BOISE, ID--(Marketwire - October 26, 2010) - US Ecology, Inc. (NASDAQ: ECOL) ("the Company")
today reported results for the quarter ended September 30, 2010.
Net income for the third quarter of 2010 was $3.9 million, or $0.22 per
diluted share. This is down from net income of $4.2 million, or $0.23 per
diluted share, in the third quarter last year. For the third quarter of
2009 we estimate that the completed Honeywell International Jersey City
project ("Honeywell") contributed approximately $0.09 of earnings per
share. Operating income for the quarter ending September 30, 2010 was $6.4
million compared to $6.8 million for the third quarter of 2009. While net
income and operating income declined from year ago levels, they both
increased 70% sequentially from the second quarter of 2010. For the 22nd
consecutive quarter, all four of the Company's disposal facilities were
profitable.
Revenue for the third quarter of 2010 was $26.0 million, down from $37.5
million in the same quarter last year. This mostly reflects declines in
transportation revenue associated with the completion of the Honeywell
project in early October of 2009. Excluding Honeywell, which contributed
$16 million in total revenue during the third quarter of 2009, revenue
would have increased approximately 20% quarter over quarter.
"Base" business revenue (revenue from recurring waste streams) declined 3%
in the third quarter of 2010 compared to the same quarter last year on
lower revenue from refinery and broker customers. "Event" revenue (revenue
from discrete remediation projects) increased 14% in the third quarter of
2010 over the same quarter last year on increased shipments from broker and
government customers. Excluding the completed 2009 Honeywell project,
Event revenue would have been up 122% from the same quarter last year. This
reflects revenue of $2.9 million earned on the General Electric ("GE")
Hudson River cleanup project, increased revenue from Government cleanups,
and smaller cleanup activity. In the third quarter of 2010, our Texas
thermal recycling service contributed $2.3 million in revenue from a
combination of Base and Event business, up slightly from the $2.2 million
generated in the third quarter of 2009. The slight increase in thermal
recycling revenue resulted from increased volume, but was partially offset
by a decline in average selling price during the third quarter of 2010
compared to the same quarter last year. Total volumes disposed at our
Idaho, Nevada and Texas waste facilities (including thermal recycling
services) were 237,000 tons in the third quarter of 2010, up 18% from the
201,000 tons in the third quarter of 2009, which included 89,000 tons from
Honeywell.
For the quarter ending September 30, 2010, gross profit was $10.4 million,
up from $10.0 million reported in the third quarter of 2009. Gross profit
as a percentage of total revenue ("gross margin") was 39.9% for the third
quarter of 2010 up from 26.6% in the same quarter last year. This gross
margin improvement reflected lower pass-through transportation and
logistics services in the third quarter of 2010 than in the same quarter of
the prior year, which was heavily weighted with transportation associated
with the completed Honeywell project. Treatment and disposal gross margin
for the third quarter of 2010 and 2009 was 50.5% and 46.5%, respectively,
reflecting the inherent operating leverage derived from higher waste
volumes and normal service mix.
Selling, general and administrative ("SG&A") expense for the three months
ending September 30, 2010 was $3.9 million, or 15.1% of revenue, as
compared to $3.2 million, or 8.5% of revenue, in the same quarter last
year. In absolute dollars, total SG&A expenses were higher for the third
quarter of 2010 compared to the same quarter last year primarily reflecting
approximately $500,000 (or $0.02 earnings per share) of business
development expenses associated with the recently announced acquisitions
slated to close later this year.
Our effective income tax rate for the third quarter of 2010 was 39.3% as
compared to 39.6% in the third quarter of 2009. This decrease primarily
reflects favorable adjustments to our filed tax returns partially offset by
an increase in non-deductible expenses.
At September 30, 2010, we had $30.4 million of cash and cash equivalents on
hand, with $16.0 million of our $20.0 million line of credit unused. The
$4.0 million line of credit usage covers a standby letter of credit
providing collateral for financial assurance for future closure and
post-closure obligations. We had no outstanding borrowings during the
quarter or at the quarter ending September 30, 2010.
