February
February 06, 2003 | February 13, 2003 | February 18, 2003
February 06, 2003
Contact: Chad Hyslop 208.331.8400
chyslop@americanecology.com
AMERICAN ECOLOGY ANNOUNCES FOURTH QUARTER 2002 INVESTOR CONFERENCE CALL
Interested Parties Invited to Call in on Thursday, February 20, 2003 at 10:00 am Mountain Time
BOISE, Idaho –American Ecology Corporation [NASDAQ: ECOL], today announced that the Company’s fourth quarter and 2002 year-end investor conference call will be held Thursday, February 20, 2003 at 10:00 am Mountain Time. The conference call will follow the Company’s earnings release on Tuesday, February 18, 2003.
Chief Executive Officer Stephen Romano, Chief Financial Officer James Baumgardner, and Corporate Controller Michael Gilberg will present fourth quarter and year end financial results, discuss operations, and respond to questions. Interested parties may submit questions in advance to info@americanecology.com, or by facsimile to 208.331.7900. Questions will also be invited after the presentations. To join the call, dial 877.679.9055. Participants will be asked to provide their name and affiliation.
American Ecology Corporation, through its subsidiaries, provides radioactive, PCB, hazardous, and non-hazardous waste services to commercial and government customers throughout the United States, such as nuclear power plants, steel mills, medical and academic institutions and petro-chemical facilities. Headquartered in Boise, Idaho, the Company is the oldest radioactive and hazardous waste services company in the United States.
February 13, 2003
Contact: Chad Hyslop 208.331.8400
chyslop@americanecology.com
AMERICAN ECOLOGY SELLS TEXAS MUNICIPAL WASTE LANDFILL TO ALLIED WASTE FOR $10 MILLION, FUTURE ROYALTIES
Company Retains Ownership of Texas Ecologists Hazardous Waste Disposal Site
BOISE, Idaho – Stephen Romano, President and Chief Executive Officer of American Ecology Corporation [NASDAQ: ECOL], today announced the sale of the Company’s El Centro municipal and industrial waste landfill located near Corpus Christi, Texas to a subsidiary of Allied Waste Industries, Inc. (“Allied”) for $10 million cash at closing and future volume-based royalty payments. “Monetizing this non-core asset provides capital for continued expansion of our core hazardous, industrial and radioactive waste disposal business opportunity to improve our capital structure,” Romano stated.
"Allied is well positioned to grow El Centro revenue and earnings through integration with its substantial existing municipal waste collection operation, so this is a good deal for both companies," Romano added.
Under the Agreement, the purchase agreement also provides incentives for Allied to bring certain industrial waste to the Texas Ecologists hazardous waste facility, and for the Company to utilize the El Centro landfill.
Opened in July 2002, the El Centro solid waste landfill was carried on the Company’s books at approximately $7 million prior to sale. When combined with a reduction in liabilities and recognition of certain future minimum royalties, the sale should result in a pre-tax gain on sale of approximately $5 million to be recognized during the first quarter of 2003.
"While we are no longer in the municipal waste business, the Company will remain an active member of the local community through our Texas Ecologists hazardous waste facility,” Romano noted, concluding “We look forward to focusing future efforts on growth of our core business."
Conference Call
The fourth quarter and 2002 full year investor conference call will be held Thursday, February 20, 2002 at 10:00 am Mountain Time. Interested parties may submit questions in advance to info@americanecology.com , or by facsimile at 208.331.7900. To join the call, dial 1.877.679.9055. Participants will be asked to provide their name and affiliation prior to joining the call.
American Ecology Corporation, through its subsidiaries, provides radioactive, PCB, hazardous and non-hazardous waste services to commercial and government customers throughout the United States, such as nuclear power plants, steel mills, medical and academic institutions and petro-chemical facilities. Headquartered in Boise, Idaho, American Ecology is the oldest radioactive and hazardous waste services Company in the United States.
This press release contains forward-looking statements that are based on our current expectations, beliefs, and assumptions about the industry and markets in which American Ecology Corporation and its subsidiaries operate. Actual results may differ materially from what is expressed herein and no assurance can be given that the company can successfully implement its core business growth strategy, generate future earnings, record a $5 million pre-tax gain on the sale, or realize all possible royalty payments under the El Centro sale agreement. For information on factors that could cause actual results to differ from expectations and financial information regarding the classification of the El Centro assets, please refer to American Ecology Corporation’s Report on Form 10-K, which will be filed with the Securities and Exchange Commission on February 18, 2003.
