US Ecology, Inc. Q4 2012 Earnings Conference Call February 14, 2013 - PowerPoint PPT Presentation

US Ecology, Inc. Q4 2012 Earnings Conference Call February 14, 2013

Today’s Hosts  Jeff Feeler Acting President & Chief Operating Officer  Steve Welling Senior Vice President of Sales and Marketing  Simon Bell Vice President of Operations  Eric Gerratt Vice President & Acting Chief Financial Officer 2

Safe Harbor During the course of this presentation the Company will be making 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. 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 meet its 2013 earnings estimates, successfully execute its growth strategy, 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, 2011 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. Participants should not place undue reliance on forward-looking statements, which reflect management’s views only as of the date hereof. 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. 3

Agenda  Highlights  Financial Results  Q4 2012  Full year 2012  Financial Position, Cash Flow & Return Metrics  2013 Earnings & Capital Expenditure Outlook  Questions & Comments 4

Highlights  Q4’ 2012 Results  Quarterly growth — top line to bottom line: Revenue up 21% over Q4 ’11 – Operating income of $10.8 million, up 4% over Q4 ’11 – Adjusted earnings per share of $0.36, up 6% over Q4’11 – Adjusted EBITDA of $15.6 million, up 2% over Q4’11 –  Quarterly growth was on top of a record quarter last year More than replaced revenue and earnings in Q4 ‘11 from GE Hudson River –  Strong performance across Idaho, Nevada, Texas and Stablex facilities  2012 Results  Record Treatment and Disposal Revenue (“T&D”) of $145.7 million  Record Operating income of $40.6 million, up 26% over 2011  Record Adjusted EBITDA of $58.4 million, up 17% over 2011  Record Net income of 25.7 million, up 40% over 2011  Adjusted earnings per share up 31% to $1.39 See reconciliation of Adjusted EBITDA and Adjusted earnings per share attached as Exhibit A to our press release filed with the SEC on 5 Form 8-K

Financial Results: Q4 2012  Total Revenue: $50.4 million vs. $41.6 million Q4 ‘11  T&D revenue growth = +18%  Transportation service revenue increase = +39%  US Ecology Michigan (formerly Dynecol) contributed $2.7 million in total revenue  Volumes: (tons) 2011 2012 Change Q1 199,000 215,000 +16,000 (+8%) Q2 215,000 261,000 +46,000 (+21%) Q3 287,000 266,000 -21,000 (-7%) Q4* 398,000 291,000 -107,000 (-27%) * Q4 volume excluding GE Hudson River and US Ecology Michigan was up 32%  Average selling price (“ASP”) up 61%  Quarterly volume decline and ASP improvement primarily due to GE Hudson River cleanup in 2011 6

Financial Results: Q4 2012 (cont.)  T&D Revenue Trends (excluding US Ecology Michigan + )  Base business up 14% vs. Q4 ’11  Event business up 9% vs. Q4 ‘11 $s in millions* Percentages* $40.0 80% 60% $30.0 40% $20.0 20% $10.0 0% + + + Q3 Q4 Q1 Q2 Q3 Q4 $- + + + '11 '11 '12 '12 '12 '12 Q3 Q4 Q1 Q2 Q3 Q4 '11 '11 '12 '12 '12 '12 Base Event Base Event * Excludes transportation services + Excludes US Ecology Michigan which was acquired on May 31,2012 7

Disposal Revenue Analysis* % of Q4'12 T&D Revenue % Change 8% Q4 '12 vs. Q4 '11 4% 13% Government Cleanup 173% 17% Broker 14% 11% Other Industry 13% Refinery 4% 47% Rate Regulated 3% Government Cleanup Rate Regulated Private Cleanup -42% Refinery Broker Other Industry Private Cleanup *Excludes transportation services & US Ecology Michigan acquired 5/31/12 8

