American Ecology Corporation (ECOL)
Q4 2008 Earnings Call
February 11, 2009 11:00 AM ET
Jeff Feller - Vice President and Chief Financial Officer
Stephen Romano - Chairman and Chief Executive Officer
Richard Wesolowski - Sidoti & Co
Theodore Kundtz - Needham
Jamie Sullivan - RBC Capital Markets
Steve Welling - Vice President of Sales and Marketing
David Yuschak - Sanders Morris Harris Capital
Tyson Bauer - Wealth Monitors
Al Kaschalk - Wedbush, Morgan Securities, Inc.
Pat McLauchlin - UBS
» American Ecology Corporation Q2 2008 Earnings Call Transcript
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Good morning. Joining me today is Chairman and Chief Executive Officer, Steve Romano; President and Chief Operating Officer, Jim Baumgardner; and Vice President of Sales and Marketing, Steve Welling.
Before we begin, please note that certain statements contained in this conference call that do not describe historical facts are forward-looking statements as defined by the Private Securities Litigation Reform Act of 1995.
Since forward-looking statements include risks and uncertainties actual results may differ materially from those expressed or implied by such statements. Factors that could cause results to differ materially from those expressed include, but are not limited to those discussed in the Company's filings with the Securities and Exchange Commission.
Management cannot control or predict many factors that determine future results. Listeners should not place undue reliance on forward-looking statements which reflect management's views only on such date the statements are made. We undertake no obligation to revise or update any forward-looking statements or make other forward-looking statements whether as a result of new information, future events, or otherwise.
For those joining by webcast, you can follow along with today's presentation. For those listening by phone, you can obtain a copy of today's presentation on our website at www.americanecology.com.
I will begin with an overview of our quarterly and year-end financial results, which were publicly released earlier this morning. After my remarks, Steve will discuss the company's 2009 earnings guidance and capital spending outlook. We will then open the call up for questions and comments.
Overall the fourth quarter of 2008 was more profitable than the same quarter last year despite challenging macro economic conditions. We also posted our fourth consecutive year of record revenue, operating income, and waste volumes disclosed.
I will now turn to specifics. Earlier this morning we reported fourth quarter revenue of $44 million down from $44.5 million in the fourth quarter last year. This decrease reflects lower transportation revenue under our bundled transportation and disposal contract for the Chevron Molycorp project.
Decreased transportation revenue was partially offset by increased treatment and disposal revenue in the fourth quarter of 2008 over the same quarter last year. Base business from recurring customers grew 1% in the fourth quarter of 2008 over the same quarter last year. This reflects continued growth in our waste broker business and strong contributions from other industrial, government, and refinery based business customers.
Growth in these customer categories was partially offset by lower revenue from steel mills and rate regulating customers. Our event business cleanup grew 5% quarter-over-quarter. This increase reflects a continue ramp up of our thermal desorption recycling service in Texas. These events projects are sourced directly from refinery customers and indirectly from third party waste brokers.
Revenue from our thermal desorption recycling service more than offset declines in our private clean-up business. Private cleanup business was down 19% in the fourth quarter compared to the same quarter last year. This reflects reduced shipments from the Molycorp project, which was initially scheduled to be completed this past summer and fewer small cleanup opportunities.
Average selling price for treatment and disposal services excluding transportation was 25% higher than the same quarter last year due to increased thermal processing and service mix variabilities.
I will now break down treatment and disposal revenue for both base and event business by customer categories. For those following the presentation please refer to slide 9. Our refinery business grew an impressive 156% in the fourth quarter of 2008 over the same quarter last year. This growth reflects ramp up of our Texas thermal desorption service, which recycled approximately 4100 tons of refinery waste during the quarter. We also benefited from a refinery soil cleanup project shift to our Idaho facility from Montana.
Our waste broker business continued to grow impressively during the quarter up 27% over the fourth quarter last year. This growth was also primarily driven by the Texas thermal desorption service. Excluding thermal revenue our broker based business grew 3.9% in fourth quarter of 2008 over the same quarter last year. On a sequential basis however, our non-thermal broker business was 2% lower in the fourth quarter of 2008 compared to the third quarter.
Our other industry category includes electric utilities, chemical manufactures, and industrial customers. Treatment and disposal revenue from this category grew 5% in the fourth quarter of 2008 over the same quarter last year, on increased waste shipments from a number of waste business customers.
Our government cleanup business was up 2% for the fourth quarter of 2008, from the fourth quarter last year. Increased shipments under our Army Corps of Engineers contract, accounted for this growth. More specifically Army Corps revenue was $2.4 million, or 5.4% of total revenue in the fourth quarter of 2008 up from $2.1 million or 4.6% of total revenue in the same quarter last year.