BOISE, ID--(Marketwire - March 4, 2010) - US Ecology, Inc. (formerly known as American
Ecology Corporation) (
NASDAQ:
ECOL) ("the Company") today reported results
for the fourth quarter and year ended December 31, 2009. Net income was
$2.6 million, or $0.15 per diluted share, for the fourth quarter of 2009,
down from net income of $5.2 million, or $0.29 per diluted share, in the
fourth quarter last year. Operating income for the fourth quarter of 2009
was $4.6 million compared to $8.3 million for the fourth quarter of 2008.
All four of the Company's disposal facilities remained profitable.
Revenue for the fourth quarter of 2009 was $23.6 million, down from $44.0
million in the same quarter last year. This reflects declines in both
transportation revenue and treatment and disposal revenue primarily due to
the completion of the four year Honeywell International ("Honeywell Jersey
City") project in early October of 2009 and the Molycorp/Chevron
Pennsylvania ("Molycorp") project which shipped waste in the fourth quarter
of 2008 and was completed in early 2009. "Base" business revenue (revenue
from recurring waste streams) declined 10% in the fourth quarter of 2009
compared to the same quarter last year on decreased shipments from other
industry, waste broker and refinery customers. "Event" remediation revenue
(revenue from discrete projects) declined 43% in the fourth quarter of 2009
over the same quarter last year primarily due to the completion of the
Honeywell Jersey City and Molycorp projects earlier in 2009. Our Texas
thermal desorption recycling service contributed $1.7 million in revenue
from a combination of Base and Event business in the fourth quarter of
2009, down 15% from the $2.0 million of revenue generated in the fourth
quarter of 2008. Total volumes disposed at our Idaho, Nevada and Texas
waste facilities were 132,000 tons in the fourth quarter of 2009, down 49%
from the fourth quarter of 2008.
Gross profit was $7.6 million in the fourth quarter of 2009, down from
$12.4 million reported in the fourth quarter of 2008. Net reductions in
closure and post-closure obligations increased gross profit by $331,000 in
the fourth quarter of 2009 and $230,000 in the fourth quarter of 2008.
Selling, general and administrative ("SG&A") expense for the fourth quarter
of 2009 was $3.7 million, or 15% of revenue, as compared to $4.1 million,
or 9% of revenue, in the same quarter last year. The $400,000 decrease in
SG&A expense reflects lower compensation costs, bad debt expense and
professional service fees, partially offset by a $244,000 thermal equipment
impairment charge related to the discontinuation of thermal services at our
Beatty, Nevada facility.
During the quarter we collected $661,000 in net proceeds for claims filed
under our insurance policies.
Other income, primarily interest and royalty income, was $55,000 for the
fourth quarter of 2009, down from $169,000 in the fourth quarter of 2008,
largely due to lower interest rates earned.
Our effective income tax rate for the fourth quarter of 2009 was 43.6% as
compared with 38.3% in the fourth quarter of 2008. This increase is
primarily due to lower pre-tax earnings in the current year, which
increases the impact of non-tax-deductible expenses on our effective tax
rate, higher estimated state income taxes and year-end adjustments to our
deferred taxes.
At December 31, 2009, we had $32.7 million of cash, cash equivalents and
short-term investments on hand, with $11.0 million of our $15.0 million
line of credit unused. The $4.0 million balance covers a standby letter of
credit providing collateral for financial assurance for future closure and
post-closure obligations. We had no borrowed debt at quarter end.
"The completion of the Honeywell Jersey City project combined with
continued softness in the industrial markets and few Event projects pushed
revenue lower in the fourth quarter," commented Chief Financial Officer,
Jeff Feeler. "These revenue decreases were partially offset by continued
decreases in operating expenses, net reductions in landfill closure
obligations and recognition of an insurance settlement."
2009 Full Year Results
Operating income for the year ended December 31, 2009 was $23.1 million as
compared with $34.5 million in 2008. Net income for the full year 2009 was
$14.0 million, or $0.77 per diluted share, as compared with net income of
$21.5 million, or $1.18 per diluted share, in 2008.
Revenue for the year ended December 31, 2009 was $132.5 million compared
with revenue of $175.8 million for the year ended December 31, 2008. Base
business revenue declined 6% in 2009 compared to last year on decreased
shipments from other industry and waste broker customers. Event
remediation revenue declined 24% in 2009 over last year primarily due to
fewer government and private industry cleanup projects.
Disposal volumes for 2009 declined 35% to 774,000 tons from 1,192,000 tons
in 2008. Gross profit was $36.3 million in 2009 compared with $49.4
million in 2008. Direct operating expenses for 2009 were $96.2 million,
down from $126.4 million in 2008. This reflects lower rail and truck
transportation expenses, variable costs for waste treatment additives,
disposal cell amortization expense on reduced waste volumes and reduced
labor and benefits expenses. Favorable adjustments to our closure and
post-closure obligations benefited our gross profit by $331,000 in 2009 and
$923,000 in 2008.
