Attached files
file | filename |
---|---|
8-K - US ECOLOGY, INC. - US ECOLOGY, INC. | usecology_8k-030410.htm |
Exhibit
99.1
NEWS
RELEASE
For
Immediate Release
Contact:
Alison Ziegler, Cameron Associates (212) 554-5469
alison@cameronassoc.com www.usecology.com
US
ECOLOGY, INC. ANNOUNCES FOURTH QUARTER AND
FULL
YEAR 2009 RESULTS
Provides business outlook for
2010
Boise, Idaho – March 4, 2010 –
US Ecology, Inc. (formerly known as American Ecology Corporation) (NASDAQ-GS:
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.
1
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.
2
Our
effective income tax rate for 2009 was 40.5% as compared with 39.0%
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.
3
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.
4
US
ECOLOGY, INC.
|
||||||||||||||||
(formerly
known as American Ecology Corporation)
|
||||||||||||||||
CONSOLIDATED
STATEMENTS OF INCOME
|
||||||||||||||||
(in
thousands, except per share data)
|
||||||||||||||||
(unaudited)
|
||||||||||||||||
Three
Months Ended December 31,
|
For
the Year Ended 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 |
5
US
ECOLOGY, INC.
|
||||||||
(formerly
known as American Ecology Corporation)
|
||||||||
CONSOLIDATED
BALANCE SHEETS
|
||||||||
(in
thousands)
|
||||||||
(unaudited)
|
||||||||
December
31, 2009
|
December
31, 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 |
6
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 |
7