February 18, 2003
Contact: Chad Hyslop 208.331.8400
chyslop@americanecology.com
AMERICAN ECOLOGY ANNOUNCES 2002 OPERATING PROFIT OF $8.9 MILLION
Restructuring Charges, Discontinued Operations,
Accounting Changes Result in Net Income of $18.8 Million
BOISE, Idaho – Jim Baumgardner, Senior Vice President and Chief Financial Officer of American Ecology Corporation [NASDAQ: ECOL], today announced that for the twelve months ending December 31, 2002, the Company posted operating income from continuing operations of $8.9 million. This was an increase of $5.8 million, or 187% over the $3.1 million operating income from continuing operations reported in 2001. With adjustments, consolidated net income reached $18.8 million or $1.15 per fully diluted share, compared to net income of $802,000 or $.03 per fully diluted share for the year ending December 31, 2001.
Reported financial results for the quarter and year ending December 31, 2002 include $7.0 million in charges for discontinued operations at the Company’s Oak Ridge, Tennessee subsidiary. Fiscal 2002 results also include a one-time $13.1 million gain from adoption of Statement of Financial Accounting Standard (“SFAS”) No. 143, and recognition of an $8.3 million tax benefit based on expected future use of net operating loss carry forwards.
“Continued growth in our core hazardous and radioactive waste disposal business pushed operating profit from continuing operations to near record levels in 2002,” Baumgardner explained, adding “The December 2002 decision to discontinue our unprofitable low-level radioactive waste processing operations in Tennessee, take the necessary charges and establish reserves for future costs eliminates a major drag on future earnings.”
Fourth Quarter
Consolidated revenue from continuing operations for the quarter ending December 31, 2002 increased 11% to $11.7 million over the $10.5 million reported for the same quarter in 2001. This revenue growth was principally driven by higher waste volumes at the Grand View, Idaho disposal facility, which posted a record quarter.
“As has been the case throughout 2002, the Idaho site’s increasing disposal volumes generated significant earnings for the quarter.” Baumgardner explained.
During the fourth quarter of 2002, selling, general, and administrative expenses (SG&A) dropped to $4.2 million or 36% of revenue compared to $4.8 million or 46% of revenue in the fourth quarter of 2001. However, the higher revenue and lower direct costs were insufficient to offset litigation expenses in the Ward Valley, California matter and other direct costs in the quarter, causing income from operations in the quarter to dip slightly to $730,000 compared to $943,000 for the same quarter of 2001.
A number of major accounting adjustments were taken during the fourth quarter of 2002. The Company recorded $7 million of pre-tax charges following cessation of operations at its wholly-owned subsidiary, American Ecology Recycle Center, Inc. (“AERC”) in Oak Ridge, Tennessee. These special pre-tax charges account for the impairment of certain assets, an increase in reserves for future closure obligations, and estimated costs to be incurred during 2003 to ready the facility for sale. Oak Ridge financial results have been reclassified as discontinued operations.
AERC, which primarily served the commercial nuclear power industry, suspended low-level radioactive waste (“LLRW”) processing operations in late December 2002. In October 2002, the Company invited bids to purchase AERC and announced its intent to exit the LLRW processing business. After concluding AERC could not be sold as a going concern, management discontinued commercial services. This decision resulted in the release of 63 employees. Seventeen employees are presently employed to maintain the facility’s radioactive materials licenses, remove accumulated waste and prepare the facility for sale.
The Company’s municipal solid waste landfill near Corpus Christ, Texas was sold on February 13, 2003 for $10 million in cash plus future royalties. The landfill assets were reclassified as assets held for sale at year-end, and its prior period results of operations were restated and reported as a discontinued operation.
Lastly, the Company adjusted the valuation allowance on its deferred tax asset resulting in the recognition of an $8.3 million tax benefit in the quarter.
The net result of the Company’s continuing operations combined with these unusual events was a loss of $415,000 or $.03 per fully diluted share for the fourth quarter of 2002, compared to net income of $206,000 or $.01 per fully diluted share reported for the same quarter last year. Excluding these unusual events, income before taxes for the three months ending December 31, 2002 was $834,000.
“Efforts at Oak Ridge are now focused on safely and expeditiously removing accumulated waste while maintaining our existing licenses and seeking a qualified buyer,” stated President and Chief Executive Officer Stephen Romano.
12 Months 2002
For 2002, consolidated revenue from presently continuing operations increased 16% to $46.8 million in 2002, up from $40.2 million in 2001. Revenue growth was driven by higher waste volumes at the Company’s Idaho and Texas hazardous waste facilities and at its Washington radioactive waste facility.
