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WIKI ANALYSIS
Clean Harbors (NASDAQ:CLHB) disposes of hazardous waste -- meaning, any form of toxic chemical, organic, or nuclear substance. Clean harbors manages 50 waste management facilities throughout North America in 36 US states, seven Canadian provinces, Mexico, and Puerto Rico. The company also has international operations in Bulgaria, China, Singapore, Sweden, Thailand, and the UK.[1] The company earned $1.07 billion in revenue and $36 million in net income in 2009.[2]
Clean Harbor operates in the highly regulated $2 billion hazardous waste services industry with an array of federal, state, and local government permits that must be obtained in order to enter the sector. As a result, there has not been a new, operating incinerator or landfill created in the U.S. for 10 years, which limits the number of competitors in this industry.
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Business Growth
FY 2009 (ended December 31, 2009)[2]
- Net revenue increased 4.2% to $1.07 billion. Revenue decreased in the company's technical and field services segments, but was offset by an increase in the industrial services segment and the addition of the exploration services segment.
- Net income fell 36% to $37 million. Despite higher revenue, the cost of sales increased 6.5%, partially due to a 2.2% increase in SG&A expenses.
Trends and Forces
Recurring and diversified customer base provides stable revenue
Clean Harbors top ten customers by revenue have an average relationship of 15 years with the company. Unlike other hazardous waste companies that rely on one or two large contracts for the bulk of their revenue, Clean Harbors has 50,000 customers including a majority of the Fortune 500 companies. No single company accounts for more than 5% of the company's revenue. This ensures more consistent revenue for the company, rather than being reliant on fluctuations in revenue due to a single client or project.
Regulations limit new entrants in the hazardous waste industry
There has not been a new, operating incinerator or landfill created in the U.S. for 10 years. There are both high regulatory costs and an extensive array of federal, state, and local permits required for new facilities. A few of the notable regulations are the Comprehensive Environmental Response, Compensation and Liability Act of 1980 (CERCLA), the Resource Conservation and Recovery Act (RCRA), the Superfund Act, and the Clean Air act. These regulations are constantly changing and vary state-to-state. For example, Massachusetts considers used oil a hazardous waste, whereas RCRA does not. The Clean Air act has just been revised to include the addition of MACT (Maximum Achievable Control Technology), and Ontario introduced a new prohibition of land disposal of untreated hazardous wastes.[3]
Competitors
The North American hazardous waste industry is estimated at $2 billion, and the number of companies operating in the segment has been shrinking since the 1990s. At the time, more than 20 companies operated in the hazardous waste disposal sector; however now, four major companies dominate the sector with smaller companies filling niche service requirements. There has not been a new, operating incinerator or landfill created in the U.S. for 10 years.
Clean Harbors, Inc. competes with:
- Veolia Environnement (VE) - Veolia Environnement is a global provider of environmental management services including waste management, waste water treatment, energy services, and transportation services. Their operations are broken up among four divisions -- Water, Energy Services, Environmental Services, and Transportation.
- WTI - WTI is a joint venture between Heritage Environmental Services and Von Roll America. WTI provides incineration services for hazardous and non-hazardous waste services.
- Ross Incinceration Services - Ross Incineration Services is a subsidary of Ross Environmental Services, a private hazardous waste management company in operation since 1949. Ross Incineration manages both hazardous and non-hazardous wastes.[4]
- Waste Management (WMI) - Waste Management is North America's largest solid-waste provider with operations that cross garbage collection, landfills, and recycling.
- American Ecology (ECOL) - American Ecology provides hazardous waste treatment and disposal services for the Northwestern U.S. The company earns its revenue largely from two major clients -- Honeywell International (HON) and the Army Corps of Engineers.
- Heritage Environmental Services - Heritage Environmental is a private environmental services firm that operates an array of landfills, incineration, chemical treatment, and recovery facilities to support their disposal and cleaning services.
- Envirosource - Envirosource is a private company that operates in two main segments -- IMS and Technologies. Their IMS team provides slag processing, metal recovery, materials handling, and other materials services. The Technologies segment provides hazardous waste treatment and disposal service for steel and governmental services.
- Philip Services Corporation - Philip Services Corporation manages a wide range of industrial and environmental cleanup projects in the U.S including scrap metal recycling, on-site waste disposal, waste transport, and emergency response services. The company has filed for bankruptcy protection twice.
References
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