Clean Harbors, Inc. (NYSE:CLH) Q2 2019 Earnings Conference Call Transcript

Jul 31, 2019 • 09:00 am ET

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Clean Harbors, Inc. (NYSE:CLH) Q2 2019 Earnings Conference Call Transcript

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Q & A
Operator
Operator

Thank you. [Operator instructions] Our first question is from Tyler Brown with Raymond James. Please proceed with your question.

Analyst
Tyler Brown

Hi. Good morning, guys.

Executive
Alan S. McKim

Hi, Tyler.

Analyst
Tyler Brown

Alan, so pricing was once again very strong in incineration. And based on my notes, it was a mid-teens increase off of a mid-teen increase comp. I know you mentioned mix, but is there a way to bifurcate that 15% increase between maybe mix and core price? And then can you give us any thoughts on pricing as we get into the back half for incineration?

Executive
Alan S. McKim

Probably think about one-third pricing and about two-thirds mix as we think of the margin improvement there.

Analyst
Tyler Brown

Okay. And then any thoughts as we move into the back half? Should we see this momentum?

Executive
Alan S. McKim

We continue to look at the mix. And as we've now gotten our El Dorado plant up and running, as you remember, when we first started that plant up, we were burning some very low-margin business just to get the unit up and running and now we've been able to get a much more selective type of waste stream to feed that. And we've also seen a lot of new waste streams coming online from some of the expansion in the chemical industry in the Gulf. So I would say that we should continue to see that kind of improvement both in price and mix for the rest of this year.

Analyst
Tyler Brown

Okay. That's great. And then utilization in the first half was obviously in the low-80% range, which well off last year's number. I know that there's a number of reasons, but should we think about utilization in the back half of the year kind of improving? And then into 2020, should we expect maybe a smoother utilization rate throughout the year? How should we think about that?

Executive
Alan S. McKim

Yeah. We had a major disruption in our Deer Park plant due to a catastrophic fire that was adjacent to our facility where we had to evacuate our plant, we had to shut our plant down for several weeks. And in the process of bringing that plant back online, we had to come off-line again and bring it back online and subsequently, we probably saw some impact to our refractory in that plant. And so quite frankly, we had to move forward a turnaround in July into June in Deer Park, so I would say that should not happen again next year. But that was probably a big part of our utilization issue there.

Analyst
Tyler Brown

Okay. Yes. It was a little funny this year. But then you mentioned that there were some large projects kicking off in the third quarter. Were you specifically talking landfill projects?

Executive
Alan S. McKim

Predominantly. Although, we do have some waste coming in for the incinerators due to those projects. But where our landfill business is about 10% off prior year, you're going to see that come back this year. And particularly on the West Coast, one of our landfills there was off-line with one of its