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Safety-Kleen Corp.
1000 N. Randall Road
Elgin, IL 60123
(847) 697-8460
For further information:
FOR IMMEDIATE RELEASE CONTACT:
MAUREEN FISK
(847) 468-2452
SAFETY-KLEEN CORP. REPORTS
THIRD QUARTER 1997 OPERATING RESULTS
ELGIN, ILLINOIS -- SEPTEMBER 29, 1997 -- Safety-Kleen Corp. (NYSE:SK)
today announced results for its third quarter ended Sept. 6, 1997. Consolidated
revenue for the 12-week period was $230 million, an increase of 8% compared with
the similar period in 1996. Net earnings rose to $15.1 million, an increase of
8% over the $14.0 million reported in the third quarter of 1996. On a per share
basis, earnings were $0.26, compared with $0.24 in the same quarter one year
ago. The Company reported average shares outstanding were approximately 58.7
million.
For the first thirty-six weeks of 1997, consolidated revenue was $680
million, an increase of 9% compared with $626 million during the same period in
1996. Net earnings were $40.3 million, relatively unchanged from $40.7 million
during the same period one year ago. Year-to-date earnings per share were $0.69
compared with $0.70 per share in 1996.
Commenting on the results, Joseph Chalhoub, President and Chief Operating
Officer noted, "Excluding the impact of a stronger dollar, on a year-over-year
basis consolidated revenue for the quarter was up 9%. Our Industrial Services
revenue for the third quarter grew 11% and Automotive Services increased 10%
compared with the prior year quarter. We also saw Imaging reach break-even at
the gross profit line, another plus for this quarter," Chalhoub noted. The
Company's Oil Recovery Service ("ORS") also netted a small profit during the
third quarter on a revenue increase of 5%. "We continue to see earnings
improvement on a sequential
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Safety-Kleen Corp.
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basis in our ORS business due primarily to the aggressive cost reduction program
we have in place," Chalhoub added.
Safety-Kleen also noted that its newer businesses, Imaging, Vacuum
Services, and Lab Pack contributed approximately $14 million in revenue during
the quarter and are on track to exceed their goal of $50 million in combined
revenue for 1997. "We expect these businesses to continue to grow rapidly for
the foreseeable future and ultimately contribute gross profit margins comparable
to our established businesses. At present, our Industrial Waste Services
business offers considerable growth opportunities for the Company and we are
testing new services that we hope to announce shortly," Chalhoub said.
Andrew Campbell, Chief Financial Officer of the Company added, "SG&A
expenses declined 4.4% from the previous quarter to approximately 13.6% of
revenue due in part to lower employee-related expenses. We hope to be able to
maintain this trend going forward. In addition, we recognized a one-time,
favorable tax credit during the quarter which reduced our effective tax rate to
37%. We expect the tax rate to return closer to the 38% level going forward,"
Campbell noted. In addition, the third quarter 1997 results include
non-recurring charges of $1.6 million after tax related to severance costs, and
also reflect the benefit of adjustments to previously established reserves of a
similar amount.
Safety-Kleen is a leading environmental and industrial service company
dedicated to helping businesses recycle and process both hazardous and
non-hazardous waste streams. Safety-Kleen shares are traded on the New York
Stock Exchange under the symbol "SK".
PRIVATE SECURITIES LITIGATION REFORM ACT DISCLOSURE
This press release contains various forward-looking statements, including
revenue and operating projections. There are many factors that could cause
actual results to differ materially, such as: adoption of new environmental laws
and regulations; general business conditions, such as the level of competition;
changes in demand for the Company's services and the price of petroleum based
products.
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CONSOLIDATED STATEMENT OF EARNINGS
(thousands, except per share amounts)
TWELVE THIRTY-SIX
WEEKS ENDED WEEKS ENDED
Sept. 6, Sept. 7, Sept. 6, Sept. 7,
1997 1996 1997 1996
Revenue
North America
Automotive/Retail Repair Services ..................... $ 61,958 $ 56,200 $ 181,834 $ 165,307
Industrial Services
Parts Cleaner ....................................... 31,981 29,641 94,747 87,274
Fluid Recovery ...................................... 37,960 33,166 111,063 96,587
Total Industrial .................................... 69,941 62,807 205,810 183,861
Oil Recovery Services ................................. 37,622 36,015 106,136 102,488
Other ................................................. 36,300 34,583 111,757 102,595
Total North America ................................... 205,821 189,605 605,537 554,251
Europe ................................................... 24,193 23,493 74,635 71,925
Consolidated Revenue ....................................... 230,014 213,098 680,172 626,176
Operating costs and expenses ............................... 171,352 155,274 507,143 455,885
Selling and administrative expenses ........................ 31,274 30,456 96,579 90,283
Operating income ........................................... 27,388 27,368 76,450 80,008
Interest income ............................................ 299 208 829 640
Interest expense ........................................... (3,707) (4,388) (12,362) (13,098)
Earnings before income taxes ............................... 23,980 23,188 64,917 67,550
Income taxes ............................................... 8,862 9,184 24,620 26,865
Net earnings ............................................... $ 15,118 $ 14,004 $ 40,297 $ 40,685
Earnings per common and common
equivalent share ......................................... $ 0.26 $ 0.24 $ 0.69 $ 0.70
Average number of common and
common
equivalent shares outstanding ............................ 58,665 58,330 58,490 58,078
Cash dividends per common share ............................ $ 0.09 $ 0.09 $ 0.27 $ 0.27
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1. The Company's interim reporting periods are twelve weeks each for the first
three reporting periods of the year and seventeen and sixteen weeks for the
fourth reporting period of 1997 and 1996, respectively.