | ||||||
Term Note B payable, bearing interest at the greater of the “prime” rate (6.50% at September 30, 2001) plus 3.50% or 12.00% collateralized by substantially all assets | 17,869 | — | ||||||
1999 Term Note payable | — | 4,200 | ||||||
2000 Term Note payable, bearing interest at the Eurodollar rate (3.06% at September 30, 2001) plus 3.00% or the “prime” rate (6.50% at September 30, 2001) plus 1.50% collateralized by substantially all assets | 1,583 | 2,333 | ||||||
Subordinated Notes, bearing interest at 16.00% | 35,000 | — | ||||||
Senior Notes payable, bearing interest at 12.50% | — | 50,000 | ||||||
65,563 | 67,727 | |||||||
Less: current maturities | 3,814 | 2,405 | ||||||
Less: unamortized financing costs | 3,001 | 469 | ||||||
Less: issue discount on Subordinated Notes | 2,184 | — | ||||||
Long–term obligations | $56,564 | $64,853 | ||||||
Year | Amount | |
Last quarter 2001 | $ 928 | |
2002 | 3,814 | |
2003 | 3,147 | |
2004 | 4,225 | |
2005 | 2,814 | |
Thereafter | 50,635 | |
Total minimum payments due under long–term obligations including current maturities | $65,563 | |
The provision for income taxes for the quarter and nine months ended September 30, 2001 and 2000 consists primarily of federal alternative minimum taxes and state tangible property and net worth taxes that are levied as a component of state income taxes. Additionally, the provision for the nine months ended September 30, 2001 includes a $388,000 tax benefit relating to the first quarter loss.
During the third quarter of 2001, the Company reached a tentative settlement with state tax authorities on the previously disclosed state tax assessement and was advised that certain subsequent years under consideration for audit for the same disputed issue would not be audited. While the Company believes that the final outcome of the dispute will not have a material adverse effect on the Company's financial condition or results of operations, no assurance can be given as to the final outcome of the dispute.
Three Months Ended September 30, 2001 | |||||||||||||
Income (Numerator) | Shares (Denominator) | Per-Share Income | |||||||||||
Net income | $404 | ||||||||||||
Less preferred dividends | 112 | ||||||||||||
Basic EPS (income available to shareholders) | 292 | 11,441 | 0.03 | ||||||||||
Effect of dilutive securities | — | 1,701 | (0.01 | ) | |||||||||
Diluted EPS | |||||||||||||
Income available to common shareholders plus assumed conversions | $292 | 13,142 | $0.02 | ||||||||||
Three Months Ended September 30, 2000 | |||||||||||||
Income (Numerator) | Shares (Denominator) | Per-Share Income | |||||||||||
Net income | $1,907 | ||||||||||||
Less preferred dividends | 112 | ||||||||||||
Basic EPS (income available to shareholders) | 1,795 | 11,139 | 0.16 | ||||||||||
Effect of dilutive securities | — | 625 | (0.01 | ) | |||||||||
Diluted EPS | |||||||||||||
Income available to common shareholders plus assumed conversions | $1,795 | 11,764 | $0.15 | ||||||||||
Nine Months Ended September 30, 2001 | |||||||||||||
Income (Numerator) | Shares (Denominator) | Per-Share Income | |||||||||||
Net income | $1,761 | ||||||||||||
Less preferred dividends | 336 | ||||||||||||
Basic EPS (income available to shareholders) | 1,425 | 11,380 | 0.13 | ||||||||||
Effect of dilutive securities | — | 1,049 | (0.02 | ) | |||||||||
Diluted EPS | |||||||||||||
Income available to common shareholders plus assumed conversions | $1,425 | 12,429 | $0.11 | ||||||||||
Nine Months Ended September 30, 2000 | |||||||||||||
Income (Numerator) | Shares (Denominator) | Per-Share Income | |||||||||||
Net income | $4,106 | ||||||||||||
Less preferred dividends | 336 | ||||||||||||
Basic EPS (income available to shareholders) | 3,770 | 11,041 | 0.34 | ||||||||||
Effect of dilutive securities | — | 225 | (0.01 | ) | |||||||||
Diluted EPS | |||||||||||||
Income available to common shareholders plus assumed conversions | $3,770 | 11,266 | $0.33 | ||||||||||
Percentage of Total Revenues | ||||||||||||
Three Months Ended September 30, | Nine Months Ended September 30, | |||||||||||
2001 | 2000 | 2001 | 2000 | |||||||||
Revenues | 100.0 | % | 100.0 | % | 100.0 | % | 100.0 | % | ||||
Cost of revenues: | ||||||||||||
Disposal costs paid to third parties | 11.1 | 9.9 | 9.7 | 11.2 | ||||||||
Other costs | 62.6 | 60.4 | 62.5 | 59.7 | ||||||||
Total cost of revenues | 73.7 | 70.3 | 72.2 | 70.9 | ||||||||
Selling, general and administrative expenses | 16.7 | 17.9 | 17.9 | 18.1 | ||||||||
Depreciation and amortization of intangible assets | 4.5 | 4.5 | 4.8 | 4.5 | ||||||||
Income from operations | 5.1 | % | 7.3 | % | 5.1 | % | 6.5 | % | ||||
Other Data: | ||||||||||||
Earnings before interest, taxes, depreciation and amortization (EBITDA) (in thousands) | $5,933 | $7,102 | $17,348 | $19,313 |
There are many factors which have impacted, and continue to impact, the Company’s revenues. These factors include: competitive industry pricing; continued efforts by generators of hazardous waste to reduce the amount of hazardous waste they produce; significant consolidation among treatment and disposal companies; industry-wide over capacity; and direct shipment by generators of waste to the ultimate treatment or disposal location.
Exhibit No. | Description | Location | ||||
Reports on Form 8-K | None |
CL | EAN HARBORS, INC. |
Re | gistrant |
Da | ted: November 9, 2001 |
/s/ ALAN S. MCKIM |
By: |
Alan S. McKim |
Chairman of the Board and |
Chief Executive Officer |
Da | ted: November 9, 2001 |
/s/ ROGER A. KOENECKE |
By: |
Roger A. Koenecke |
Senior Vice President and |
Chief Financial Officer |