"We were pleased with the growth in volume and disposal revenue and the
sequential rebound in earnings," commented Vice President and Chief
Financial Officer, Jeff Feeler. "Our disposal margin once again topped 50%
demonstrating the strong operating leverage in our business when volumes
increase."
Year-To-Date Results
Revenue for the nine months ending September 30, 2010 was $65.4 million,
down from $108.9 million in the same period in 2009. In the nine months
ended September 30, 2009, Honeywell represented $49.9 million of total
revenue. Excluding Honeywell revenue, revenue was up 11% in the first nine
months of 2010. Disposal volumes in the first nine months of 2010 were
474,000 tons, down 26% from the same period last year. However, when
Honeywell is excluded, volume for the first nine months increased 31% over
the same nine months last year.
Gross profit was $24.1 million for the first nine months of 2010, down from
$28.6 million in the first nine months of 2009. Gross margin was 36.9% for
the first nine months of 2010 as compared with 26.3% in the same period
last year. The gross margin improvement in the first nine months of 2010
reflects lower pass-through transportation and logistics services compared
to the same period of 2009. Treatment and disposal margin for the first
nine months of 2010 was 45.0% compared with 45.3% in the same period last
year.
SG&A expenses for the first nine months of 2010 were $10.8 million, or
16.6% of revenue, as compared to $10.2 million, or 9.3% of revenue, for the
same period last year. SG&A in 2010 includes a $497,000 charge related to
a regulatory fine associated with our Beatty, Nevada facility dating back
to 2005. SG&A also includes $562,000 in business development expenses
associated with the recently announcement acquisitions.
Operating income for the first nine months of 2010 was $13.3 million
compared to $18.5 million for the first nine months of 2009.
Our effective income tax rate for the nine months ending September 30, 2010
was 40.0% as compared with 39.7% in the first nine months of 2009. This
increase primarily reflects an increase in non-deductible expenses for
income taxes.
Net income was $8.1 million, or $0.44 per diluted share, for the first nine
months of 2010, down from net income of $11.3 million, or $0.62 per diluted
share, in the first nine months of 2009, of which $0.23 represented
estimated earnings per share from Honeywell. Excluding the impact of the
completed Honeywell project, earnings per share were 13% higher for the
first nine months of 2010 over the same period of 2009.
2010 Outlook
The Company continues to expect full year earnings per share of between
$0.57 and $0.67 per diluted share when excluding one-time business
development costs associated with the recently announced acquisitions of
Stablex Canada and Siemens Water Technologies', Vernon, California
facility. This represents 10% to 29% growth in earnings over 2009 when
Honeywell earnings and one-time proceeds from insurance are excluded. We
now expect our 2010 capital expenditures to be approximately $14.0 million,
down from our previous estimate of $15.6 to $16.6 million. Much of the
capital expenditure decline relates to in process construction projects
that will now be completed in 2011.
"As expected, the third quarter was much improved over the last several
quarters, as we managed increased volumes from the GE Hudson River project,
U.S. Army Corps of Engineers, and many smaller cleanup projects," commented
President and Chief Executive Officer, Jim Baumgardner. "We were pleased
that the increased bidding activity the last couple quarters resulted in
increased waste receipts in the third quarter."
Baumgardner continued, "However, we did experience slight softness in our
Base Business during the third quarter reflecting what we believe is
continued economic weakness in the industrial sector. This weakness
continues to create uncertain and choppy market conditions. Regardless, we
expect that the fourth quarter of 2010 will be a solid quarter and we will
achieve our full year earnings guidance of between $0.57 and $0.67 earnings
per fully diluted share excluding the one-time costs to close our pending
acquisitions."
Baumgardner concluded, "We are on track to close the acquisition of Stablex
Canada on October 31st and the Siemens facility in Vernon, California by the
end of the year. Transition planning and integration activities are in
full swing and we are very excited about the increased geographic
footprint, expanded services, and new customers these acquisitions bring to
the US Ecology family."
