BOISE, ID--(Marketwired - April 29, 2015) - US Ecology, Inc. (
Operating income for the first quarter of 2015 was $15.0 million, down 3% from $15.5 million in the first quarter of 2014. Adjusted EBITDA for the first quarter of 2015 was $27.2 million, up 34% from $20.3 million in the same period last year. Net income for the first quarter of 2015 was $5.9 million, or $0.27 per diluted share, down from $9.4 million, or $0.43 per diluted share, in the first quarter of 2014. Excluding foreign currency translation losses and business development expenses, adjusted earnings per diluted share was $0.35 in the first quarter of 2015, down from $0.48 in the first quarter of 2014. A reconciliation of earnings per diluted share to adjusted earnings per diluted share and net income to Adjusted EBITDA is attached as Exhibit A to this release.
Total revenue for the first quarter of 2015 was $136.7 million, up from $53.4 million in the same quarter last year. First quarter 2015 revenue includes $84.7 million from the acquired EQ businesses. Revenue for the Environmental Services ("ES")2 segment was $91.4 million for the first quarter of 2015, up from $53.4 million in the first quarter of 2014. Revenue for the FIS3 business segment was $45.2 million for the first quarter of 2015.
Excluding the acquired EQ operations, ES revenue decreased $1.3 million, or 2%, in the first quarter of 2015 compared to the same period last year on lower treatment and disposal ("T&D") revenue. T&D revenue declined 4% reflecting 22% lower volume compared to the first quarter of 2014. Transportation service revenue (excluding EQ) increased 7% compared to the first quarter of 2014.
For the first quarter of 2015, gross profit was $39.8 million (including $18.8 million in gross profit from EQ), up from $22.1 million in the first quarter of 2014. Gross profit for the ES segment was $34.0 million in the first quarter of 2015, up from $22.1 million in the same quarter of 2014. Excluding the acquired EQ operations, ES gross profit was $21.0 million, down 5% from $22.1 million in the first quarter of 2014. T&D gross margin for the legacy US Ecology business was 50% for the first quarter of both 2015 and 2014. Gross profit for the FIS segment was $5.9 million in the first quarter of 2015.
Selling, general and administrative ("SG&A") expense for the first quarter of 2015 was $24.9 million compared with $6.6 million in the same quarter last year. The increase reflects $15.3 million in SG&A from the acquired EQ operations, and higher business development expenses, labor costs, incentive compensation and professional fees and expenses.
Consolidated net interest expense for the first quarter of 2015 was $5.7 million, up from $42,000 in the first quarter of 2014, reflecting interest expense on increased credit facility borrowings used to fund the EQ acquisition.
The Company's consolidated effective income tax rate for the first quarter of 2015 was 33.1%, down from 35.8% for the first quarter of 2014. This decrease primarily reflects lower non-tax deductible expenses on higher projected full year earnings in the first quarter of 2015 than the same period last year.
"Despite adverse weather conditions impacting eastern North America, US Ecology delivered a strong quarter in line with our expectations," commented President and Chief Executive Officer, Jeff Feeler. "The strong performance was led by our Environmental Services segment. Our Field and Industrial Services segment improved significantly year-over-year on a pro forma basis due to higher quality revenue and ongoing optimization initiatives. As expected, the legacy US Ecology business was down compared to an exceptionally strong first quarter of 2014 reflecting a 17% decline in Event Business that was partially offset by a 7% increase in Base Business. The legacy EQ business delivered $11.2 million of Adjusted EBITDA in the first quarter of 2015, an 84% improvement over Adjusted Pro Forma EBITDA for the first quarter of 2014."
For information on our pro forma Adjusted EBITDA for 2014, refer to the form 8-K/A furnished to the Securities and Exchange Commission on March 2, 2014.
2015 Outlook Reaffirmed
"Business conditions remain consistent with our expectations," added Feeler. "As we progress through the year we expect to deliver sequentially stronger quarterly financial performance consistent with our previous guidance. Our underlying Base Business remains solid and we continue to bid on and secure Event Business opportunities that are expected to benefit the remainder of the year."
