SOURCE: American Ecology Corporation

October 23, 2007 16:30 ET

American Ecology Announces Third Quarter 2007 Financial Results, Raises Annual Earnings Guidance

BOISE, ID--(Marketwire - October 23, 2007) - American Ecology Corporation (NASDAQ: ECOL) today reported financial results for its third quarter and nine months ended September 30, 2007.

Third Quarter Results

Net income was $4.5 million, or $0.25 per diluted share, for the third quarter of 2007, up 51% from net income of $3.0 million, or $0.16 per diluted share, earned in the third quarter of 2006. Operating income for the third quarter of 2007 increased 41% to $6.6 million, exceeding the $4.7 million earned in the third quarter of 2006. Operating income in the third quarter of 2006 benefited from a $704,000 settlement of an outstanding business interruption claim related to the July 2004 fire at our Robstown, Texas facility. All four operating facilities were profitable for the quarter.

Revenue for the third quarter of 2007 increased 44% to $39.4 million, up from $27.5 million in the same quarter last year. This growth reflected increased revenue from bundled transportation and disposal projects including the Honeywell International Jersey City and Molycorp Pennsylvania contracts, and other rail-served projects. A steady flow of shipments under our multi-year contract with the U.S. Army Corps of Engineers also contributed to revenue growth for the quarter. In the third quarter of last year, the Army Corps of Engineers shipped significantly lower volumes pending appropriation of funds for the federal government's new fiscal year.

Direct operating costs for the quarter rose to $29.2 million, up from $20.6 million in the third quarter last year. The increase reflects higher rail and truck transportation expenses on increased waste volumes as well as higher variable costs for labor and benefits, waste treatment additives, disposal cell space amortization and equipment maintenance.

Waste volumes disposed at our Idaho, Nevada and Texas waste facilities increased 55% in the third quarter of 2007 over the third quarter of 2006 to 269,000 tons. The resulting operating leverage drove quarterly gross profit to $10.3 million in the third quarter of 2007, a 49% increase over gross profit of $6.9 million posted in the same quarter last year.

Selling, general and administrative ("SG&A") expenses for the third quarter of 2007 were $3.6 million, or 9% of revenue, as compared to $2.9 million, or 11% of revenue, in the same quarter last year. The $734,000 increase in SG&A expenses was due primarily to increased business activity, higher stock-based compensation expense, sales commissions, incentive compensation and administrative costs in support of the increased waste volumes received. SG&A expenses for the quarter included a $198,000 charge related to the write-off of engineering costs for a New Jersey rail transload facility previously planned for the Honeywell Jersey City project. Rail facility development for the New Jersey facility has been postponed indefinitely due to increased construction and operation cost estimates and improved economic terms received shipping through the eastern Pennsylvania rail facility that is presently used.

During the third quarter of 2007, the Company's effective income tax rate declined to 33.9%. This reflects higher state investment tax credits on filed tax returns and a reduction in the Company's estimated annual effective tax rate from 39.3% to 39.1%.

At September 30, 2007, we had $11.3 million of cash and short-term investments. $11 million of our $15.0 million line of credit was unused, with the remaining $4.0 million issued as a standby letter of credit providing collateral for financial assurance policies for future closure and post-closure obligations.

Year-To-Date Results

Net income for the first nine months of 2007 was $14.5 million, or $0.80 per diluted share, up 20% from net income of $12.1 million, or $0.66 per diluted share, earned in the first nine months of 2006. Operating income for the first nine months of 2007 was $22.7 million, up 24% from operating income of $18.4 million for the first nine months of last year.

Revenue for the first nine months of 2007 was $119.7 million, up 52% from $78.9 million in the same period last year. This growth reflects increased revenue from bundled rail transportation and disposal contracts as well as higher revenue at our Idaho, Nevada, and Texas operations. Our Beatty, Nevada facility delivered significant operating income growth in the first nine months of 2007 aided by two large clean-up projects that were substantially completed in the first quarter. This strong growth year-to-date more than replaced a large non rate-regulated project at our Richland, Washington facility that was completed in August 2006.

Higher disposal volumes drove gross profit to $33.4 million in the first nine months of 2007, up 23% from $27.1 million in the first nine months of 2006. Direct operating costs for the first nine months of 2007 were $86.2 million, up from $51.8 million in same period last year. This reflects higher rail and truck transportation expenses on higher waste volumes as well as higher variable costs for labor and benefits, waste treatment additives, disposal cell amortization and equipment maintenance.

