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 Todays Hosts Jeff Feeler Acting President & Chief Operating Officer Steve Welling Senior Vice President of Sales and Marketing Simon Bell Vice President of
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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,
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
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
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,
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.
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Q4 2012 Full year 2012 Financial Position, Cash Flow & Return Metrics
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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
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See reconciliation of Adjusted EBITDA and Adjusted earnings per share attached as Exhibit A to our press release filed with the SEC on Form 8-K
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: Average selling price (“ASP”) up 61% Quarterly volume decline and ASP improvement primarily due to
*Q4 volume excluding GE Hudson River and US Ecology Michigan was up 32% 6
T&D Revenue Trends (excluding US Ecology Michigan+)
Base business up 14% vs. Q4 ’11 Event business up 9% vs. Q4 ‘11
* Excludes transportation services + Excludes US Ecology Michigan which was acquired on May 31,2012
+ + + + 7 + +
Government Cleanup Rate Regulated Refinery Broker Other Industry Private Cleanup
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*Excludes transportation services & US Ecology Michigan acquired 5/31/12
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
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See reconciliation of Adjusted EBITDA and Adjusted earnings per share attached as Exhibit A to our press release filed with the SEC on Form 8-K
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amounts in thousands except per share data
Q4 2012 Q4 2011 $ Change % Change 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
Foreign currency (loss) gain (562) 872 (1,434)
Other 56 96 (40)
Pretax income 10,093 11,049 (956)
Income tax expense 3,981 4,350 (369)
Net income $ 6,112 $ 6,699 $ (587)
Diluted EPS $ 0.33 $ 0.37 $ (0.04)
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%
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: ASP up 21% in 2012 on favorable service mix & without GE
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*YTD volume excluding GE Hudson River and US Ecology Michigan was up 13%
Government Cleanup Rate Regulated Refinery Broker Other Industry Private Cleanup
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*Excludes transportation services & US Ecology Michigan acquired 5/31/12
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
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See reconciliation of Adjusted EBITDA and Adjusted earnings per share attached as Exhibit A to our press release filed with the SEC on Form 8-K
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amounts in thousands except per share data
2012 2011 $ Change % Change Revenue $ 169,138 $ 154,917 $ 14,221 9.2% Gross profit 66,297 53,867 12,430 23.1% SG&A 25,659 21,502 4,157 19.3% Operating income 40,638 32,365 8,273 25.6% Interest expense, net (861) (1,578) 717
Foreign currency gain (loss) 1,213 (1,321) 2,534
Other 728 341 387 113.5% Pretax income 41,718 29,807 11,911 40.0% Income tax expense 16,059 11,437 4,622 40.4% Net income $ 25,659 $ 18,370 $ 7,289 39.7% Diluted EPS $ 1.40 $ 1.01 $ 0.39 38.6% Diluted Shares Outstanding 18,281 18,223 Adjusted EBITDA Reconciliation Net Income 25,659 $ 18,370 $ Income tax expense 16,059 11,437 Interest expense, net 861 1,578 Foreign currency (gain) loss (1,213) 1,321 Other income (728) (341) Depreciation and amortization 13,916 13,933 Amortization of Intangibles 1,469 1,419 Stock-Based Compensation 846 837 Accretion of Closure & Post Closure Liabilities 1,483 1,295 Adjusted EBITDA 58,352 $ 49,849 $ 8,503 $ 17.1%
$2.1 million in cash $45.0 million of debt ($42.9 million of net debt) $26.5 million available lines of credit YTD Cash Flow Stats:
$35.2 million cash flow from operations $4.5 million debt borrowings (US Ecology Michigan acquisition) $16.4 million dividend payments $15.8 million capital investments
Trailing Twelve Month Return Metrics:
Return on Capital = 14.6% Return on Assets = 12.2% Return on Equity = 24.2%
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Earnings per share estimated at $1.45-$1.551
Up to 12% growth
Adjusted EBITDA estimated to range from $62-65 million
Business Climate:
Favorable 2012 business trends continue Base business growth, mid-single to low double digits Event business sales pipeline remains strong 2013 T&D gross margin projected at 43%-45% Tax rate estimated at 38% for full year
Capital Expenditures estimated at $22-$23 million
Includes $3.4 million carryover not spent in 2012 Nevada landfill construction moved up from 2014 due to strong business conditions New landfill space construction in Texas and Quebec also Purchased land in Texas to support long-term expansion Continuing to invest in infrastructure and equipment upgrades to support growth
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1Guidance excludes non-cash foreign currency translation gains or losses
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