In October 2009, we received our final shipments from the Honeywell Jersey
City project. This project shipped approximately 1.3 million tons of
material from 2005 to 2009 making it one of the largest private cleanups in
history. 2009 total revenue, including pass-through revenue for
transportation services, from Honeywell was $50.6 million. During 2009 the
Honeywell project became increasingly more profitable as a result of lower
additive costs and a reduction in personnel as we prepared for the end of
the project. At the same time, economic conditions significantly impacted
our non-Honeywell business resulting in the Honeywell project becoming a
more significant portion of our total business. We estimate that the
Honeywell Jersey City project contributed approximately 30% of total
operating income in 2009, higher than in any previous year, or $0.23 per
diluted share.
SG&A expense for 2009 was $13.8 million, 10% of revenue, as compared to
$14.9 million, or 8% of revenue, for the same period last year. The $1.1
million decrease in SG&A reflects reduced compensation expense, sales
commissions and professional fees and services, but was partially offset by
a $244,000 thermal equipment impairment charge related to the
discontinuation of thermal treatment services at our Beatty, Nevada
facility at the end of the year.
During the fourth quarter of 2009 we collected $661,000 in net proceeds for
claims filed under our insurance policies.
Other income, primarily interest and royalty income, was $381,000 for 2009,
down from $712,000 in 2008. This reduction reflects lower prevailing
interest rates and related interest income earned on investments.
Our effective income tax rate for 2009 was 40.5% as compared with 39.0% in
2008. This increase is primarily due to lower pre-tax earnings in the
current year, which increases the impact of non-tax-deductible expenses on
our effective tax rate and higher estimated state income taxes.
"2009 was significantly impacted by the lower Event Business, including
lower waste volumes under our Army Corps contract," commented Feeler.
"Fewer opportunities were available as private cleanup projects were
deferred and government projects were hampered by the additional
administrative requirements of The American Recovery and Reinvestment Act
of 2009. Despite these difficult economic conditions we were successful at
expanding our customer portfolio and maintaining existing customer
relationships with our Base Business customers, positioning us well for
future growth."
2010 Earnings and Capital Expenditure Outlook
Management currently projects 2010 earnings to range between $0.57 and
$0.67 per diluted share. While this is an absolute decrease in
year-over-year earnings per share, it represents a 10% to 29% growth in
core earnings over 2009 levels after excluding the earnings impact of the
Honeywell Jersey City project and insurance proceeds.
"2009 was a challenging year for our Company as revenue and earnings
declined from our record performance in 2008," stated President and Chief
Executive Officer, Jim Baumgardner. "In response, we moved quickly to
reduce costs and recalibrate the business to a changing market environment.
As a result we entered 2010 with a leaner cost structure, broader customer
base, focused service offering, and powerful waste handling
infrastructure."
The Company expects much of the economic weakness experienced in 2009 to
persist in 2010 with slow improvement over the course of the year. Base
business is expected to strengthen in 2010 as national and regional
industrial production increases. We forecast that our Event business will
return in 2010, albeit slowly. We also predict that volumes under our US
Army Corps of Engineers contract will return to more historic levels after
the softness seen in 2009. Pricing for treatment and landfill services are
projected to be relatively flat in 2010 compared to 2009. While we
generally believe that pricing pressure on our thermal services will
persist throughout much of 2010, higher waste volumes and corresponding
improvements in utilization could lead to improved pricing for thermal
services later in the year.
Baumgardner continued, "While we continue to face economic uncertainties,
our Company is financially stronger and better positioned in the
marketplace than at any time in our history. We have a solid book of Base
business, a very competitive cost structure, a robust infrastructure, a
terrific workforce, and a solid balance sheet."
Concluding, Baumgardner said, "Despite the continuing difficult economic
environment, we will diligently execute our business strategy and expect
our business, excluding Honeywell, to grow organically in 2010. In
addition to organically growing our business, we are also focused on
acquiring strategically aligned assets."
Capital spending is estimated to range from $13 to $14 million for 2010, up
from $9.4 million in 2009. Capital spending in 2010 will be devoted
primarily to the construction of additional disposal space and expanded
treatment capacity at our Texas facility and ongoing equipment replacement
company-wide.
Dividend
On January 4, 2010 the Company declared a quarterly dividend of $0.18 per
common share for stockholders of record on January 15, 2010. This $3.3
million dividend was paid on January 22, 2010 using cash on hand.
Conference Call
US Ecology, Inc. will hold an investor conference call on Thursday, March
4, 2010 at 10 a.m. Eastern Standard Time (8:00 a.m. Mountain Standard Time)
to discuss these results, its current financial position and its 2010
business outlook. 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 March 11,
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, 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 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, 2008 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 and regulations, market conditions and
production rates for the thermal recycling service at our Texas facility,
our ability to replace business from completed Honeywell Jersey City
project, access to cost effective transportation services, 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 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.