Management continues to expect full year 2015 diluted earnings per share to range between $1.76 and $1.92 per share, excluding business development expenses and foreign currency gains and losses, with Adjusted EBITDA of ranging from $137 to $143 million.
Dividend
On April 1, 2015, the Company declared a quarterly dividend of $0.18 per common share for stockholders of record on April 21, 2015. The $3.9 million dividend was paid on April 28, 2015.
Conference Call
US Ecology, Inc. will hold an investor conference call on Thursday, April 30, 2015 at 10:00 a.m. Eastern Time (8:00 a.m. Mountain Time) to discuss these results and its current financial position and business outlook. Questions will be invited after management's presentation. Interested parties can access the conference call by dialing 866-807-9684 or 412-317-5415. The conference call will also be broadcast live on our website at www.usecology.com. An audio replay will be available through May 15, 2015 by calling 877-344-7529 or 412-317-0088 and using the passcode 10064315. The replay will also be accessible on our website at www.usecology.com.
1 Includes $1.7 million of business development expenses.
2 Environmental Services ("ES") -- This segment includes all of US Ecology's legacy operations and the legacy EQ treatment and disposal facilities. It provides diversified waste services including transportation, recycling, treatment and disposal of hazardous and non-hazardous materials at Company-owned landfill, wastewater and other treatment facilities.
3 Field & Industrial Services ("FIS") -- This segment includes all of the legacy EQ field and industrial services business. It provides waste packaging, collection and total waste management solutions at customer sites and through our 10-day transfer facilities. Services include on-site management, waste characterization, transportation and disposal of non-hazardous and hazardous waste. This segment also provides specialty services such as high-pressure and chemical cleaning, centrifuge and materials processing, tank cleaning, decontamination, remediation, spill cleanup, emergency response and other services to commercial and industrial facilities and government entities.
About US Ecology, Inc.
US Ecology, Inc. is a leading North American provider of environmental services to commercial and government entities. The Company addresses the complex waste management needs of its customers, offering treatment, disposal and recycling of hazardous, non-hazardous and radioactive waste, as well as a wide range of complementary field and industrial services. US Ecology's focus on safety, environmental compliance, and best-in-class customer service enables us to effectively meet the needs of our customers and to build long-lasting relationships. Headquartered in Boise, Idaho, with operations in the United States, Canada and Mexico, the Company has been protecting the environment since 1952. For more information visit www.usecology.com.
This press release contains forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) that are based on our current expectations, beliefs and assumptions about the industry and markets in which US Ecology, Inc. and its subsidiaries operate. Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on management's beliefs and assumptions, which in turn are based on currently available information. Important assumptions include, among others, those regarding demand for Company services, expansion of service offerings geographically or through new or expanded service lines, the timing and cost of planned capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward-looking statement. Many of these factors are beyond our ability to control or predict. Such factors include the replacement of non-recurring event clean-up projects, a loss of a major customer, our ability to permit and contract for timely construction of new or expanded disposal cells, our ability to renew our operating permits or lease agreements with regulatory bodies, loss of key personnel, compliance with and changes to applicable laws, rules, or regulations, access to insurance, surety bonds and other financial assurances, a deterioration in our labor relations or labor disputes, our ability to perform under required contracts, failure to realize anticipated benefits and operational performance from acquired operations, including our acquisition of EQ Holdings, Inc. in June 2014, adverse economic or market conditions, government funding or competitive pressures, incidents or adverse weather conditions that could limit or suspend specific operations, access to cost effective transportation services, fluctuations in foreign currency markets, lawsuits, our willingness or ability to pay dividends, implementation of new technologies, limitations on our available cash flow as a result of our indebtedness and our ability to effectively execute our acquisition strategy and integrate future acquisitions.
Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission (the "SEC"), we are under no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results or performance. Before you invest in our common stock, you should be aware that the occurrence of the events described in the "Risk Factors" section of our reports filed with the SEC could harm our business, prospects, operating results, and financial condition.
| US ECOLOGY, INC. | ||||||||||
| CONSOLIDATED STATEMENTS OF INCOME | ||||||||||
| (in thousands, except per share data) | ||||||||||
| (unaudited) | ||||||||||
| Three Months Ended | ||||||||||
| March 31, | ||||||||||
| 2015 | 2014 | |||||||||
| Revenue | ||||||||||
| Environmental Services | $ | 91,425 | $ | 53,354 | ||||||
| Field & Industrial Services | 45,226 | - | ||||||||
| Total | 136,651 | 53,354 | ||||||||
| Gross Profit | ||||||||||
| Environmental Services | 33,987 | 22,120 | ||||||||
| Field & Industrial Services | 5,857 | - | ||||||||
| Total | 39,844 | 22,120 | ||||||||
| Selling, General & Administrative Expenses | ||||||||||
| Environmental Services | 5,589 | 2,599 | ||||||||
| Field & Industrial Services | 5,790 | - | ||||||||
| Corporate | 13,514 | 4,037 | ||||||||
| Total | 24,893 | 6,636 | ||||||||
| Operating income | 14,951 | 15,484 | ||||||||
| Other income (expense): | ||||||||||
| Interest income | 41 | 44 | ||||||||
| Interest expense | (5,694 | ) | (86 | ) | ||||||
| Foreign currency loss | (1,067 | ) | (940 | ) | ||||||
| Other | 536 | 86 | ||||||||
| Total other expense | (6,184 | ) | (896 | ) | ||||||
| Income before income taxes | 8,767 | 14,588 | ||||||||
| Income tax expense | 2,902 | 5,227 | ||||||||
| Net income | $ | 5,865 | $ | 9,361 | ||||||
| Earnings per share: | ||||||||||
| Basic | $ | 0.27 | $ | 0.44 | ||||||
| Diluted | $ | 0.27 | $ | 0.43 | ||||||
| Shares used in earnings per share calculation: | ||||||||||
| Basic | 21,583 | 21,475 | ||||||||
| Diluted | 21,689 | 21,586 | ||||||||
| Dividends paid per share | $ | 0.18 | $ | 0.18 | ||||||
| US ECOLOGY, INC. | ||||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||||
| (in thousands) | ||||||||||
| (unaudited) | ||||||||||
| March 31, 2015 | December 31, 2014 | |||||||||
| Assets | ||||||||||
| Current Assets: | ||||||||||
| Cash and cash equivalents | $ | 10,197 | $ | 22,971 | ||||||
| Receivables, net | 120,270 | 135,261 | ||||||||
| Prepaid expenses and other current assets | 10,549 | 11,984 | ||||||||
| Income tax receivable | 4,683 | 6,912 | ||||||||
| Deferred income taxes | 1,476 | 2,377 | ||||||||
| Total current assets | 147,175 | 179,505 | ||||||||
| Property and equipment, net | 221,918 | 227,684 | ||||||||
| Restricted cash and investments | 5,756 | 5,729 | ||||||||
| Intangible assets, net | 272,696 | 278,667 | ||||||||
| Goodwill | 219,660 | 221,279 | ||||||||
| Other assets | 10,623 | 11,308 | ||||||||
| Deferred income taxes | - | 85 | ||||||||
| Total assets | $ | 877,828 | $ | 924,257 | ||||||
| Liabilities and Stockholders' Equity | ||||||||||
| Current Liabilities: | ||||||||||
| Accounts payable | $ | 18,112 | $ | 24,513 | ||||||
| Deferred revenue | 8,288 | 13,190 | ||||||||
| Accrued liabilities | 32,194 | 36,251 | ||||||||
| Accrued salaries and benefits | 9,900 | 13,322 | ||||||||
| Income tax payable | 3,062 | 4,124 | ||||||||
| Current portion of closure and post-closure obligations | 5,703 | 5,359 | ||||||||
| Current portion of long-term debt | 3,616 | 3,828 | ||||||||
| Total current liabilities | 80,875 | 100,587 | ||||||||
| Long-term closure and post-closure obligations | 67,461 | 67,511 | ||||||||
| Long-term debt | 369,079 | 390,825 | ||||||||
| Other long-term liabilities | 6,479 | 4,336 | ||||||||
| Unrecognized tax benefits | - | - | ||||||||
| Deferred income taxes | 105,865 | 109,661 | ||||||||
| Total liabilities | 629,759 | 672,920 | ||||||||
| Contingencies and commitments | ||||||||||
| Stockholders' Equity | ||||||||||
