BOISE, ID--(Marketwire - March 8, 2011) - US Ecology, Inc. (
NASDAQ:
ECOL) ("the Company")
today reported results for the fourth quarter and full year ended December
31, 2010.
Fourth Quarter 2010 Results
Net income for the fourth quarter of 2010 was $4.5 million, or $0.25 per
diluted share, up 71% from $2.6 million, or $0.15 per diluted share posted
in the fourth quarter of 2009. The upturn in revenue was driven by strong
volume from both the Company's Base and Event Business. Operating income
for the fourth quarter of 2010 was $7.1 million, up 54% from $4.6 million
in the fourth quarter of 2009.
Fourth quarter 2010 results reflect $2.0 million in pretax business
development costs ($1.9 million after tax or $0.10 per share) associated
with the acquisition of Stablex Canada Inc. ("Stablex") and other business
development efforts and $1.9 million in pretax foreign currency gains ($1.2
million after tax or $0.06 per share). On October 31, 2010, the Company
closed the acquisition of Stablex for $77.5 million using $19.7 million in
cash and $57.8 million of debt. During the fourth quarter of 2009 the
Company benefitted from approximately $0.02 per share on a non-recurring
insurance settlement.
Revenue for the fourth quarter of 2010 was $39.5 million, up 67% from $23.6
million in the same quarter last year. Stablex contributed $5.7 million of
revenue for the two months of US Ecology ownership. Also contributing to
the revenue increase was a $1.3 million refund from the State of Nevada
post-closure trust fund for the Company's Nevada operation received during
the fourth quarter of 2010. Excluding Stablex and the Nevada refund,
revenue during the fourth quarter of 2010 increased 38% over the same
quarter last year.
Base Business revenue (revenue from recurring waste streams), excluding
Stablex, increased 22% in the fourth quarter of 2010 compared to the same
quarter last year. Event Business revenue (revenue from discrete cleanup
projects), excluding Stablex, increased 74% in the fourth quarter of 2010
over the same quarter last year. The Company's Texas thermal recycling
service contributed $3.1 million in revenue during the quarter, up 76% from
the $1.8 million generated in the fourth quarter of 2009. Total volumes
disposed at our Idaho, Nevada, Texas and Quebec waste facilities (including
thermal recycling) were 244,000 tons in the fourth quarter of 2010, up 83%
from the 133,000 tons disposed in the fourth quarter of 2009.
For the fourth quarter of 2010, gross profit was $14.9 million, up 95% from
the $7.6 million reported in the fourth quarter of 2009. Total gross
margin was 37.8% for the fourth quarter of 2010, up from 32.3% in the same
quarter last year. Treatment and disposal gross margin for the fourth
quarter of 2010 was 50.3%, up from 44.5% in the fourth quarter of 2009.
Increases in gross margin reflect higher tons disposed during the fourth
quarter of 2010 compared to the same quarter last year, service mix and the
State of Nevada closure trust refund discussed above.
Selling, general and administrative ("SG&A") expense for the three months
ended December 31, 2010 was $7.8 million, or 19.7% of revenue, as compared
to $3.7 million, or 15.5% of revenue, in the same quarter last year. The
$4.1 million increase includes $2.0 million in Stablex acquisition costs
and other business development activity, a $1.4 million accrual of
full-year incentive compensation and $746,000 of SG&A expense directly
associated with the Stablex facility.
The Company's effective income tax rate for the fourth quarter of 2010 was
48.3%, up from 43.6% in the fourth quarter of 2009. This increase reflects
the impact of business development costs that are not deductible for income
tax purposes.
At December 31, 2010, we had $6.3 million of cash on hand. Total
borrowings on our available lines of credit were $63 million with $28
million available for future borrowings.
"Increased landfill disposal volumes combined with solid performance from
our thermal recycling operations pushed revenue, gross profit and gross
margins higher during the quarter, demonstrating the inherent operating
leverage associated with our facilities," commented Vice President and
Chief Financial Officer, Jeff Feeler. "The strength in disposal volumes
was seen across all of our hazardous waste sites and came from nearly all
areas of our business," Feeler added.
Full Year 2010 Results
Net income for the year ending December 31, 2010 was $12.6 million, or
$0.69 per diluted share. 2010 reported earnings reflected both the
incremental expenses and foreign currency gains associated with the
purchase of Stablex. Excluding these items, the Company estimates that the
historic US Ecology core business would have generated earnings of
approximately $0.75 per diluted share. This compares to net income of
$14.0 million, or $0.77 per diluted share, in 2009 which included an
estimated $0.23 per share from the Honeywell Jersey City project completed
last year and a $0.02 on a non-recurring insurance settlement.
"When you eliminate the impact of the Stablex transaction from 2010 results
and adjust 2009 results for the previously completed Honeywell project and
insurance settlement, US Ecology's core business delivered a 44%
improvement in earnings per share in 2010," stated Feeler.
Revenue for 2010 was $104.8 million, including $5.7 million from Stablex.