SG&A expenses for the first nine months of 2007 were $10.7 million, or 9% of revenue, as compared to $9.4 million, or 12% of revenue, for the same period last year.

Higher state investment tax credits on filed tax returns reduced the Company's effective tax rate from 39.1% to 37.7% for the first nine months of 2007, positively impacting net income.

2007 Earnings Guidance Raised

Based on strong year-to-date performance, management is raising its previously issued 2007 earnings guidance from $0.98 to $1.02 per diluted share to a range of $1.02 to $1.05 per diluted share.

"American Ecology's increased 2007 earnings projection reflects record year-to-date financial performance and a positive fourth quarter outlook based on steady shipments from large rail-served projects shipping to our Idaho site and sustained business at out Texas and Nevada facilities," stated Stephen Romano, President and Chief Executive Officer.

Dividend

On October 1, 2007, the Company declared a $0.15 per common share quarterly dividend for stockholders of record on October 12, 2007. This $2.7 million dividend was paid on October 19, 2007 using cash on hand.

Conference Call

American Ecology will hold an investor conference call on Wednesday, October 24, 2007 at 11:00 a.m. Eastern Daylight Time (9:00 a.m. Mountain Daylight Time) to discuss these results, its current financial position and its business outlook. Questions will be invited after management's presentation. Interested parties can join the conference call by dialing (866) 814-1914. The conference call will also be broadcast live on our website at www.americanecology.com. An audio replay will be available through October 31, 2007 by calling (800) 675-9924 and using the passcode 102407. The replay will also be accessible on our website at www.americanecology.com.

About American Ecology Corporation

American Ecology Corporation, through its subsidiaries, provides radioactive, PCB, hazardous, and non-hazardous waste services to commercial and government customers throughout the United States, such as steel mills, medical and academic institutions, refineries, chemical manufacturing facilities and the nuclear power industry. Headquartered in Boise, Idaho, the Company is the oldest radioactive and hazardous waste services company 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 American Ecology Corporation 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 meet its 2007 earnings estimates, successfully execute its growth strategy, or declare or pay future dividends. For information on other factors that could cause actual results to differ materially from expectations, please refer to American Ecology Corporation's December 31, 2006 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 loss of key personnel, compliance with and changes to applicable laws and regulations, lawsuits, access to insurance and other financial assurances, implementation of new technologies, loss of a major customer, incidents that could limit or suspend specific operations, access to cost effective transportation services, our ability to perform under required contracts, significant stock sales and the effect on the price of our common stock and our willingness or ability to pay dividends.

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 American Ecology Corporation.



                       AMERICAN ECOLOGY CORPORATION
                    CONSOLIDATED STATEMENTS OF INCOME
                  (in thousands, except per share data)
                                (unaudited)




                                 Three Months Ended     Nine Months Ended
                                    September 30,         September 30,
                                --------------------- --------------------
                                  2007       2006       2007       2006
                                ---------- ---------  ---------  ---------

Revenue                         $   39,427 $  27,464  $ 119,658  $  78,910
Transportation costs                18,935    12,683     55,866     29,199
Other direct operating costs        10,224     7,874     30,357     22,569
                                ---------- ---------  ---------  ---------

Gross profit                        10,268     6,907     33,435     27,142

Selling, general and
 administrative expenses             3,636     2,902     10,709      9,446
Business interruption insurance
 claim                                   -      (704)         -       (704)
                                ---------- ---------  ---------  ---------
Operating income                     6,632     4,709     22,726     18,400
Other income (expense):
 Interest income                       189       215        550        608
 Interest expense                        -        (6)        (2)        (8)
 Other                                  10         -         62        458
                                ---------- ---------  ---------  ---------
  Total other income                   199       209        610      1,058

Income before income taxes           6,831     4,918     23,336     19,458
Income tax                           2,313     1,925      8,799      7,359
                                ---------- ---------  ---------  ---------
Net income                      $    4,518 $   2,993  $  14,537  $  12,099
                                ========== =========  =========  =========

Earnings per share:
  Basic                         $     0.25 $    0.17  $    0.80  $    0.67
  Dilutive                      $     0.25 $    0.16  $    0.80  $    0.66

Shares used in earnings
 per share calculation:
  Basic                             18,220    18,129     18,215     18,046
  Dilutive                          18,257    18,237     18,255     18,215