Gross profit from continuing operations increased to $21.6 million or 46% of revenue, up from $17.4 million or 43% in revenue in 2001.
In 2002, SG&A from continuing operations dropped by 12% to $12.6 million compared to $14.3 million in 2001. Relative to revenue, SG&A showed an even greater improvement, dropping to 27% of revenue compared to 36% of revenue last year.
The combination of higher revenue, improved gross profit, and lower expenses pushed income from continuing operations for the year ending December 31, 2002 to $8.9 million from the $3.1 million posted during 2001.
The $13.1 million non-cash gain from the change in accounting standard, recognition of an $8.3 million tax benefit, and $8.9 million in operating income offset more than $3 million in operating losses at AERC and $7 million in special charges related to the discontinuation of AERC operations. This allowed the Company to post net income of $18.8 million or $1.15 per fully diluted share for the year ending December 31, 2002. This compared to net income of $802,000 or $.03 per fully diluted share for 2001. Excluding the impact of discontinued Oak Ridge operations and the above accounting standard change, the Company posted net income from continuing operations of $16.1 million or $.98 per fully diluted earnings per share, more than a five fold increase from the $3 million net income from continuing operations or $.17 per fully diluted share posted in 2001.
“Our financial plan going into 2002 was to deliver solid earnings, strengthen our balance sheet, improve cash flow, and either achieve profitability at Oak Ridge or exit that business,” Baumgardner explained, adding “We delivered on all points.”
“With numerous lawsuits settled, a substantial reorganization behind us and a major drag on earnings eliminated, American Ecology is now solidly focused on growing its core hazardous and radioactive waste disposal business,” Romano concluded.
Changes in Accounting and Special Notes
Consistent with SFAS No. 109 “Accounting for Income Taxes,” the Company records a valuation allowance to reduce its deferred tax assets to the amount management believes will more likely than not be realized. At year end, the Company adjusted its deferred tax valuation allowance, recognizing an $8.3 million tax benefit in its income statement while posting a deferred tax asset of an equal amount on its balance sheet. The Company considered future business growth, future taxable income, the mix of earnings in the markets in which it operates, and prudent and feasible tax planning strategies in adjusting the valuation allowance.
Estimates to remove accumulated waste and prepare the Oak Ridge, Tennessee subsidiary for sale following cessation of operations resulted in a charge of approximately $1.8 million for these expected future costs, which are included in the $7 million of special charges for AERC. These costs were accounted for consistent with guidance in Emerging Issues Task Force Issue No. 94-3, "Liability Recognition for Certain Employee Termination Benefits and Other Costs to Exit an Activity" and have been included as a charge to the results of discontinued operations for the year ended December 31, 2002.
In addition, the Company adopted SFAS No. 144, "Accounting for the Impairment or Disposal of Long-Lived Assets." This standard requires, among other things, that assets held for sale or where the Company has no continuing involvement be classified as discontinued operations in the statements of operations for all periods presented. Accordingly, the Company reclassified historical operating results as necessary to comply with SFAS No. 144. This standard further requires that impairment tests be performed on assets held for sale. At December 31, 2002 the Company impaired $1.6 million of AERC’s long term assets and $360,000 of its short term assets. These charges are also part of AERC’s $7 million special charges.
Conference Call
The Company’s fourth quarter and 2002 investor conference call will be held Thursday, February 20, 2002 at 10:00 am Mountain Time. Interested parties are invited to submit questions in advance to info@americanecology.com, or by facsimile at 208.331.7900. To join the call, dial 1.877.679.9055. Participants will be asked to provide their name and affiliation prior to joining the call.
American Ecology Corporation, through its subsidiaries, provides radioactive, PCB, hazardous, and non-hazardous waste services to commercial and government customers throughout the United States, such as nuclear power plants, steel mills, medical and academic institutions and petro-chemical facilities. Headquartered in Boise, Idaho, the Company is the oldest radioactive and hazardous waste services company in the United States.
This press release contains forward-looking statements that are based on management’s current expectations, beliefs, and assumptions about the industry and markets in which American Ecology Corporation and its subsidiaries operate. Actual results may differ materially from what is expressed herein. No assurance can be given that the company can successfully implement its growth strategy, generate improved or sustained earnings, or prevail in pending litigation including litigation to recover monetary damages for the proposed Ward Valley, California and Butte, Nebraska LLRW disposal projects. Nor can any assurance be given that Company’s cost estimates to exit its Tennessee LLRW processing business are accurate or complete. Costs to exit that business could materially exceed current estimates.