Dividend
On October 1, 2010 the Company declared a quarterly dividend of $0.18 per
common share for stockholders of record on October 15, 2010. This $3.3
million dividend was paid on October 22, 2010 using cash on hand.
Conference Call
US Ecology, Inc. will hold an investor conference call on Tuesday, October
26, 2010 at 10 a.m. Eastern Daylight Time (8:00 a.m. Mountain Daylight
Time) to discuss these results and its current financial position.
Questions will be invited after management's presentation. Interested
parties can join the conference call by dialing (866) 700-6293 or (617)
213-8835 and using the passcode 20083109. The conference call will also be
broadcast live on our website at www.usecology.com. An audio replay will
be available through November 2, 2010 by calling (888) 286-8010 or (617)
801-6888 and using the passcode 99785873. The replay will also be
accessible on our website at www.usecology.com.
About US Ecology, Inc.
US Ecology, Inc. (formerly known as American Ecology Corporation) through
its subsidiaries, provides radioactive, hazardous, PCB and non-hazardous
industrial waste management and recycling services to commercial and
government entities, such as refineries and chemical production facilities,
manufacturers, electric utilities, steel mills, medical and academic
institutions and waste broker / aggregators. Headquartered in Boise, Idaho,
the Company is one of the nation's oldest radioactive and hazardous waste
services providers in the United States.
This press release contains forward-looking statements as 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. Because
such statements include risks and uncertainties, actual results may differ
materially from what is expressed herein and no assurance can be given that
the Company will achieve its 2010 earnings estimates, successfully execute
its growth strategy, increase market share, or declare or pay future
dividends. For information on other factors that could cause actual results
to differ materially from expectations, please refer to US Ecology, Inc.'s
December 31, 2009 Annual Report on Form 10-K and other reports filed with
the Securities and Exchange Commission. Many of the factors that will
determine the Company's future results are beyond the ability of management
to control or predict. Readers should not place undue reliance on
forward-looking statements, which reflect management's views only as of the
date such statements are made. The Company undertakes no obligation to
revise or update any forward-looking statements, or to make any other
forward-looking statements, whether as a result of new information, future
events or otherwise. Important assumptions and other important factors that
could cause actual results to differ materially from those set forth in the
forward-looking information include a loss of a major customer, compliance
with and changes to applicable laws, rules, or regulations, market
conditions, average selling prices, and production rates for the thermal
recycling service at our Texas facility, our ability to replace business
from recently completed large projects, access to cost effective
transportation services, cost effective access to insurance and other
financial assurances, loss of key personnel, lawsuits, adverse economic
conditions including a tightened credit market, the timing or level of
government funding or competitive conditions, incidents that could limit or
suspend specific operations, our ability to perform under required
contracts, our willingness or ability to pay dividends and our ability to
close or integrate any potential acquisitions.
Investors should also be aware that while we do, from time to time,
communicate with securities analysts, it is against our policy to disclose
any material non-public information or other confidential commercial
information. Accordingly, stockholders should not assume that we agree with
any statement or report issued by any analyst irrespective of the content
of the statement or report. Furthermore, we have a policy against issuing
or confirming financial forecasts or projections issued by others. Thus, to
the extent that reports issued by securities analysts contain any
projections, forecasts or opinions, such reports are not the responsibility
of US Ecology, Inc.
US ECOLOGY, INC.
