Clean Harbor: Still More Room to Run

| About: Clean Harbors, (CLH)

Clean Harbors (NYSE:CLH) was going to have a great quarter. After all, it was one of the big beneficiaries of the gulf oil spill with its experience in cleaning up environmental contaminants… and a big quarter it was. The company smashed estimates posting a record EPS of $2.20 which was way ahead of the analyst estimate of .87. To put that in perspective, it’s nearly equal to the company's best year in 2008, when it produced $2.62/share in profit. Revenues beat as well at $472 million vs the analyst estimate of $422 million. It should be noted, however, that some of the boost this quarter comes from its acquisition of Eveready in 2009.

Obviously a great quarter for CLH, and it should be enough to keep the stock in the green today, but it’s always difficult to say how much has been priced in. Considering the company smashed analyst estimates, I think there is some room to run to the upside and CLH may be a compelling entry here.

CEO Alan McKim commented on the gulf oil spill operations:

“Our participation in the Gulf oil spill response exceeded our initial expectations and the guidance we provided in mid-May, accounting for more than 20% of revenue in the second quarter,” McKim said. “We worked closely with both government agencies and private organizations to provide a broad range of services within four primary areas: skimming, decontamination, water treatment and onshore clean-up. We deployed a large number of our own employees in the region and hired subcontractors who recruited a temporary workforce from the affected areas. At the peak level in the quarter, we had more than 3,500 response-related personnel in the Gulf region. We also supplied a wide variety of equipment, including boats, containment boom, skimmers, and vacuum trucks, as well as recovery and treatment systems.”

Looking ahead, the CEO commented that the company hase a strong cash position of $300 million which may be used for acquisitions and strategic investments. While he acknowledged the economy hasn’t fully recovered, McKim sees stabilization and improved performance and is optimistic for the full year. The Gulf operations are expected to continue at a reduced level this quarter and wind down significantly in the 4th quarter.

Full year 2010 revenue guidance is being revised by the company, expecting $1.6 – $1.65 billion this year.