SYS-CON MEDIA Authors: Adine Deford, Cynthia Dunlop, Harry Trott, Xenia von Wedel, Peter Silva

News Feed Item

US Ecology Announces First Quarter 2014 Results

Strong Business Conditions Drive Record Quarterly Adjusted EBITDA; 2014 Guidance Raised on Strong Outlook and Demand

BOISE, ID -- (Marketwired) -- 05/05/14 -- US Ecology, Inc. (NASDAQ: ECOL) ("the Company") today reported financial results for its first quarter ended March 31, 2014.

Net income for the first quarter of 2014 was $9.4 million, or $0.43 per diluted share, up from $5.4 million, or $0.29 per diluted share, in the first quarter of 2013. Excluding foreign currency translation losses and business development expenses, adjusted earnings per diluted share grew 50% to $0.48 in the first quarter of 2014, up from $0.32 in the first quarter of 2013. Earnings per share for the first quarter of 2014 reflects the 3.0 million shares issued in December 2013. Total shares outstanding were 21.5 million at March 31, 2014.

Operating income for the first quarter of 2014 was $15.5 million, up 60% from $9.7 million in the first quarter last year. Adjusted EBITDA for the first quarter of 2014 was a record $20.3 million, up 46% from $13.9 million in the same period last year. A reconciliation of earnings per diluted share to adjusted earnings per diluted share and net income to adjusted EBITDA is attached as Exhibit A to this release.

Total revenue for the first quarter of 2014 was $53.4 million, up 24% from $42.9 million in the same quarter last year. Treatment and disposal ("T&D") revenue increased 24% reflecting a 58% increase in project-based Event Business. Transportation revenue increased 28% from the same quarter in the prior year. Recurring Base Business revenue for the first quarter of 2014 increased 4% compared to the first quarter of 2013.

Total quarterly waste volume disposed or processed was 296,000 tons in the first quarter of 2014, up 32% from 223,000 tons in the first quarter of 2013. Average selling price ("ASP") for the first quarter of 2014 decreased 6% compared to the same quarter last year, primarily due to service mix.

For the first quarter of 2014, gross profit was $22.1 million, up 44% from $15.4 million in the first quarter of 2013. Total gross margin was 41% in the first quarter of 2014, up from 36% in the same quarter last year. T&D gross margin for the first quarter of 2014 was 50%, up from 42% in the first quarter of 2013, primarily reflecting higher volumes.

Selling, general and administrative ("SG&A") expense for the first quarter of 2014 was $6.6 million compared with $5.7 million in the same quarter last year. This increase reflects higher labor and variable compensation, business development expenses and other administrative expenses supporting increased business activity. Despite the increase, as a percentage of revenue SG&A declined to 12% from 13% in the same quarter in the prior year.

The Company's effective income tax rate for the first quarter of 2014 was 35.8%, down from 37.1% for the first quarter of 2013. This decrease reflects a higher proportion of earnings from our Canadian operations, which are taxed at a lower corporate tax rate.

At March 31, 2014, cash on hand was $77.9 million with no outstanding borrowings on our lines of credit, compared with $73.9 million of cash on hand at December 31, 2013. At March 31, 2014, $80.8 million was available for future borrowings. Subsequent to the end of the quarter, the Company announced that it had entered into a definitive agreement to acquire EQ -- The Environmental Quality Company ("EQ") for $465 million. The acquisition is anticipated to close in the second or third quarter of 2014.

"Continuing, favorable business conditions and service mix drove these strong quarterly financial results," commented President and Chief Executive Officer, Jeff Feeler. "Event Business projects in the Northeast, Gulf Coast and Southwest regions continued to show strength with new opportunities building on last year's strength. Our recurring Base Business continued its steady performance. Increased waste volumes enhanced the favorable operating leverage inherent to the disposal business, pushing treatment and disposal margin up eight percentage points to 50% for the quarter."

