US Ecology Announces First Quarter 2013 Results

US Ecology Announces First Quarter 2013 Results 
Operating Income up 49%; Adjusted EBITDA up 31% 
BOISE, ID -- (Marketwired) -- 04/25/13 --  US Ecology, Inc. (NASDAQ:
ECOL) ("the Company") today reported financial results for the
quarter ended March 31, 2013.  
Net income for the first quarter of 2013 was $5.4 million, or $0.29
per diluted share, up from $4.5 million, or $0.25 per diluted share,
in the first quarter of 2012. Excluding foreign currency translation
gains and losses and business development expenses, adjusted earnings
per diluted share grew 52% to $0.32 in the first quarter of 2013, up
from $0.21 in the first quarter of 2012. Operating income for the
first quarter of 2013 was $9.7 million, up 49% from $6.5 million in
the first quarter last year.  
Adjusted EBITDA for the first quarter of 2013 was $13.9 million, up
31% from $10.6 million in the same quarter 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 2013 was $42.9 million, up 30%
from $33.0 million in the same quarter last year. Treatment and
disposal ("T&D") revenue increased 21% quarter over quarter.
Transportation revenue increased 114% quarter over quarter. Excluding
US Ecology Michigan, which was acquired in May 2012, T&D revenue
growth in the quarter reflected a 54% increase in project based work
(Event Business) partially offset by a 1% decrease in recurring, Base
Business revenue compared to the first quarter of 2012.  
Total quarterly waste volume disposed or processed at our Idaho,
Michigan, Nevada, Texas and Quebec facilities was 223,000 tons in the
first quarter of 2013, up 4% from 215,000 tons in the first quarter
of 2012. Average selling price ("ASP") for the first quarter of 2013
increased 19% compared to the first quarter of 2012, reflecting a
more favorable service mix.  
For the first quarter of 2013, gross profit was $15.4 million, up 27%
from $12.1 million in the first quarter of 2012. Total gross margin
was 36% in the first quarter of 2013 compared to 37% in the first
quarter of 2012. T&D gross margin for the first quarter of 2013 was
42%, up from 41% in the first quarter of 2012. The year-over-year
increase in T&D gross margin reflects a more favorable service mix in
2013 partially offset by the addition of US Ecology Michigan which
operates at lower gross margins than our other business lines.  
Selling, general and administrative ("SG&A") expense for the first
quarter of 2013 was $5.7 million, or 13% of revenue, compared to $5.6
million, or 17% of revenue in the same quarter last year.  
The Company's effective income tax rate for the first quarter of 2013
was 37.1%, down from 39.1% for the first quarter of 2012. This
decrease reflects a higher proportion of earnings from our Canadian
operations, which are taxed at a lower corporate tax rate, partially
offset by higher U.S. state income taxes. 
At March 31, 2013, cash on hand was $4.5 million. Total borrowings on
our lines of credit were $41.0 million, down from $45.0 million at
December 31, 2012. At March 31, 2013, $47.2 million was available for
future borrowings.  
"Strong growth in our Event Business drove waste volumes in the
quarter, helping us benefit from the inherent operating leverage in
the business," commented Vice President, Acting Chief Financial
Officer and Chief Accounting Officer, Eric Gerratt. "We are pleased
with the strong quarterly performance driven by solid execution at
all of our facilities." 
2013 Outlook  
"Continuing business momentum in the first quarter reaffirms
management's confidence that US Ecology will deliver solid growth in
2013 on top of record 2012 results," commented Acting President and
Chief Operating Officer, Jeff Feeler. "Growth in industrial
production in North America is expected to drive increases in
recurring Base Business. Our Event Business continues to be healthy
with multiple contracts awarded and shipping along with a solid
pipeline of opportunities to backfill completed projects. In
addition, robust Gulf Coast refining markets continue to support
demand for our thermal recycling services. We continue to expect full
year earnings per share between $1.45 and $1.55 per diluted share
excluding any foreign currency gains or losses, and project 2013
Adjusted EBITDA between $62 and $65 million." 
Dividend  
On April 1, 2013, the Company declared a quarterly dividend of $0.18
per common share for stockholders of record on April 19, 2013. The
$3.3 million dividend is to be paid on April 26, 2013. 
Conference Call 
US Ecology, Inc. will hold an investor conference call on Thursday,
April 25, 2013 at 10a.m. Eastern Daylight Time (8:00 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 866-713-8563 or 617-597-5311 and using the passcode
96536035. The conference call will also be broadcast live on our
website at www.usecology.com. An audio replay will be available
through May 2, 2013 by calling 888-286-8010 or 617-801-6888 and using
the passcode 12662606. 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 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 2013
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, 2012 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 and 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 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,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
Revenue                                          $     42,899  $     33,013 
Direct operating costs                                 21,084        17,638 
Transportation costs                                    6,433         3,299 
                                                 ------------  ------------ 
                                                                            
