Charah Solutions, Inc. (CHRA) Misses Q4 EPS by 9c, Revenues Beat; Offer FY19 Revenue Mid-Point Outlook Above Consensus

Charah Solutions, Inc. (NYSE: CHRA) reported Q4 EPS of $0.18, $0.09 worse than the analyst estimate of $0.27. Revenue for the quarter came in at $203.2 million versus the consensus estimate of $189.42 million.

“Across our businesses, our environmental and maintenance solutions are in increasing demand. We continue to diversify and expand these offerings to create a comprehensive suite of services to meet our customers’ evolving needs. Since our third quarter conference call, we have signed several new contracts, extended others, and expect to receive significant additional new business over the course of 2019 as we capitalize on a growing set of opportunities and further diversify our customer base,” said Scott Sewell, President and Chief Executive Officer of Charah Solutions. “During the fourth quarter of 2018, we continued to execute on our industry-leading technology initiatives by installing our MP618™ fly ash beneficiation technology at our Sulphur, Louisiana, terminal and completing our facility in upstate New York. We believe our ability to bundle these technologies with our ash excavation capabilities will improve our competitive position and open new markets to us. Customer interest has already been strong, and we plan to roll them out to additional sites later this year.”

“Our financial results in 2018 exceeded our expectations at the time of our initial public offering in June, despite unusually heavy precipitation in areas that affected a number of our remediation projects. Our 2019 revenue outlook is generally in line with expectations, while our Adjusted EBITDA outlook is lower, mostly due to the early completion of the Brickhaven contract, which accelerated EBITDA into 2018 that had been expected in future years. However, we expect to receive significant cash in 2019 that we intend to utilize to meaningfully de-lever and invest in the growth of our business, with a priority on our technology investments,” Mr. Sewell continued. “Looking ahead to 2020, we expect to generate strong growth in revenues and EBITDA, as we are well positioned to capitalize on regulatory and industry dynamics favoring remediation, which should provide us significant growth potential over a multi-year period. We also expect to reap the benefit of our technology initiatives.”

GUIDANCE:

Charah Solutions, Inc. sees FY2019 revenue of $650-800 million, versus the consensus of $722.34 million.

• Net income of $5 million to $20 million
• Adjusted EBITDA of $50 million to $65 million
• Significantly cash flow positive

The midpoint of 2019 revenue guidance is slightly lower than the 2018 level. Revenues in the Environmental Solutions segment are expected to be modestly lower in 2019 than 2018, due to the acceleration of Brickhaven revenues into 2018 and the timing of new business awards, partially offset by higher byproduct sales revenues. Revenues in the Maintenance and Technical Services segment are expected to be modestly higher in 2019 than 2018, with growth in fossil services offsetting a lower outage year in nuclear services.

2020 Outlook

The Company expects revenue growth of at least 20% in 2020 from 2019 guidance, driven by its leading competitive position, favorable market dynamics and regulatory trends that continue to expand its opportunity set, and revenue and margin enhancement potential from the rollout of its technology initiatives. In addition, the Company expects improvement to its Adjusted EBITDA margin in 2020 relative to 2019 due to the higher-margin profile of the expected growth in revenues and the ability to grow revenues without materially scaling up G&A expense.

For earnings history and earnings-related data on Charah Solutions, Inc. (CHRA) click here.

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