2014 Outlook

"First quarter results continued the positive momentum seen in 2013 and puts us on track for another strong year in 2014," commented Feeler. "With a solid pipeline of opportunities developing, we now project annual adjusted earnings per share to range from $1.60 to $1.70 per share and adjusted EBITDA to range from $74 million to $78 million. This is up from our previous guidance of $1.50 to $1.60 per share of adjusted diluted earnings and adjusted EBITDA of $70 to $74 million." Estimates do not include potential accretion to adjusted EPS and increased adjusted EBITDA anticipated from the proposed acquisition of EQ, foreign currency translation gains or losses, or business development expenses.

Dividend

On April 1, 2014, the Company declared a quarterly dividend of $0.18 per common share for stockholders of record on April 21, 2014. The $3.9 million dividend was paid on April 28, 2014. As previously announced, we do not expect the anticipated acquisition of EQ to affect the Company's dividend policy.

Conference Call

US Ecology, Inc. will hold an investor conference call on Tuesday, May 6, 2014 at 9:00 a.m. Eastern Daylight Time (7:00 a.m. Mountain Daylight Time) to discuss these results and its current financial position and business outlook. Questions will be invited after management's presentation. Interested parties can join the conference call by dialing (866) 825-1709 or (617) 213-8060 and using the passcode 12600771. The conference call will also be broadcast live on our website at www.usecology.com. An audio replay will be available through May 13, 2014 by calling (888) 286-8010 or (617) 801-6888 and using the passcode 76389658. 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 North America.

This press release contains forward-looking statements (as such term is 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 as well as the proposed acquisition of EQ - The Environmental Quality Company. Such statements may include, but are not limited to, statements about the Company's ability to close its proposed acquisition, its ability to raise the capital necessary to complete the transaction, expected synergies from the transaction, projections of the financial results of the combined company and other statements that are not historical facts. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from what is expressed herein and no assurance can be given that the Company will achieve its 2014 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, 2013 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 or contract, compliance with and changes to applicable laws, rules, or regulations, access to cost effective transportation services, access to insurance, surety bonds and other financial assurances, loss of key personnel, lawsuits, labor disputes, adverse economic conditions, government funding or competitive pressures, incidents or adverse weather conditions that could limit or suspend specific operations, implementation of new technologies, market conditions, average selling prices for recycled materials, our ability to replace business from recently completed large projects, our ability to perform under required contracts, our ability to permit and contract for timely construction of new or expanded disposal cells, our willingness or ability to pay dividends and our ability to effectively close, integrate, and realize anticipated synergies from future acquisitions, which can be impacted by the failure of the acquired company to achieve anticipated revenues, earnings or cash flows, assumption of liabilities that exceed our estimates, potential compliance issues, diversion of management's attention or other resources from our existing business, risks associated with entering product / service areas in which we have limited experience, increases in working capital investment, unexpected capital expenditures, potential losses of key employees and customers of the acquired company and future write-offs of intangible and other assets, including goodwill, if the acquired operations fail to generate sufficient cash flows.

Investors should also be aware that while we do, from time to time, communicate with securities analysts, it is against our policy to disclose to them 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
                                                         March 31,
                                               ----------------------------
                                                    2014           2013
                                               -------------  -------------

Revenue                                        $      53,354  $      42,899
Direct operating costs                                22,621         21,084
Transportation costs                                   8,613          6,433
                                               -------------  -------------

Gross profit                                          22,120         15,382

Selling, general and administrative expenses           6,636          5,726
                                               -------------  -------------
Operating income                                      15,484          9,656

Other income (expense):
  Interest income                                         44              5
  Interest expense                                       (86)          (221)
  Foreign currency loss                                 (940)          (938)
  Other                                                   86             97
                                               -------------  -------------
    Total other expense                                 (896)        (1,057)