Gross profit                                           15,382        12,076 
                                                                            
Selling, general and administrative expenses            5,726         5,605 
                                                 ------------  ------------ 
Operating income                                        9,656         6,471 
                                                                            
Other income (expense):                                                     
  Interest income                                           5             5 
  Interest expense                                       (221)         (224)
  Foreign currency gain (loss)                           (938)        1,091 
  Other                                                    97            80 
                                                 ------------  ------------ 
    Total other income (expense)                       (1,057)          952 
                                                                            
Income before income taxes                              8,599         7,423 
Income tax expense                                      3,193         2,900 
                                                 ------------  ------------ 
Net income                                       $      5,406  $      4,523 
                                                 ============  ============ 
                                                                            
Earnings per share:                                                         
  Basic                                          $       0.30  $       0.25 
  Diluted                                        $       0.29  $       0.25 
                                                                            
Shares used in earnings per share calculation:                              
  Basic                                                18,320        18,218 
  Diluted                                              18,407        18,254 
                                                                            
Dividends paid per share                         $          -  $       0.18 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                              US ECOLOGY, INC.                              
                        CONSOLIDATED BALANCE SHEETS                         
                               (in thousands)                               
                                (unaudited)                                 
                                                                            
                                                   March 31,   December 31, 
                                                     2013          2012     
                                                 ------------  ------------ 
Assets                                                                      
                                                                            
Current Assets:                                                             
  Cash and cash equivalents                      $      4,511  $      2,120 
  Receivables, net                                     32,254        33,947 
  Prepaid expenses and other current assets             2,510         3,161 
  Deferred income taxes                                   597         1,276 
                                                 ------------  ------------ 
    Total current assets                               39,872        40,504 
                                                                            
Property and equipment, net                           113,319       109,792 
Restricted cash                                         4,111         4,111 
Intangible assets, net                                 39,536        40,771 
Goodwill                                               22,617        23,105 
Other assets                                              491           411 
                                                 ------------  ------------ 
Total assets                                     $    219,946  $    218,694 
                                                 ============  ============ 
                                                                            
Liabilities and Stockholders' Equity                                        
                                                                            
Current Liabilities:                                                        
  Accounts payable                               $      6,842  $      6,333 
  Deferred revenue                                      5,147         3,919 
  Accrued liabilities                                   7,093         7,322 
  Accrued salaries and benefits                         4,402         7,570 
  Income tax payable                                    3,947           426 
  Current portion of closure and post-closure                               
   obligations                                            978         1,913 
                                                 ------------  ------------ 
    Total current liabilities                          28,409        27,483 
                                                                            
Long-term closure and post-closure obligations         15,608        15,449 
Reducing revolving line of credit                      41,000        45,000 
Other long-term liabilities                               102           114 
Unrecognized tax benefits                                 470           467 
Deferred income taxes                                  16,482        18,159 
                                                 ------------  ------------ 
  Total liabilities                                   102,071       106,672 
                                                                            
Contingencies and commitments                                               
                                                                            
Stockholders' Equity                                                        
  Common stock                                            184           184 
  Additional paid-in capital                           64,537        63,969 
  Retained earnings                                    53,830        48,424 
  Treasury stock                                         (554)       (1,183)
  Accumulated other comprehensive income (loss)          (122)          628 
                                                 ------------  ------------ 
    Total stockholders' equity                        117,875       112,022 
                                                 ------------  ------------ 
Total liabilities and stockholders' equity       $    219,946  $    218,694 
                                                 ============  ============ 
                                                                            
                                                                            
                                                                            
                   CONSOLIDATED STATEMENTS OF CASH FLOWS                    
                               (in thousands)                               
                                (unaudited)                                 
                                                                            