No assurance can be given that the Company can generate taxable income in the future. If it is determined that the Company will not realize all or part of its net deferred tax assets in the future, an adjustment to the deferred tax assets would be charged to earnings in future periods. Likewise, if it is later determined that it is more likely than not that the Company will utilize the remaining, presently unrecognized tax benefits, additional tax benefits will be recognized.
For information on factors that could cause actual results to differ from expectations, please refer to American Ecology Corporation’s Annual Report 10-K and Quarterly Reports 10-Q filed with the Securities and Exchange Commission.
AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited)
($ in 000’s except per share amounts)
Three Months Ended Dec. 31 Year Ended Dec. 31
2002 2001 2002 2001
Revenue $ 11,712 $ 10,476 $ 46,789 $ 40,175
Direct operating costs 6,790 4,691 25,223 22,778
Gross profit 4,922 5,785 21,566 17,397
Selling, general and
administrative expenses 4,192 4,842 12,631 14,274
Income from operations 730 943 8,935 3,123
Investment income -- 14 31 246
Gain/(loss) on
sale of assets (15) (30) (15) (8)
Interest expense 94 194 820 1,011
Other income (expense) (252) (162) (542) 827
Income before income
tax, discontinued
operations and
cumulative effect
of change in
accounting principle 369 571 7,589 3,177
Income tax benefit
(expense) 8,279 (118) 8,505 (186)
Income before
discontinued operations
and cumulative effect
of change in
accounting principle 8,648 453 16,094 2,991
(Loss) from
discontinued operations (9,063) (247) (10,464) (2,189)
Income (loss) before
cumulative effect of
change in accounting
principle (415) 206 5,630 802
Cumulative effect
of change in
accounting principle -- -- 13,141 --
Net income (loss) (415) 206 18,771 802
Preferred stock
dividends 99 99 398 398
Net income (loss)
available to
common shareholders $ (514) $ 107 $ 18,373 $ 404
Basic earnings
(loss) per share $ (.03) $ .01 $ 1.28 $ .03
Diluted earnings
(loss) per share $ (.03) $ .01 $ 1.15 $ .03
Dividends paid
per common share $ -- $ -- $ -- $ --
Notes are an integral part of the financial statements. Certain
reclassifications have been made to prior year financial statements
to conform to current year presentation.
AMERICAN ECOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS (Unaudited)
($ in 000’s except per share amounts)
As of December 31,
2002 2001
ASSETS
Current Assets:
Cash and cash equivalents $ 135 $ 4,476
Receivables, net 10,460 12,674
Income taxes receivable 740 740
Prepayments and other 498 1,881
Deferred income taxes 2,745 --
Assets held for sale or closure 10,722 --
Total current assets 25,300 19,771
Cash and investment securities, pledged 244 243
Property and equipment, net 26,998 38,462
Facility development costs 27,430 27,430
Other assets 129 918
Assets held for sale or closure 1,485 --
Deferred income taxes 5,539 --
Total Assets $ 87,125 $ 86,824
LIABILITIES AND SHAREHOLDERS’ EQUITY
Current Liabilities:
Current portion of long term debt $ 1,985 $ 9,860
Short term line of credit -- 5,000
Accounts payable 2,192 2,408
Accrued liabilities 4,166 12,121
Accrued closure and post closure
obligation, current portion 882 700
Income taxes payable 23 250
Current liabilities of assets
held for sale or closure 7,965 --
Total current liabilities 17,213 30,339
Long term accrued liabilities 2,372 1,843
Long term debt 5,972 2,593
Revolving line of credit 603 --
Liabilities of assets held for
sale or closure, excluding
current portion 5,699 --
Accrued closure and post
closure obligation, excluding
current portion 9,318 25,633
Total liabilities 41,177 60,408
Commitments and contingencies
Shareholders’ equity:
Convertible preferred stock,
1,000,000 shares authorized,
Designated as follows:
Series D cumulative convertible
preferred stock, $.01 par value,
100,001 shares issued and outstanding; 1 1
Series E redeemable convertible
preferred stock, $10.00 par value,
300,000 shares converted and retired -- --
Common stock, $.01 par value,
50,000,000 authorized, 14,539,264
and 13,766,485 shares issued
and outstanding 145 138
Additional paid-in capital 55,789 54,637
Accumulated deficit (9,987) (28,360)
Total shareholders’ equity 45,948 26,416
Total Liabilities and
Shareholders’ Equity $ 87,125 $ 86,824
Notes are an integral part of the financial statements. Certain
reclassifications have been made to prior year financial
statements to conform to current year presentation.