Income before income taxes                            14,588          8,599
Income tax expense                                     5,227          3,193
                                               -------------  -------------
Net income                                     $       9,361  $       5,406
                                               =============  =============

Earnings per share:
    Basic                                      $        0.44  $        0.30
    Diluted                                    $        0.43  $        0.29

Shares used in earnings
per share calculation:
    Basic                                             21,475         18,320
    Diluted                                           21,586         18,407

Dividends paid per share (1)                   $        0.18  $           -
                                               =============  =============

(1) First quarter 2013 dividend was accelerated and paid in December 2012



                              US ECOLOGY, INC.
                        CONSOLIDATED BALANCE SHEETS
                               (in thousands)
                                (unaudited)

                                                 March 31,     December 31,
                                                    2014           2013
                                               -------------  -------------
Assets

Current Assets:
  Cash and cash equivalents                    $      77,918  $      73,940
  Receivables, net                                    41,678         43,636
  Prepaid expenses and other current assets            2,832          3,612
  Deferred income taxes                                  659          1,340
                                               -------------  -------------
    Total current assets                             123,087        122,528

Property and equipment, net                          116,419        114,859
Restricted cash and investments                        4,111          4,097
Intangible assets, net                                35,187         36,832
Goodwill                                              20,941         21,693
Other assets                                             411            547
                                               -------------  -------------
Total assets                                   $     300,156  $     300,556
                                               =============  =============

Liabilities and Stockholders' Equity

Current Liabilities:
  Accounts payable                             $       4,605  $       7,277
  Deferred revenue                                     7,458          8,870
  Accrued liabilities                                  7,962          8,691
  Accrued salaries and benefits                        4,872          6,957
  Income tax payable                                   5,113          4,428
  Current portion of closure and post-closure
   obligations                                           916            949
                                               -------------  -------------
    Total current liabilities                         30,926         37,172

Long-term closure and post-closure obligations        19,552         16,519
Other long-term liabilities                               58             69
Unrecognized tax benefits                                483            480
Deferred income taxes                                 13,213         14,778
                                               -------------  -------------
  Total liabilities                                   64,232         69,018

Contingencies and commitments

Stockholders' Equity
  Common stock                                           215            215
  Additional paid-in capital                         163,275        162,830
  Retained earnings                                   76,085         70,597
  Treasury stock                                        (387)          (319)
  Accumulated other comprehensive income
   (loss)                                             (3,264)        (1,785)
                                               -------------  -------------
    Total stockholders' equity                       235,924        231,538
                                               -------------  -------------
Total liabilities and stockholders' equity     $     300,156  $     300,556
                                               =============  =============



                              US ECOLOGY, INC.
                   CONSOLIDATED STATEMENTS OF CASH FLOWS
                               (in thousands)
                                (unaudited)

                                                    Three Months Ended
                                                         March 31,
                                               ----------------------------
                                                    2014           2013
                                               -------------  -------------
Cash Flows From Operating Activities:
  Net income                                   $       9,361  $       5,406
  Adjustments to reconcile net income to net
   cash provided by operating activities:
    Depreciation and amortization of property
     and equipment                                     3,839          3,439
    Amortization of intangible assets                    352            367
    Accretion of closure and post-closure
     obligations                                         330            307
    Unrealized foreign currency loss                   1,452          1,057
    Deferred income taxes                               (460)          (716)
    Share-based compensation expense                     270            146
    Unrecognized tax benefits                              3              3
    Net (gain) loss on sale of property and
     equipment                                             8            (41)
    Changes in assets and liabilities:
      Receivables                                      1,259          1,473
      Other assets                                       882            732
      Accounts payable and accrued liabilities        (2,142)          (556)
      Deferred revenue                                (1,164)         1,269
      Accrued salaries and benefits                   (1,994)        (3,106)
      Income tax payable                                 783          3,528
      Closure and post-closure obligations              (114)        (1,043)
                                               -------------  -------------
        Net cash provided by operating
         activities                                   12,665         12,265

