Attached files
| file | filename |
|---|---|
| 8-K - CURRENT REPORT ON FORM 8-K - US ECOLOGY, INC. | aec_8k-011210.htm |
1
Investor
Presentation
January
2010
2
Jim
Baumgardner
President
and Chief Executive Officer
Steve
Welling
Senior
Vice President of Sales and Marketing
Jeff
Feeler
Vice
President and Chief Financial Officer
3
Safe
Harbor
During
the course of this presentation I will be making forward-looking statements (as
such term
is defined in the Private Securities Litigation Reform Act of 1995) that are based on management’s
current expectations, beliefs and assumptions about the industry and markets in which we and our
subsidiaries operate. Because such statements include risks and uncertainties, actual results may
differ materially from what is expressed and no assurance can be given that the Company will
meet its 2009 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 our December 31, 2008 Annual Report on Form 10-K and other
reports filed with the Securities and Exchange Commission. Many of the factors that will
determine our future results are beyond our ability to control or predict. Participants should not
place undue reliance on forward-looking statements, which reflect our views only as of today. We
undertake 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.
is defined in the Private Securities Litigation Reform Act of 1995) that are based on management’s
current expectations, beliefs and assumptions about the industry and markets in which we and our
subsidiaries operate. Because such statements include risks and uncertainties, actual results may
differ materially from what is expressed and no assurance can be given that the Company will
meet its 2009 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 our December 31, 2008 Annual Report on Form 10-K and other
reports filed with the Securities and Exchange Commission. Many of the factors that will
determine our future results are beyond our ability to control or predict. Participants should not
place undue reliance on forward-looking statements, which reflect our views only as of today. We
undertake 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, compliance with and changes to applicable laws and regulations, access to cost effective
transportation services, access to insurance and other financial assurances, loss of key personnel,
lawsuits, adverse economic conditions, government funding or competitive pressures, incidents
that could limit or suspend specific operations, implementation of new technologies, our ability to
perform under required contracts, our willingness or ability to pay dividends and our ability to
integrate any potential acquisitions.
materially from those set forth in the forward-looking information include a loss of a major
customer, compliance with and changes to applicable laws and regulations, access to cost effective
transportation services, access to insurance and other financial assurances, loss of key personnel,
lawsuits, adverse economic conditions, government funding or competitive pressures, incidents
that could limit or suspend specific operations, implementation of new technologies, our ability to
perform under required contracts, our willingness or ability to pay dividends and our ability to
integrate any potential acquisitions.
4
Business
Overview
Ø Operate
4 Hazardous & Radioactive Waste Disposal Facilities
Ø Headquartered
in Boise, Idaho (Nasdaq: ECOL)
- 221
Employees
- 9 Month
Revenue $109 million
Ø Services
to U.S. industry & government
- “Base”
Business: recurring waste streams
- “Event”
Business: Discrete clean-ups
Ø Transportation
logistics including 234 company owned railcars
Ø In
business since 1952
5
American
Ecology Mission
Provide
safe, secure & cost-effective hazardous and
radioactive materials management solutions to industry
& government while creating sustainable shareholder
value.
radioactive materials management solutions to industry
& government while creating sustainable shareholder
value.
6
American
Ecology Vision
Ø Cement
our position as the premier hazardous & radioactive
materials services provider in the diverse markets we serve
materials services provider in the diverse markets we serve
-
Be
the best at what we do!
Ø Build on
our strong relationships with customers & regulators
by providing cost-effective, technically superior environmental
management solutions.
by providing cost-effective, technically superior environmental
management solutions.
Ø Empower
and align employees to actively participate in our
success.
success.
Ø Generate
sustainable increases in earnings per share and cash
flow at rate faster than growth of the markets we operate in.
flow at rate faster than growth of the markets we operate in.
7
Investment
Highlights
Ø Unique
set of radioactive & hazardous services and assets
Ø Seasoned,
committed Executive management team
Ø Strong
cash flow business
- Investment
in infrastructure fueling organic growth
Ø Significant
operating leverage once fixed costs covered
Ø Strong
balance sheet with no
debt
Ø Industry-leading
return on invested capital: 15.2% ttm
8
Market
Cap: $ 312
million*
Recent
Price: $17.21*
52 Wk.
Range: $13.56
- $21.21
Shares
Out./Float: 18.2 /
15.5 million
Dividend/Yield: $0.72 /
4.2%
SG&A
% of Revenue 9.3%
**
Cash
Position: $20.1
million**
Term
Debt: -0-
Avail.
line of credit: $11
million
Solid
Financials
*at
1-5-2010 **at
9-30-2009
9
Ø Historically
~3.5M tons/year - Down in 2009 due to economy
— Base
Business: Recurring business from industrial base
• Lower
manufacturing output in 2009 producing lower
waste volumes - Must take market share to grow
waste volumes - Must take market share to grow
— Event
Business: Discrete ‘Clean-ups’
• Private/discretionary
clean-ups continue to be deferred &
delayed - Uncertain when normal conditions will return
delayed - Uncertain when normal conditions will return
• Government
clean-ups moving forward but slower than
anticipated
anticipated
U.S.