This compares to $132.5 million of total revenue in 2009, of which
Honeywell represented $50.6 million. During 2010, the Company disposed of
723,000 tons, down 7% from the 774,000 tons last year. In 2009, however,
Honeywell accounted for approximately 284,000 tons, or 37% of that year's
total disposal volume. Excluding Honeywell from the 2009 totals, 2010
disposal volumes would have increased 48% over the prior year.
Gross profit for 2010 was $39.0 million, up from $36.3 million in 2009.
Gross margin increased to 37.2% in 2010 up from 27.4% in 2009. The gross
margin improvement in 2010 compared to the same period of 2009 reflects a
reduction in transportation and logistics services, which generally
contribute little or no margin. Treatment and disposal gross margin in
2010 was 46.9% compared with 45.1% in 2009. The increase in treatment and
disposal margin primarily reflects the inherent operating leverage of the
Company's landfill operations and the $1.3 million closure trust refund,
partially offset by lower margins on our thermal recycling services.
SG&A expenses in 2010 were $18.6 million, or 17.8% of revenue, as compared
to $13.8 million, or 10.4% of revenue, in 2009. SG&A in 2010 includes $2.6
million in acquisition and other business development expense, $1.4 million
in incentive compensation and a $497,000 regulatory fine at our Beatty,
Nevada facility related to 2005 to 2008 business activities. 2009 SG&A did
not include any meaningful expenses for business development or regulatory
fines, and no incentive compensation.
Despite higher gross profit, operating income declined to $20.4 million in
2010 from $23.1 million in 2009 due to higher SG&A related to business
development expenses in 2010. Excluding the $2.6 million in business
development expense, 2010 operating income would have essentially matched
2009.
Our effective income tax rate in 2010 was 43.3% as compared with 40.5% in
2009. This increase primarily reflects higher business development
expenses and regulatory fines that are not deductible expenses for income
taxes.
"The fourth quarter resurgence in our core treatment and disposal business
reflected strong contributions from virtually all of our diverse service
offerings," commented President and Chief Executive Officer, Jim
Baumgardner. "We saw solid improvement in our Base Business, Event
Business and Thermal Recycling Business. Our strong fourth quarter capped
off a solid year in which we not only exceeded our financial targets, but
successfully closed on a major strategic acquisition that we expect will be
accretive to earnings in 2011 and beyond," Baumgardner added.
2011 Outlook
Management currently projects earnings between $0.75 and $0.85 per fully
diluted share excluding any foreign currency gains or losses. This
represents a 9% to 23% gain over 2010 results, which included foreign
currency gains of $0.06 per share. Excluding foreign currency gains
recognized in 2010, our 2011 guidance represents projected earnings growth
of 21% to 37%.
The Company generally expects economic conditions to improve in 2011, as
compared to 2010. As a result, Base Business is expected to strengthen
modestly as national and regional industrial production increases. The
Company exited 2010 with a healthy pipeline of Event Business opportunities
and expects that in 2011 we will see more private cleanup activity and
commercial opportunities. With increased refinery activity, expanded
thermal recycling opportunities are also expected in 2011.
Baumgardner added, "We look forward to an improving market for
environmental services over the course of 2011 and believe we are uniquely
positioned to take advantage of stronger demand for our services as a
result of our waste handling infrastructure, unique suite of permits and
highly experienced workforce. We remain committed to growing the business
through focused execution and acquiring additional, strategically aligned
businesses, like Stablex."
Company-wide, including Stablex, capital spending for 2011 is estimated to
range from $10 to $11 million, down from $14.2 million in 2010. Capital
expenditures for 2011 will be devoted primarily to the construction of
additional disposal space, replacement of aging equipment and maintenance
activities company-wide.
Dividend
On January 3, 2011, the Company declared a quarterly dividend of $0.18 per
common share for stockholders of record on January 14, 2011. The $3.3
million dividend was paid on January 21, 2011.
Conference Call
US Ecology, Inc. will hold an investor conference call on Tuesday, March 8,
2011 at 10 a.m. Eastern Time (8:00 a.m. Mountain 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 March 15,
2011 by calling (888) 286-8010 or (617) 801-6888 and using the passcode
65265463. The replay will also be accessible on our website at
www.usecology.com.
About US Ecology, Inc.
US Ecology, Inc., 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 brokers. Headquartered
in Boise, Idaho, the Company is one of the oldest radioactive and hazardous
waste services companies in the North America.