Cash Flows From Investing Activities:
  Purchases of property and equipment                 (4,775)        (6,752)
  Purchases of restricted cash and investments           (14)             -
  Proceeds from sale of property and equipment             6             52
                                               -------------  -------------
        Net cash used in investing activities         (4,783)        (6,700)

Cash Flows From Financing Activities:
  Dividends paid                                      (3,874)             -
  Proceeds from stock option exercises                   174          1,050
  Payments on reducing revolving line of
   credit                                                  -         (4,000)
  Deferred financing costs paid                            -           (177)
  Other                                                  (65)             2
                                               -------------  -------------
        Net cash used in financing activities         (3,765)        (3,125)

Effect of foreign exchange rate changes on
 cash                                                   (139)           (49)

Increase in cash and cash equivalents                  3,978          2,391

Cash and cash equivalents at beginning of
 period                                               73,940          2,120
                                               -------------  -------------

Cash and cash equivalents at end of period     $      77,918  $       4,511
                                               =============  =============


EXHIBIT A

Non-GAAP Results and Reconciliation

US Ecology reports adjusted EBITDA and adjusted earnings per diluted share results, which are non-GAAP financial measures, as a complement to results provided in accordance with generally accepted accounting principles in the United States (GAAP) and believes that such information provides analysts, stockholders, and other users information to better understand the Company's operating performance. Because adjusted EBITDA and adjusted earnings per diluted share are not measurements determined in accordance with GAAP and are thus susceptible to varying calculations they may not be comparable to similar measures used by other companies. Items excluded from adjusted EBITDA and adjusted earnings per diluted share are significant components in understanding and assessing financial performance.

Adjusted EBITDA and adjusted earnings per diluted share should not be considered in isolation or as an alternative to, or substitute for, net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Adjusted EBITDA and adjusted earnings per diluted share have limitations as analytical tools and should not be considered in isolation or a substitute for analyzing our results as reported under GAAP. Some of the limitations are:

  • Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs;
  • Adjusted EBITDA does not reflect our interest expense, or the requirements necessary to service interest or principal payments on our debt;
  • Adjusted EBITDA does not reflect our income tax expenses or the cash requirements to pay our taxes;
  • Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; and
  • although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect cash requirements for such replacements.

Adjusted EBITDA
The Company defines adjusted EBITDA as net income before interest expense, interest income, income tax expense, depreciation, amortization, stock based compensation, accretion of closure and post-closure liabilities, foreign currency gain/loss and other income/expense, which are not considered part of usual business operations. The following reconciliation itemizes the differences between reported net income and adjusted EBITDA for the three months ended March 31, 2014 and 2013:


(in thousands)                                 Three Months Ended March 31,
                                               ----------------------------
                                                    2014           2013
                                               -------------  -------------

Net Income                                     $       9,361  $       5,406
  Income tax expense                                   5,227          3,193
  Interest expense                                        86            221
  Interest income                                        (44)            (5)
  Foreign currency (gain)/loss                           940            938
  Other income                                           (86)           (97)
  Depreciation and amortization of plant and
   equipment                                           3,839          3,439
  Amortization of intangible assets                      352            367
  Stock-based compensation                               270            146
  Accretion and non-cash adjustments of
   closure & post-closure obligations                    330            307
                                               -------------  -------------
Adjusted EBITDA                                $      20,275  $      13,915
                                               =============  =============

EXHIBIT A

Non-GAAP Results and Reconciliation, continued

Adjusted Earnings Per Diluted Share
The Company defines adjusted earnings per diluted share as net income plus the after tax impact of non-cash, non-operational foreign currency gains or losses ("Foreign Currency Gain/Loss") plus the after tax impact of business development cost divided by the diluted shares used in the earnings per share calculation. The Foreign Currency Gain/Loss excluded from the earnings per diluted share calculation are related to intercompany loans between our Canadian subsidiary and the U.S. parent which have been established as part of our tax and treasury management strategy. These intercompany loans are payable in Canadian dollars ("CAD") requiring us to revalue the outstanding loan balance through our consolidated income statement based on the CAD/United States currency movements from period to period. We believe excluding the currency movements for these intercompany financial instruments provides meaningful information to investors regarding the operational and financial performance of the Company.