Disposal Market Overview
10
3
Commercial Nuclear Waste Sites in US
21
Hazardous Waste Sites in US & Canada
« 5
sites: Waste Management
« 7
sites: Clean Harbors
« 6
sites: Others
11
Changes
Expected to Benefit
Our Industry Long-term
Our Industry Long-term
Ø American
Recovery & Reinvestment Act of 2009 (“Stimulus”):
—
$100
million extra to Army Corps FUSRAP Program
—
$800
million extra to EPA Superfund & underground storage
tank programs
—
Main
benefit expected in 2010 & 2011 - timing and impact
difficult to predict
difficult to predict
Ø Proposals
to reinstate lapsed Superfund excise tax on industry
Ø FY 2010
EPA budget largest in agency’s history
—
Heightened
enforcement should drive more mandated clean-ups
• Timing
& impact difficult to predict
Ø Private
Sector Redevelopment of Brownfields
12
Growth
Strategy Overview
Ø Strong
safety culture & regulatory compliance
Ø Expand
waste handling infrastructure including rail
Ø Modify
facility permits to support entry into new markets, develop
new services & attract new customers
new services & attract new customers
Ø Maximize
operating leverage inherent to business
Ø Aggressively
manage cost structure
and
Ø Execute
acquisitions consistent with Vision, Mission, and Core
Competencies
Competencies
13
Disciplined
Dual Growth Strategy
14
Acquisition
Approach
Ø Deals
must be consistent with our Vision, Mission, Core
Competencies & Strategy
Competencies & Strategy
— Think
broadly, but act in a focused way
— Will the
deal help us solve customer hazardous/radioactive
waste problem or issue?
waste problem or issue?
Ø Be
disciplined. No deal is much better than a bad deal.
Ø Don’t
overpay — Can never be
‘fixed’
Ø Don’t
underestimate execution complexity. The hard part starts
after the purchase.
after the purchase.
15
Ø Remote
desert site fed by rail specializes in
high volumes
high volumes
- 5+ years
of permitted capacity, but
more unpermitted space for growth
more unpermitted space for growth
Ø “Hybrid”
site for low-activity radioactive
and hazardous waste
and hazardous waste
Ø Long-term
business from U.S. Army Corps
of Engineers through ~ 2021
of Engineers through ~ 2021
Premier
U.S. Hazardous Waste Site
Grand
View, Idaho
16
Ø Adding
New Infrastructure and Disposal
Space for Growth in 2010:
Space for Growth in 2010:
— Adding
expanded treatment and
drum
handling capacity
handling capacity
— Constructing
additional landfill cell
— 10+
years of permitted capacity
Robstown,
Texas
Serving
the Gulf Coast Oil & Gas Market
17
Texas
Thermal Recycling
Ø Recycles
refinery tank bottoms,
cracking catalyst & other oil
bearing wastes
cracking catalyst & other oil
bearing wastes
—
Industrial
reuse of catalyst
—
Used Oil
resold into market
Ø Key
advantage: Internalize cost
of by-product waste (ash &
liquids)
of by-product waste (ash &
liquids)
Ø Building
market share despite
increased competition in 2009
increased competition in 2009
— Very
Price Competitive
18
Ø New
disposal area built in 2008
- 10+
years of capacity
Ø New,
state-of-the-art treatment
building with high capacity drum
handling capability
building with high capacity drum
handling capability
Ø Superb
natural conditions for disposal
Beatty,
Nevada
Great
Desert Location Serving California Markets
19
ØRegulated
monopoly for low-level
radioactive waste in 8 western states
radioactive waste in 8 western states
ØNaturally
occurring radioactive material
at free market pricing
at free market pricing
Steady,
Rate-Regulated Earnings
Richland,
Washington
20
20
2010
Outlook
Ø We
believe general economic weakness will persist in 2010 with
slow improvement over the course of the year
slow improvement over the course of the year
— Regional
& industry pockets will improve before wide-spread recovery
Ø Continued
pressure on pricing, especially on thermal services
Ø Forecast
‘Event’ clean-up projects will be slow to return
Ø Expect
‘Base’ business to improve slightly through the year as
industrial production increases
industrial production increases
Ø Anticipate
Army Corps business to rebound due to specific
project needs and stimulus spending
project needs and stimulus spending
Ø Given
economic outlook, treatment and disposal revenue from
Honeywell will be hard to fully replace despite non-Honeywell
growth
Honeywell will be hard to fully replace despite non-Honeywell
growth
Focus
on Growth in a Sustainable Way!