| Common stock | 217 | 216 | ||||||||
| Additional paid-in capital | 165,845 | 165,524 | ||||||||
| Retained earnings | 95,272 | 93,301 | ||||||||
| Treasury stock | (5 | ) | (18 | ) | ||||||
| Accumulated other comprehensive loss | (13,260 | ) | (7,686 | ) | ||||||
| Total stockholders' equity | 248,069 | 251,337 | ||||||||
| Total liabilities and stockholders' equity | $ | 877,828 | $ | 924,257 | ||||||
| US ECOLOGY, INC. | ||||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||||
| (in thousands) | ||||||||||||
| (unaudited) | ||||||||||||
| Three Months Ended | ||||||||||||
| March 31, | ||||||||||||
| 2015 | 2014 | |||||||||||
| Cash Flows From Operating Activities: | ||||||||||||
| Net income | $ | 5,865 | $ | 9,361 | ||||||||
| Adjustments to reconcile net income to net cash provided by | ||||||||||||
| operating activities: | ||||||||||||
| Depreciation and amortization of property and equipment | 7,479 | 3,839 | ||||||||||
| Amortization of intangible assets | 3,302 | 352 | ||||||||||
| Accretion of closure and post-closure obligations | 1,035 | 330 | ||||||||||
| Unrealized foreign currency loss | 1,754 | 1,452 | ||||||||||
| Deferred income taxes | (1,193 | ) | (460 | ) | ||||||||
| Share-based compensation expense | 463 | 270 | ||||||||||
| Unrecognized tax benefits | - | 3 | ||||||||||
| Net loss on disposal of property and equipment | 953 | 8 | ||||||||||
| Amortization of debt discount | 37 | - | ||||||||||
| Changes in assets and liabilities: | ||||||||||||
| Receivables | 14,143 | 1,259 | ||||||||||
| Income tax receivable | 2,229 | - | ||||||||||
| Other assets | 2,060 | 882 | ||||||||||
| Accounts payable and accrued liabilities | (6,281 | ) | (2,142 | ) | ||||||||
| Deferred revenue | (4,393 | ) | (1,164 | ) | ||||||||
| Accrued salaries and benefits | (3,256 | ) | (1,994 | ) | ||||||||
| Income tax payable | (981 | ) | 783 | |||||||||
| Closure and post-closure obligations | (583 | ) | (114 | ) | ||||||||
| Net cash provided by operating activities | 22,633 | 12,665 | ||||||||||
| Cash Flows From Investing Activities: | ||||||||||||
| Purchases of property and equipment | (9,231 | ) | (4,775 | ) | ||||||||
| Purchases of restricted cash and investments | (816 | ) | (14 | ) | ||||||||
| Proceeds from sale of restricted cash and investments | 790 | - | ||||||||||
| Proceeds from sale of property and equipment | 160 | 6 | ||||||||||
| Net cash used in investing activities | (9,097 | ) | (4,783 | ) | ||||||||
| Cash Flows From Financing Activities: | ||||||||||||
| Payments on term loan | (21,994 | ) | - | |||||||||
| Dividends paid | (3,894 | ) | (3,874 | ) | ||||||||
| Proceeds from stock option exercises | 126 | 174 | ||||||||||
| Other | (255 | ) | (65 | ) | ||||||||
| Net cash used in financing activities | (26,017 | ) | (3,765 | ) | ||||||||
| Effect of foreign exchange rate changes on cash | (293 | ) | (139 | ) | ||||||||
| Increase (decrease) in cash and cash equivalents | (12,774 | ) | 3,978 | |||||||||
| Cash and cash equivalents at beginning of period | 22,971 | 73,940 | ||||||||||
| Cash and cash equivalents at end of period | $ | 10,197 | $ | 77,918 | ||||||||
EXHIBIT A
Non-GAAP Results and Reconciliation
US Ecology reports Adjusted EBITDA and adjusted earnings per diluted share results, which are non-GAAP financial measures, as a complement to results provided in accordance with generally accepted accounting principles in the United States (GAAP) and believes that such information provides analysts, stockholders, and other users information to better understand the Company's operating performance. Because Adjusted EBITDA and adjusted earnings per diluted share are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations they may not be comparable to similar measures used by other companies. Items excluded from Adjusted EBITDA and adjusted earnings per diluted share are significant components in understanding and assessing financial performance.