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------- --------------------
2010 2009 2010 2009
---------- --------- --------- ---------
Revenue $ 25,984 $ 37,529 $ 65,356 $ 108,871
Direct operating costs 10,229 10,852 30,239 34,099
Transportation costs 5,383 16,694 11,027 46,131
---------- --------- --------- ---------
Gross profit 10,372 9,983 24,090 28,641
Selling, general and
administrative expenses 3,929 3,206 10,839 10,175
---------- --------- --------- ---------
Operating income 6,443 6,777 13,251 18,466
Other income (expense):
Interest income 16 18 47 103
Interest expense - (1) (1) (2)
Other 30 101 120 225
---------- --------- --------- ---------
Total other income 46 118 166 326
Income before income taxes 6,489 6,895 13,417 18,792
Income tax expense 2,551 2,731 5,366 7,466
---------- --------- --------- ---------
Net income $ 3,938 $ 4,164 $ 8,051 $ 11,326
========== ========= ========= =========
Earnings per share:
Basic $ 0.22 $ 0.23 $ 0.44 $ 0.62
Diluted $ 0.22 $ 0.23 $ 0.44 $ 0.62
Shares used in earnings
per share calculation:
Basic 18,172 18,148 18,167 18,145
Diluted 18,186 18,170 18,186 18,173
Dividends paid per share $ 0.18 $ 0.18 $ 0.54 $ 0.54
========== ========= ========= =========
US ECOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
September 30, December 31,
2010 2009
------------- -------------
Assets
Current Assets:
Cash and cash equivalents $ 30,439 $ 31,347
Short-term investments - 1,395
Receivables, net 17,758 16,302
Prepaid expenses and other current assets 2,429 1,752
Deferred income taxes 427 41
------------- -------------
Total current assets 51,053 50,837
Property and equipment, net 72,827 67,485
Restricted cash 4,114 4,800
Other assets 509 540
------------- -------------
Total assets $ 128,503 $ 123,662
============= =============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 5,857 $ 4,264
Deferred revenue 1,836 1,353
Accrued liabilities 4,742 4,150
Accrued salaries and benefits 1,657 1,735
Income tax payable 1,062 201
Current portion of closure and post-closure
obligations 3,545 293
Current portion of capital lease obligations 8 11
------------- -------------
Total current liabilities 18,707 12,007
Long-term closure and post-closure
obligations 11,690 13,070
Long-term capital lease obligations 4 10
Deferred income taxes 5,580 5,077
------------- -------------
Total liabilities 35,981 30,164
Contingencies and commitments
Stockholders' Equity
Common stock 183 183
Additional paid-in capital 61,637 61,459
Retained earnings 32,681 34,446
Treasury stock (1,979) (2,590)
------------- -------------
Total stockholders' equity 92,522 93,498
------------- -------------
Total liabilities and stockholders' equity $ 128,503 $ 123,662
============= =============
US ECOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Nine months
Ended September 30,
------------------------
2010 2009
----------- -----------
Cash Flows From Operating Activities:
Net income $ 8,051 $ 11,326
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and accretion 5,841 6,937
Deferred income taxes 117 1,465
Stock-based compensation expense 789 539
Net loss on sale of property and equipment 167 38
Investment premium amortization 20 -
Changes in assets and liabilities:
Receivables, net (1,456) 1,632
Income tax receivable - 2,834
Other assets (646) 435
Accounts payable and accrued liabilities 1,884 (1,448)
Deferred revenue 483 (2,605)
Accrued salaries and benefits (78) (1,000)
Income tax payable 861 539
Closure and post-closure obligations (215) (423)
Other (2) (19)
----------- -----------
Net cash provided by operating activities 15,816 20,250
Cash Flows From Investing Activities:
Purchases of property and equipment (9,023) (8,725)
Purchases of short-term investments (4,998) (1,409)
Maturities of short-term investments 6,375 -
Restricted cash, net 686 (84)
Proceeds from sale of property and equipment 61 62
----------- -----------
Net cash used in investing activities (6,899) (10,156)
Cash Flows From Financing Activities:
Dividends paid (9,816) (9,801)
Stock repurchases - (2)
Other (9) (7)
----------- -----------
Net cash used in financing activities (9,825) (9,810)
(Decrease) Increase in cash and cash equivalents (908) 284
Cash and cash equivalents at beginning of period 31,347 18,473
----------- -----------
Cash and cash equivalents at end of period $ 30,439 $ 18,757
=========== ===========
Contact Information: Contact:
Alison Ziegler
Cameron Associates
(212) 554-5469
alison@cameronassoc.com
www.usecology.com