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 2011 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, access to cost effective
transportation services, cost effective access to insurance and other
financial assurances, loss of key personnel, lawsuits, adverse economic
conditions, 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, our ability to successfully integrate Stablex Canada Inc.,
our ability to close on future potential acquisitions or our ability to
successfully integrate future 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 For the Year Ended
December 31, December 31,
-------------------- --------------------
2010 2009 2010 2009
--------- --------- --------- ---------
Revenue $ 39,480 $ 23,648 $ 104,836 $ 132,519
Direct operating costs 15,152 9,436 45,391 43,535
Transportation costs 9,407 6,577 20,434 52,708
--------- --------- --------- ---------
Gross profit 14,921 7,635 39,011 36,276
Selling, general and
administrative expenses 7,795 3,660 18,634 13,835
Insurance claim - (661) - (661)
--------- --------- --------- ---------
Operating income 7,126 4,636 20,377 23,102
Other income (expense):
Interest income 4 13 51 116
Interest expense (319) - (320) (2)
Foreign currency gain (loss) 1,878 (6) 1,819 (37)
Other 80 48 259 304
--------- --------- --------- ---------
Total other income 1,643 55 1,809 381
Income before income taxes 8,769 4,691 22,186 23,483
Income tax expense 4,236 2,047 9,602 9,513
--------- --------- --------- ---------
Net income $ 4,533 $ 2,644 $ 12,584 $ 13,970
========= ========= ========= =========
Earnings per share:
Basic $ 0.25 $ 0.15 $ 0.69 $ 0.77
Diluted $ 0.25 $ 0.15 $ 0.69 $ 0.77
Shares used in earnings
per share calculation:
Basic 18,177 18,149 18,170 18,146
Diluted 18,197 18,172 18,189 18,173
Dividends paid per share $ 0.18 $ 0.18 $ 0.72 $ 0.72
========= ========= ========= =========
US ECOLOGY, INC.
CONSOLIDATED BALANCE SHEETS
(in thousands)
(unaudited)
December 31, December 31,
2010 2009
------------ ------------
Assets
Current Assets:
Cash and cash equivalents $ 6,342 $ 31,347
Short-term investments - 1,395
Receivables, net 33,553 16,302
Prepaid expenses and other current assets 2,635 1,752
Deferred income taxes 455 41
------------ ------------
Total current assets 42,985 50,837
Property and equipment, net 105,822 67,485
Restricted cash 4,115 4,800
Intangible assets, net 41,740 -
Goodwill 21,790 -
Other assets 897 540
------------ ------------
Total assets $ 217,349 $ 123,662
============ ============
Liabilities and Stockholders' Equity
Current Liabilities:
Accounts payable $ 5,033 $ 4,264
Deferred revenue 3,620 1,353
Accrued liabilities 8,188 4,150
Accrued salaries and benefits 4,051 1,735
Income tax payable 2,615 201
Current portion of closure and post-closure
obligations 778 293
Current portion of capital lease obligations 7 11
------------ ------------
Total current liabilities 24,292 12,007
Long-term closure and post-closure obligations 15,995 13,070
Reducing revolving line of credit 63,000 -
Long-term capital lease obligations 3 10
Other long-term liabilities 201 -
Deferred income taxes 19,146 5,077
------------ ------------
Total liabilities 122,637 30,164
Contingencies and commitments
Stockholders' Equity
Common stock 183 183
Additional paid-in capital 61,892 61,459
Retained earnings 33,940 34,446
Accumulated other comprehensive income 676 -
Treasury stock (1,979) (2,590)
------------ ------------
Total stockholders' equity 94,712 93,498
------------ ------------
Total liabilities and stockholders' equity $ 217,349 $ 123,662
============ ============
US ECOLOGY, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
(in thousands)
(unaudited)
For the Year Ended
December 31,
--------------------------
2010 2009
------------ ------------
Cash Flows From Operating Activities:
Net income $ 12,584 $ 13,970
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization and accretion 9,118 9,046
Unrealized foreign currency gain (1,205) -
Deferred income taxes (286) 1,793
Stock-based compensation expense 988 655
Net loss on sale of property and equipment 171 296
Investment premium amortization 20 -
Changes in assets and liabilities (net of
effect of business acquisition):
Receivables, net (11,278) 14,435
Income tax receivable - 2,834
Other assets (618) (11)
Accounts payable and accrued liabilities 481 (1,054)
Deferred revenue 339 (3,304)
Accrued salaries and benefits 2,362 (1,160)
Income tax payable 2,413 201
Closure and post-closure obligations (158) (928)
Other (2) 14
------------ ------------
Net cash provided by operating activities 14,929 36,787
Cash Flows From Investing Activities:
Business acquisition (net of cash acquired) (77,427) -
Purchases of property and equipment (14,190) (9,405)
Purchases of short-term investments (4,998) (1,409)
Maturities of short-term investments 6,375 -
Restricted cash, net 685 (84)
Proceeds from sale of property and equipment 58 64
------------ ------------
Net cash used in investing activities (89,497) (10,834)
Cash Flows From Financing Activities:
Proceeds from reducing revolving line of
credit 63,000 -
Dividends paid (13,090) (13,068)
Deferred financing costs paid (373) -
Stock repurchases 46 (2)
Tax benefit of common stock options 10 -
Other (11) (9)
------------ ------------
Net cash provided by (used in)
financing activities 49,582 (13,079)
Effect of foreign exchange rate changes on cash (19) 0
(Decrease) Increase in cash and cash
equivalents (25,005) 12,874
Cash and cash equivalents at beginning of
period 31,347 18,473
------------ ------------
Cash and cash equivalents at end of period $ 6,342 $ 31,347
============ ============
Contact Information: Contact:
Alison Ziegler
Cameron Associates
(212) 554-5469
alison@cameronassoc.com
www.usecology.com