Adjusted EBITDA and adjusted earnings per diluted share should not be considered in isolation or as an alternative to, or substitute for, net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Adjusted EBITDA and adjusted earnings per diluted share have limitations as analytical tools and should not be considered in isolation or a substitute for analyzing our results as reported under GAAP. Some of the limitations are:
- Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
- Adjusted EBITDA does not reflect our interest expense, or the requirements necessary to service interest or principal payments on our debt;
- Adjusted EBITDA does not reflect our income tax expenses or the cash requirements to pay our taxes;
- Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; and
- although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements.
Adjusted EBITDA
The Company defines Adjusted EBITDA as net income before interest expense, interest income, income tax expense, depreciation, amortization, stock based compensation, accretion of closure and post-closure liabilities, foreign currency gain/loss and other income/expense, which are not considered part of usual business operations. The following reconciliation itemizes the differences between reported net income and Adjusted EBITDA for the three months ended March 31, 2015 and 2014:
| (in thousands) | Three Months Ended March 31, | ||||||||
| 2015 | 2014 | ||||||||
| Net Income | $ | 5,865 | $ | 9,361 | |||||
| Income tax expense | 2,902 | 5,227 | |||||||
| Interest expense | 5,694 | 86 | |||||||
| Interest income | (41 | ) | (44 | ) | |||||
| Foreign currency loss | 1,067 | 940 | |||||||
| Other income | (536 | ) | (86 | ) | |||||
| Depreciation and amortization of plant and equipment | 7,479 | 3,839 | |||||||
| Amortization of intangible assets | 3,302 | 352 | |||||||
| Stock-based compensation | 463 | 270 | |||||||
| Accretion and non-cash adjustments of closure & post-closure obligations | 1,035 | 330 | |||||||
| Adjusted EBITDA | $ | 27,230 | $ | 20,275 | |||||
EXHIBIT A
Non-GAAP Results and Reconciliation, continued
Adjusted Earnings Per Diluted Share
The Company defines adjusted earnings per diluted share as net income plus the after tax impact of non-cash, non-operational foreign currency gains or losses ("Foreign Currency Gain/Loss") plus the after tax impact of business development costs divided by the number of diluted shares used in the earnings per share calculation. The Foreign Currency Gain/Loss excluded from the earnings per diluted share calculation are related to intercompany loans between our Canadian subsidiary and the U.S. parent which have been established as part of our tax and treasury management strategy. These intercompany loans are payable in Canadian dollars ("CAD") requiring us to revalue the outstanding loan balance through our consolidated income statement based on the CAD/United States currency movements from period to period. We believe excluding the currency movements for these intercompany financial instruments provides meaningful information to investors regarding the operational and financial performance of the Company.
Business development costs relate to expenses incurred to evaluate businesses for potential acquisition or costs related to closing and integrating successfully acquired businesses. We believe excluding these business development costs provides meaningful information to investors regarding the operational and financial performance of the Company.
The following reconciliation itemizes the differences between reported net income and earnings per diluted share to adjusted net income and adjusted earnings per diluted share for the three months ended March 31, 2015 and 2014:
| (in thousands, except per share data) | Three Months Ended March 31, | |||||||||||
| 2015 | 2014 | |||||||||||
| per share | per share | |||||||||||
| Net income / earnings per diluted share | $ | 5,865 | $ | 0.27 | $ | 9,361 | $ | 0.43 | ||||
| Business development costs, net of tax | 1,067 | 0.05 | 120 | 0.01 | ||||||||
| Non-cash foreign currency loss, net of tax | 647 | 0.03 | 703 | 0.04 | ||||||||
| Adjusted net income / adjusted earnings per diluted share | $ | 7,579 | $ | 0.35 | $ | 10,184 | $ | 0.48 | ||||
| Shares used in earnings per diluted share calculation | 21,689 | 21,586 | ||||||||||
Contact Information:
Contact:
Alison Ziegler
Cameron Associates
(212) 554-5469
alison@cameronassoc.com
www.usecology.com