Financial Results: Q4 2012 (cont.)  Gross Profit  $18.3 million, up 14% from $16.0 million in Q4 ‘11  Gross margin: 36.3% of total revenue, down from 38.6% in Q4 ‘11  T&D gross margin: 44.2% of T&D revenue, down 45.8 % in Q4 ‘11  SG&A  $7.5 million (14.8% of total revenue) – Up from $5.6 million (13.5% of total revenue) in Q4 ‘11  Operating Income  $10.8 million, up 4% from $10.4 million in Q4 ‘11  Adjusted EBITDA  $15.6 million, up 2% from $15.3 million in Q4 ‘11  Net income $6.1 million, $0.33 per share  Foreign exchange (Fx) translation non-cash loss of $0.02 per share on weaker CAD$  Adjusted EPS of $0.36 excluding Fx translation loss & business development costs See reconciliation of Adjusted EBITDA and Adjusted earnings per share attached as Exhibit A to our press release filed with the SEC on 9 Form 8-K

Financial Results: Q4 2012 vs. Q4 2011 % Q4 2012 Q4 2011 $ Change Change amounts in thousands except per share data Revenue $ 50,406 $ 41,567 $ 8,839 21.3% Gross profit 18,306 16,031 2,275 14.2% SG&A 7,492 5,628 1,864 33.1% Operating income 10,814 10,403 411 4.0% Interest expense, net (215) (322) 107 -33.2% Foreign currency (loss) gain (562) 872 (1,434) -164.4% Other 56 96 (40) -41.7% Pretax income 10,093 11,049 (956) -8.7% Income tax expense 3,981 4,350 (369) -8.5% Net income $ 6,112 $ 6,699 $ (587) -8.8% Diluted EPS $ 0.33 $ 0.37 $ (0.04) -10.8% Diluted shares outstanding 18,332 18,237 Adjusted EBITDA Reconciliation Net Income $ 6,112 $ 6,699 Income tax expense 3,981 4,350 Interest expense, net 215 322 Foreign currency loss (gain) 562 (872) Other income (56) (96) Depreciation and amortization 3,695 4,022 Amortization of intangibles 373 343 Stock-based compensation 282 215 Accretion of closure & post-closure liabilities 464 325 Adjusted EBITDA $ 15,628 $ 15,308 $ 320 2.1% 10

Financial Results: 2012  Total Revenue: $ 169.1 million vs. $154.9 million in 2011  T&D revenue growth = +13%  Transportation service revenue decline = -9%  US Ecology Michigan contributed $6.7 million in total revenue  T&D Revenue Trends (excluding US Ecology Michigan)  Base business up 17% from 2011  Event business down 2% from 2011  Volumes: (tons) 2011 2012 Change YTD 1,099,000 1,032,000 -67,000 (-6%) *YTD volume excluding GE Hudson River and US Ecology Michigan was up 13%  ASP up 21% in 2012 on favorable service mix & without GE Hudson River project 11

Disposal Revenue Analysis* % of 2012 T&D Revenue % Change 6% 12% 2012 vs.2011 4% Government Cleanup 59% 18% 9% Other Industry 28% Broker 13% Rate Regulated 0% 51% Refinery -5% Government Cleanup Rate Regulated Refinery Private Cleanup -46% Broker Other Industry Private Cleanup 12 *Excludes transportation services & US Ecology Michigan acquired 5/31/12

Financial Results: 2012 (cont.)  Gross Profit  $66.3 million, up 23% from $53.9 million in 2011  Gross margin: 39.2% of total revenue compared with 34.8% in 2011  T&D gross margin: 45.7% of T&D revenue compared with 42.9% in 2011  SG&A  $25.7 million (15.2% of total revenue) – Up from $21.5 million (13.9% of total revenue) in 2011  Record Operating Income  $40.6 million, up 26% from $32.4 million in 2011  Record Adjusted EBITDA  $58.4 million, up 17% from $49.8 million  Record Net Income $25.7 million, $1.40 per diluted share  2011 net income was $18.4 million, $1.01 per diluted share  Adjusted EPS $1.39, up 31% from $1.06 in 2011 See reconciliation of Adjusted EBITDA and Adjusted earnings per share attached as Exhibit A to our press release filed with the SEC on 13 Form 8-K