(formerly known as American Ecology Corporation)
CONSOLIDATED STATEMENTS OF INCOME
(in thousands, except per share data)
(unaudited)
Three Months Ended For the Year Ended
December 31, December 31,
-------------------- --------------------
2009 2008 2009 2008
--------- --------- --------- ---------
Revenue $ 23,648 $ 44,041 $ 132,519 $ 175,827
Transportation costs 6,577 20,278 52,708 82,064
Other direct operating costs 9,436 11,365 43,535 44,322
--------- --------- --------- ---------
Gross profit 7,635 12,398 36,276 49,441
Selling, general and
administrative expenses 3,660 4,060 13,835 14,920
Insurance claim (661) - (661) -
--------- --------- --------- ---------
Operating income 4,636 8,338 23,102 34,521
Other income (expense):
Interest income 13 101 116 413
Interest expense - (1) (2) (7)
Other 42 69 267 306
--------- --------- --------- ---------
Total other income 55 169 381 712
Income before income taxes 4,691 8,507 23,483 35,233
Income tax expense 2,047 3,258 9,513 13,735
--------- --------- --------- ---------
Net income $ 2,644 $ 5,249 $ 13,970 $ 21,498
--------- --------- --------- ---------
Earnings per share:
Basic $ 0.15 $ 0.29 $ 0.77 $ 1.18
Diluted $ 0.15 $ 0.29 $ 0.77 $ 1.18
Shares used in earnings
per share calculation:
Basic 18,149 18,222 18,146 18,236
Diluted 18,172 18,258 18,173 18,290
Dividends paid per share $ 0.18 $ 0.18 $ 0.72 $ 0.66
--------- --------- --------- ---------
US ECOLOGY, INC.
(formerly known as American Ecology Corporation)
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
December 31, December 31,
2009 2008
----------- -----------
Assets
Current Assets:
Cash and cash equivalents $ 31,347 $ 18,473
Short-term investments 1,395 -
Receivables, net 16,302 30,737
Prepaid expenses and other current assets 1,752 2,281
Income tax receivable - 2,834
Deferred income taxes 41 417
----------- -----------
Total current assets 50,837 54,742
Property and equipment, net 67,485 67,987
Restricted cash 4,800 4,716
Other assets 540 -
----------- -----------
Total assets $ 123,662 $ 127,445
----------- -----------
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 4,264 $ 5,400
Deferred revenue 1,353 4,657
Accrued liabilities 4,150 4,398
Accrued salaries and benefits 1,735 2,895
Income tax payable 201 -
Current portion of closure and post-closure
obligations 293 490
Current portion of capital lease obligations 11 10
----------- -----------
Total current liabilities 12,007 17,850
Long-term closure and post-closure obligations 13,070 13,972
Long-term capital lease obligations 10 21
Deferred income taxes 5,077 3,660
----------- -----------
Total liabilities 30,164 35,503
Contingencies and commitments
Stockholders' Equity
Common stock 183 183
Additional paid-in capital 61,459 60,803
Retained earnings 34,446 33,544
Treasury stock (2,590) (2,588)
----------- -----------
Total stockholders' equity 93,498 91,942
----------- -----------
Total liabilities and stockholders' equity $ 123,662 $ 127,445
----------- -----------
US ECOLOGY, INC.
(formerly known as American Ecology Corporation)
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Year Ended
December 31,
------------------------
2009 2008
----------- -----------
Cash Flows From Operating Activities:
Net income $ 13,970 $ 21,498
Adjustments to reconcile net income to net cash
provided by operating activities:
Depreciation, amortization and accretion 9,046 10,641
Deferred income taxes 1,793 3,333
Stock-based compensation expense 655 820
Net loss on sale of property and equipment 296 34
Accretion of interest income - (15)
Changes in assets and liabilities:
Receivables, net 14,435 (1,315)
Income tax receivable 2,834 (1,840)
Other assets (11) 753
Accounts payable and accrued liabilities (1,054) (1,815)
Deferred revenue (3,304) 166
Accrued salaries and benefits (1,160) 282
Income tax payable 201 -
Closure and post-closure obligations (928) (1,934)
Other 14 -
----------- -----------
Net cash provided by operating activities 36,787 30,608
Cash Flows From Investing Activities:
Purchases of property and equipment (9,405) (13,617)
Purchases of short-term investments (1,409) (992)
Restricted cash (84) 165
Proceeds from sale of property and equipment 64 14
Maturities of short-term investments - 3,216
----------- -----------
Net cash used in investing activities (10,834) (11,214)
Cash Flows From Financing Activities:
Dividends paid (13,068) (12,054)
Stock repurchases (2) (2,588)
Other (9) (10)
Tax benefit of common stock options - 73
Proceeds from stock option exercises - 1,095
----------- -----------
Net cash used in financing activities (13,079) (13,484)
Increase in cash and cash equivalents 12,874 5,910
Cash and cash equivalents at beginning of period 18,473 12,563
----------- -----------
Cash and cash equivalents at end of period $ 31,347 $ 18,473
=========== ===========
Contact Information: Contact:
Alison Ziegler
Cameron Associates
(212) 554-5469
alison@cameronassoc.com
www.usecology.com