US Ecology announces Q3 results, reinstates full year guidance

US Ecology Inc., Boise, Idaho, a solid waste collection and management services provider, has reported its financial results for the third quarter of 2020.

Highlights for the quarter included:

• Revenue of $238.1 million, up 42 percent (which includes a $80.9 million contribution from NRC Group Holdings Corp. following its merger with US Ecology on Nov. 1)
• Legacy US Ecology revenue declined 6 percent
• Base Business revenue decline of 15 percent; Event Business revenue growth of 8 percent, excluding NRC
• Field and Industrial Services revenue growth of 10 percent, excluding NRC
• Net income of $6.3 million, or $0.20 per diluted share
• Adjusted earnings per diluted share of $0.25
• Adjusted EBITDA of $45.4 million increased 10 percent and includes a $9.7 million contribution from NRC
• Strong quarterly adjusted free cash flow generation, up 8 percent to $16.8 million

“Despite headwinds related to the COVID-19 pandemic, the resilience of our overall business compounded by the capital preservation initiatives implemented earlier this year allowed us to generate strong year-over-year free cash flow growth, strengthening our balance sheet during these unprecedented times,” said US Ecology Chairman and CEO Jeff Feeler.

Q3 results

Revenue for the Environmental Services (ES) segment was $112.4 million for the third quarter of 2020, down 8 percent from $122.2 million in the third quarter of 2019. NRC contributed $5.1 million to ES segment revenue in the third quarter of 2020. Excluding the NRC contribution, ES segment revenue decreased 12 percent, which US Ecology attributes to a 10 percent decline in Treatment and Disposal (T&D) revenue and a 24 percent decline in transportation revenue compared to the third quarter of 2019.

Meanwhile, revenue for the Field and Industrial Services (FIS) segment was $125.7 million for the third quarter of 2020, compared to $45.2 million in the third quarter of 2019. FIS segment revenue benefitted from a $75.8 million contribution from NRC in the third quarter of 2020. Excluding NRC, FIS segment revenue increased 10 percent in the third quarter of 2020 compared to the third quarter of 2019.

“NRC’s domestic environmental services business saw strong growth both sequentially compared with the second quarter of 2020 and compared to the third quarter last year on increased COVID-19 decontamination, emergency response services and synergies which helped partially offset the challenges we continue to face in the energy exposed end markets,” said Feeler. “ I am very proud of the entire US Ecology team as we work together across regions and service lines to move ahead with the integration process and position the business to perform in the face of these difficult times.”

Cash earnings per diluted share was $0.46 for the third quarter of 2020 compared to $0.84 for the third quarter of 2019.

2020 business outlook

Despite ongoing uncertainty and COVID-19 impacted business headwinds, US Ecology says it plans to re-establish guidance for the full year of 2020 after withdrawing guidance back on March 31.

The company’s current outlook is predicated on continued business recovery and assumes that there are no additional major COVID-19 shutdowns similar to what was experienced in the second quarter of 2020 and no economic unrest stemming from the U.S. elections.

Based on current conditions, US Ecology expects that 2020 full-year revenue will range from $911 million to $931 million. Additionally, adjusted earnings per share for the full year is expected to range between $0.36 per share to $0.50 per share and adjusted EBITDA for the full year is estimated to range between $168 million to $175 million.

“Business conditions have improved from the second quarter led by our service-based business which we believe are the first indications of an industrial recovery. This is further supported by strong industrial production metrics being reported throughout the third quarter of 2020 and continuing in the fourth quarter which we expect will translate into increased Base Business volumes as production waste moves for disposal,” said Feeler. “Our Event Business pipeline and shipment schedules continue to be strong, despite experiencing several projects shift from 2020 into 2021 as we enter the final quarter of the year. Collectively, we believe we are back on the path to recovery, setting us up for a better 2021.”