Clean Harbors Inks Deal With Lonestar To Expand Foothold
Zacks Investment Research | May 12, 2017 07:43AM ET
Waste management services provider Clean Harbors, Inc. (NYSE:CLH) recently inked a definitive agreement to acquire Lonestar West Inc. Per the deal, Clean Harbors will acquire the outstanding shares of Lonestar in an all-cash transaction for CAD $44.1 million. The company expects the acquisition will be accretive in 2017.
Based in Sylvan Lake, Alberta, Lonestar operates a fleet of 140 Hydrovac, Vacuum and Auxiliary units across Western Canada, Ontario, California, and the Southern U.S. The company is poised for growth in its HVAC (heating, ventilation and air conditioning) services to become a prime competitor in the North American market. Lonestar has over 160 employees and operates across 12 centers throughout Canada and the U.S. The company generated revenues of CAD $43 million in 2016. Lonestar provides services for drilling operations, oil sands projects, plant maintenance, as well as commercial, municipal and civil projects.
This deal will enable Clean Harbors broaden its daylighting and hydro excavation capabilities, capitalize on the growing demand for these services, expand its foothold, while accelerating growth in existing regions and maximize cross-selling opportunities.
Per a market research by BCC Research, the total global market for commercial and residential HVAC systems was $69.8 billion in 2013 and $75.4 billion in 2014. It is expected to reach $116.6 billion by 2019, registering a compound annual growth rate of 9.1%, over the next five years.
In first-quarter 2017, Clean Harbors reported net revenue of $688.9 million, up 8% from the prior-year period owing to operating leverage in the business model and gradual uptick in customer activity. Revenues beat the Zacks Consensus Estimate of $659 million. On completion of the acquisition, Lonestar will enable Clean Harbors further improve its top-line, going forward.
Such strategic initiatives have enabled Clean Harbors to outperform the Zacks categorized Zacks Investment Research
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