                                                     Three Months Ended     
                                                          March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
Cash Flows From Operating Activities:                                       
  Net income                                     $      5,406  $      4,523 
  Adjustments to reconcile net income to net                                
   cash provided by operating activities:                                   
    Depreciation and amortization of property                               
     and equipment                                      3,439         3,223 
    Amortization of intangible assets                     367           350 
    Accretion of closure and post-closure                                   
     obligations                                          307           335 
    Unrealized foreign currency loss (gain)             1,057        (1,201)
    Deferred income taxes                                (716)          338 
    Stock-based compensation expense                      146           203 
    Unrecognized tax benefits                               3             3 
    Net (gain) loss on sale of property and                                 
     equipment                                            (41)           22 
    Changes in assets and liabilities:                                      
      Receivables, net                                  1,473         7,624 
      Income tax receivable                                 -            42 
      Other assets                                        732           (66)
      Accounts payable and accrued liabilities           (556)         (967)
      Deferred revenue                                  1,269          (295)
      Accrued salaries and benefits                    (3,106)       (1,526)
      Income tax payable                                3,528           896 
      Closure and post-closure obligations             (1,043)          (82)
                                                 ------------  ------------ 
        Net cash provided by operating                                      
         activities                                    12,265        13,422 
                                                                            
Cash Flows From Investing Activities:                                       
    Purchases of property and equipment                (6,752)       (2,386)
    Proceeds from sale of property and equipment           52            66 
                                                 ------------  ------------ 
        Net cash used in investing activities          (6,700)       (2,320)
                                                                            
Cash Flows From Financing Activities:                                       
    Payments on reducing revolving line of                                  
     credit                                            (4,000)       (8,500)
    Proceeds from stock option exercises                1,050             - 
    Deferred financing costs paid                        (177)            - 
    Proceeds from reducing revolving line of                                
     credit                                                 -         3,000 
    Dividends paid                                          -        (3,282)
    Other                                                   2          (243)
                                                 ------------  ------------ 
        Net cash used in financing activities          (3,125)       (9,025)
                                                                            
Effect of foreign exchange rate changes on cash           (49)           32 
                                                                            
Decrease in cash and cash equivalents                   2,391         2,109 
                                                                            
Cash and cash equivalents at beginning of year          2,120         4,289 
                                                 ------------  ------------ 
                                                                            
Cash and cash equivalents at end of year         $      4,511  $      6,398 
                                                 ============  ============ 

 
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, shareholders, 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, 2013 and 2012:  


 
                                                                            
                                                     Three Months Ended     
(in thousands)                                            March 31,         
                                                 -------------------------- 
                                                     2013          2012     
                                                 ------------  ------------ 
                                                                            
Net Income                                       $      5,406  $      4,523 
  Income tax expense                                    3,193         2,900 
  Interest expense                                        221           224 
  Interest income                                          (5)           (5)
  Foreign currency (gain)/loss                            938        (1,091)
  Other income                                            (97)          (80)
  Depreciation and amortization of plant and                                
   equipment                                            3,439         3,223 
  Amortization of intangibles                             367           350 
  Stock-based compensation                                146           203 
  Accretion and non-cash adjustments of closure                             
   & post-closure liabilities                             307           335 
                                                 ------------  ------------ 
Adjusted EBITDA                                  $     13,915  $     10,582 
                                                 ============  ============ 

 
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 CAD
requiring us to revalue the outstanding loan balance through our
consolidated income statement based on the CAD/USD 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. Business development
costs in 2012 include the acquisition of Dynecol, Inc. which closed
on May 31, 2012 and other business development and strategic planning
activities. 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, 2013 and 2012: 


 
                                                                            
(in thousands, except per share                                             
 data)                                  Three Months Ended March 31,        
                                 ------------------------------------------ 
                                          2013                 2012         
                                 --------------------- -------------------- 
                                                                            
                                             per share            per share 
Net income / earnings per                                                   
 diluted share                   $    5,406 $     0.29 $   4,523  $    0.25 
                                                                            
Business development costs, net                                             
 of tax                          $        - $        -        41  $       - 
Non-cash foreign currency                                                   
 (gain)/loss, net of tax         $      595 $     0.03      (702) $   (0.04)
                                 ---------- ---------- ---------  --------- 
                                                                            
Adjusted net income / adjusted                                              
 earnings per diluted share      $    6,001 $     0.32 $   3,862  $    0.21 
                                 ========== ========== =========  ========= 
                                                                            
                                                                            
Shares used in earnings per                                                 
 diluted share calculation           18,407               18,254            
                                 ==========            =========            

  
Contact: 
Alison Ziegler
Cameron Associates 
(212) 554-5469
alison@cameronassoc.com 
www.usecology.com 
 
 
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