Business development costs relate to expenses incurred to evaluate businesses for potential acquisition or costs related to closing and integrating successfully acquired businesses. We believe excluding these business development costs provides meaningful information to investors regarding the operational and financial performance of the Company.

The following reconciliation itemizes the differences between reported net income and earnings per diluted share to adjusted net income and adjusted earnings per diluted share for the three months ended March 31, 2014 and 2013:


(in thousands, except per share
 data)                                     Three Months Ended March 31,
                                     ---------------------------------------
                                             2014                2013
                                     ------------------- -------------------

                                                     per                 per
                                                   share               share
Net income / earnings per diluted
 share                               $   9,361 $    0.43 $   5,406 $    0.29

Business development costs, net of
 tax                                       120      0.01         -         -
Non-cash foreign currency
 (gain)/loss, net of tax                   703      0.04       595      0.03
                                     --------- --------- --------- ---------

Adjusted net income / adjusted
 earnings per diluted share          $  10,184 $    0.48 $   6,001 $    0.32
                                     ========= ========= ========= =========


Shares used in earnings per diluted
 share calculation                      21,586              18,407
                                     =========           =========

More Stories By Marketwired .

Copyright © 2009 Marketwired. All rights reserved. All the news releases provided by Marketwired are copyrighted. Any forms of copying other than an individual user's personal reference without express written permission is prohibited. Further distribution of these materials is strictly forbidden, including but not limited to, posting, emailing, faxing, archiving in a public database, redistributing via a computer network or in a printed form.

