US Ecology, Inc.
) reported adjusted earnings per share (EPS) of 44 cents
(excluding special items) in third quarter 2012, up 33% year over
year and way ahead of the Zacks Consensus Estimate of 28
Including non-cash gains on foreign currency translation and
business development costs, EPS in the reported quarter came in
at 47 cents. Including non-cash foreign currency translation loss
and business development costs, EPS in the prior-year quarter
stood at 20 cents.
Quarter in Detail
Revenues increased 15% to $45.7 million in the quarter and
outpaced the Zacks Consensus Estimate of $40 million.
Treatment and disposal revenue improved 12%. The
acquisition of US Ecology Michigan contributed $2.9 million of
total revenue in the quarter. Excluding the acquisition,
Treatment and disposal revenue reflected a 22% spike in Base
Business (recurring waste streams) revenue, offset by a 9% year
over year decline in Event business (discrete projects).
Transportation revenue surged 40%.
Total volume disposed or processed during the quarter at US
Ecology's Idaho, Michigan, Nevada, Texas and Quebec waste
facilities was 266,000 tons, down 7% from the year-ago quarter.
The decline mainly reflects shipments from the GE Hudson River
clean-up project in the third quarter last year. Excluding the
2011 Hudson River project waste volume and the contribution from
US Ecology Michigan, volumes increased 17% in the quarter from
the year-ago quarter. Average selling price increased 21% for the
Direct operating costs increased 6% to $19.9 million while
transportation costs upped 31% to $7.2 million in the quarter.
Gross profit improved 21% to $18.6 million with gross margin at
41% compared with $15.3 million and 39%, respectively, in the
prior-year quarter. Treatment and disposal gross margin
improved to 48% from 46% a year ago due to favorable service
Selling, general and administrative expenses increased 8% year
over year to $6.2 million due to higher business development
costs, payroll related costs including variable incentive
compensation and other general administrative costs associated
with higher levels of business activity.
The company's operating profit improved 29% year over year to
a record $12.4 million. Operating margin expanded 290 basis
points to 27.1% from 24.2% in the year-ago quarter. Adjusted
EBITDA (earnings before Interest, tax, depreciation and
amortization) was also a record $16.7 million, up 19% from the
Cash and cash equivalents were $5.5 million as of September
30, 2012, down from $5.9 million as of June 30, 2012. During the
first nine months of fiscal 2012, cash flow from operations
decreased to $24.8 million from $32 million in the comparable
Total borrowings on line of credit were $49.5 million as of
September 30, 2012 compared with $50 million as of June 30, 2012.
As of September 30, 2012, $24.8 million remain available for
US Ecology expects 2012 EPS between $1.30 and $1.35, up from
the previous expectation of $1.05 to $1.15, reflecting upbeat
third quarter results and expectations of a stronger fourth
quarter. Adjusted EBITDA is now expected to lie between $55 and
$57 million, up from $48 and $52 million.
US Ecology posted a strong third quarter with record treatment
and disposal revenue, operating income and adjusted EBITDA thanks
to continued growth in its Base Business. We expect the
momentum in the Base Business to continue in the fourth quarter
as well. In addition, a healthy pipeline in the Event Business
point toward a strong fourth quarter. Furthermore, with several
higher margin niche projects under contract and slated for 2013
in the Events Business, the year 2013 also holds significant
Boise, Idaho-based US Ecology through its subsidiaries,
provides radioactive, hazardous, and non-hazardous industrial
waste management and recycling services to commercial and
government entities, which include refineries and chemical
production facilities, manufacturers, electric utilities, steel
mills, medical and academic institutions and waste brokers. US
Ecology currently maintains a Zacks #1 Rank (Strong Buy) for the
It competes with
Clean Harbors, Inc.
Waste Management Inc
). Waste Management reported adjusted EPS of 61 cents in the
third quarter of 2012, down 3% from the year-ago quarter but a
penny ahead of the Zacks Consensus Estimate. The year-over-year
fall was due to a decline in recycling commodity prices in the
quarter. Clean Harbors is yet to announce its third quarter
results. The Zacks Consensus Estimate for the company currently
stands at 55 cents, projecting a 21% year over year decline.
CLEAN HARBORS (CLH): Free Stock Analysis
US ECOLOGY INC (ECOL): Free Stock Analysis
WASTE MGMT-NEW (WM): Free Stock Analysis
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