Clean Harbors Shares Gain On Strong Q2, Acquisition Of HydroChemPSC For $1.25B

Clean Harbors Inc CLH reported second-quarter sales growth of 30.5% year-over-year to $926.46 million, beating the consensus of $841.02 million.
Sales by segments: Environmental Services $724.09 million (+18% Y/Y), Safety-Kleen Sustainability Solutions $202.28 million (+108% Y/Y).
Adjusted EPS improved to $1.19 from $0.52 in 2Q20, beating the consensus of $0.80.
Adjusted EBITDA increased 36% Y/Y to $187.8 million, and margin expanded by 80 bps to 20.3%.
Clean Harbors generated cash from operating activities year-to-date of $265.43 million, compared to $173.48 million a year ago, and adjusted free cash flow of $176.92 million.
The income from operations increased by 82.7% Y/Y to $110 million, and the margin expanded by 340 bps to 11.9%.
It held $666.3 million in cash and cash equivalents as of June 30, 2021.
FY21 Outlook: Clean Harbors expects Adjusted EBITDA of $620 million - $650 million (prior $560 million - $600 million).
Adjusted free cash flow of $285 million - $315 million (previous $230 million - $270 million).
Q3 Outlook: Clean Harbors expects Adjusted EBITDA to be at a level similar to or slightly above Q3 of 2020.
Additionally, Clean Harbors announced a definitive agreement to acquire HydroChemPSC (HPC), from an affiliate of Littlejohn & Co., LLC, for $1.25 billion in an all-cash transaction. It plans to fund the deal through a combination of cash and issuance of additional debt.
HPC expects to generate ~$744 million revenues for FY21, with an Adjusted EBITDA of ~$115 million.
Clean Harbors expects to achieve cost synergies of $40 million from the acquisition after the first full year of operations, a purchase multiple of 8.1 times on a post-synergized basis.
Price action: CLH shares are trading higher by 3.58% at $99.80 on the last check Wednesday.

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