Latest Stories
"We help companies that are using a lot of Software as a Service. We help companies manage and gain visibility into what people are using inside the company and decide to secure them or use standards to lock down or to embrace the adoption of SaaS inside the company," explained Scott Kriz, Co-founder and CEO of Bitium, in this SYS-CON.tv interview at 15th Cloud Expo, held Nov 4–6, 2014, at the Santa Clara Convention Center in Santa Clara, CA.
15th Cloud Expo, which took place Nov. 4-6, 2014, at the Santa Clara Convention Center in Santa Clara, CA, expanded the conference content of @ThingsExpo, Big Data Expo, and DevOps Summit to include two developer events. IBM held a Bluemix Developer Playground on November 5 and ElasticBox held a Hackathon on November 6. Both events took place on the expo floor. The Bluemix Developer Playground, for developers of all levels, highlighted the ease of use of Bluemix, its services and functionalit...
Some developers believe that monitoring is a function of the operations team. Some operations teams firmly believe that monitoring the systems they maintain is sufficient to run the business successfully. Most of them are wrong. The complexity of today's applications have gone far and beyond the capabilities of "traditional" system-level monitoring tools and approaches and requires much broader knowledge of business and applications as a whole. The goal of DevOps is to connect all aspects of app...
The 4th International DevOps Summit, co-located with16th International Cloud Expo – being held June 9-11, 2015, at the Javits Center in New York City, NY – announces that its Call for Papers is now open. Born out of proven success in agile development, cloud computing, and process automation, DevOps is a macro trend you cannot afford to miss. From showcase success stories from early adopters and web-scale businesses, DevOps is expanding to organizations of all sizes, including the world's large...
SAP is delivering break-through innovation combined with fantastic user experience powered by the market-leading in-memory technology, SAP HANA. In his General Session at 15th Cloud Expo, Thorsten Leiduck, VP ISVs & Digital Commerce, SAP, discussed how SAP and partners provide cloud and hybrid cloud solutions as well as real-time Big Data offerings that help companies of all sizes and industries run better. SAP launched an application challenge to award the most innovative SAP HANA and SAP HANA...
Want to enable self-service provisioning of application environments in minutes that mirror production? Can you automatically provide rich data with code-level detail back to the developers when issues occur in production? In his session at DevOps Summit, David Tesar, Microsoft Technical Evangelist on Microsoft Azure and DevOps, will discuss how to accomplish this and more utilizing technologies such as Microsoft Azure, Visual Studio online, and Application Insights in this demo-heavy session.
When an enterprise builds a hybrid IaaS cloud connecting its data center to one or more public clouds, security is often a major topic along with the other challenges involved. Security is closely intertwined with the networking choices made for the hybrid cloud. Traditional networking approaches for building a hybrid cloud try to kludge together the enterprise infrastructure with the public cloud. Consequently this approach requires risky, deep "surgery" including changes to firewalls, subnets...
DevOps is all about agility. However, you don't want to be on a high-speed bus to nowhere. The right DevOps approach controls velocity with a tight feedback loop that not only consists of operational data but also incorporates business context. With a business context in the decision making, the right business priorities are incorporated, which results in a higher value creation. In his session at DevOps Summit, Todd Rader, Solutions Architect at AppDynamics, discussed key monitoring techniques...
Cultural, regulatory, environmental, political and economic (CREPE) conditions over the past decade are creating cross-industry solution spaces that require processes and technologies from both the Internet of Things (IoT), and Data Management and Analytics (DMA). These solution spaces are evolving into Sensor Analytics Ecosystems (SAE) that represent significant new opportunities for organizations of all types. Public Utilities throughout the world, providing electricity, natural gas and water,...
The security devil is always in the details of the attack: the ones you've endured, the ones you prepare yourself to fend off, and the ones that, you fear, will catch you completely unaware and defenseless. The Internet of Things (IoT) is nothing if not an endless proliferation of details. It's the vision of a world in which continuous Internet connectivity and addressability is embedded into a growing range of human artifacts, into the natural world, and even into our smartphones, appliances, a...
How do APIs and IoT relate? The answer is not as simple as merely adding an API on top of a dumb device, but rather about understanding the architectural patterns for implementing an IoT fabric. There are typically two or three trends: Exposing the device to a management framework Exposing that management framework to a business centric logic Exposing that business layer and data to end users. This last trend is the IoT stack, which involves a new shift in the separation of what stuff happe...
The 3rd International Internet of @ThingsExpo, co-located with the 16th International Cloud Expo - to be held June 9-11, 2015, at the Javits Center in New York City, NY - announces that its Call for Papers is now open. The Internet of Things (IoT) is the biggest idea since the creation of the Worldwide Web more than 20 years ago.
The Internet of Things is tied together with a thin strand that is known as time. Coincidentally, at the core of nearly all data analytics is a timestamp. When working with time series data there are a few core principles that everyone should consider, especially across datasets where time is the common boundary. In his session at Internet of @ThingsExpo, Jim Scott, Director of Enterprise Strategy & Architecture at MapR Technologies, discussed single-value, geo-spatial, and log time series dat...
An entirely new security model is needed for the Internet of Things, or is it? Can we save some old and tested controls for this new and different environment? In his session at @ThingsExpo, New York's at the Javits Center, Davi Ottenheimer, EMC Senior Director of Trust, reviewed hands-on lessons with IoT devices and reveal a new risk balance you might not expect. Davi Ottenheimer, EMC Senior Director of Trust, has more than nineteen years' experience managing global security operations and asse...
The Internet of Things will greatly expand the opportunities for data collection and new business models driven off of that data. In her session at @ThingsExpo, Esmeralda Swartz, CMO of MetraTech, discussed how for this to be effective you not only need to have infrastructure and operational models capable of utilizing this new phenomenon, but increasingly service providers will need to convince a skeptical public to participate. Get ready to show them the money!