Dividends paid per share        $     0.15 $    0.15  $    0.45  $    0.45
                                ========== =========  =========  =========



                       AMERICAN ECOLOGY CORPORATION
                        CONSOLIDATED BALANCE SHEETS
                              (in thousands)


                                            September 30,
                                                 2007        December 31,
                                              (unaudited)        2006
                                            --------------- ---------------
Assets
Current Assets:
 Cash and cash equivalents                  $         9,095 $         3,775
 Short-term investments                               2,190           6,120
 Receivables, net                                    28,600          27,692
 Prepaid expenses and other current assets            4,287           2,639
 Income tax receivable                                    -             650
 Deferred income taxes                                1,139           2,166
                                            --------------- ---------------
  Total current assets                               45,311          43,042
Property and equipment, net                          61,877          55,460
Restricted cash                                       4,841           4,691
Deferred income taxes                                   460             848
                                            --------------- ---------------
Total assets                                $       112,489 $       104,041
                                            =============== ===============

Liabilities and Stockholders’ Equity
Current Liabilities:
 Accounts payable                           $         4,252 $         6,866
 Deferred revenue                                     4,324           3,612
 Accrued liabilities                                  7,670           3,544
 Accrued salaries and benefits                        2,045           1,943
 Customer advances                                      338           1,866
 Income tax payable                                       1               -
 Current portion of closure and
  post-closure obligations                            2,017             656
 Current portion of long-term debt                        6               6
                                            --------------- ---------------
  Total current liabilities                          20,653          18,493

Long-term closure and post-closure
 obligations                                         11,176          12,160
Long-term debt                                           19              24
Other long-term liabilities                               -               9
                                            --------------- ---------------
 Total liabilities                                   31,848          30,686

Contingencies and commitments

Stockholders’ Equity
 Common stock                                           182             182
 Additional paid-in capital                          58,483          57,532
 Retained earnings                                   21,976          15,641
                                            --------------- ---------------
  Total stockholders’ equity                         80,641          73,355
                                            --------------- ---------------
Total liabilities and stockholders’ equity  $       112,489 $       104,041
                                            =============== ===============



                       AMERICAN ECOLOGY CORPORATION
                   CONSOLIDATED STATEMENT OF CASH FLOWS
                              (in thousands)
                                (unaudited)



                                                For the Nine Months Ended
                                                      September 30,
                                              ----------------------------
                                                  2007           2006
                                              -------------  -------------
Cash Flows From Operating Activities:
 Net income                                   $      14,537  $      12,099
 Adjustments to reconcile net income to net
  cash provided by operating activities:
   Depreciation, amortization and accretion           7,039          5,796
   Deferred income taxes                              1,415          5,579
   Stock-based compensation expense                     420            243
   Accretion of interest income                        (140)          (299)
   Net gain on sale of property and equipment           (58)          (166)
   Changes in assets and liabilities:
    Receivables                                        (908)        (5,204)
    Income tax receivable                               650            808
    Insurance receivable                                  -            157
    Other assets                                     (1,648)           133
    Accounts payable and accrued liabilities            542         (2,120)
    Deferred revenue                                    712          1,804
    Accrued salaries and benefits                       102         (1,023)
    Income tax payable                                    1              -
    Closure and post-closure obligations               (416)          (947)
                                              -------------  -------------
      Net cash provided by operating
       activities                                    22,248         16,860

Cash Flows From Investing Activities:
  Purchases of short-term investments               (22,700)       (24,393)
  Purchases of property and equipment               (13,264)       (15,731)
  Restricted cash                                      (150)        (4,617)
  Maturities of short-term investments               26,770         38,909
  Proceeds from sale of property and
   equipment                                             92            174
                                              -------------  -------------
      Net cash used in investing activities          (9,252)        (5,658)

Cash Flows From Financing Activities:
  Dividends paid                                     (8,202)        (8,096)
  Proceeds from stock option exercises                  328          1,778
  Tax benefit of common stock options                   203            551
  Other                                                  (5)            (1)
                                              -------------  -------------
      Net cash used in financing activities          (7,676)        (5,768)

Increase in cash and cash equivalents                 5,320          5,434

Cash and cash equivalents at beginning of
 period                                               3,775          3,641
                                              -------------  -------------
Cash and cash equivalents at end of period    $       9,095  $       9,075
                                              =============  =============


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