May, 2009
A message from the Chief Executive Officer
After a record year in 2008, a weakened national economy took hold in the first quarter of 2009. While business from "base" industrial customers held up relatively well, declining only 5% quarter over quarter, reduced shipments from government and private industry customers produced a 19% decline in clean-up project revenue. A bright spot was our new thermal desorption recycling service in Texas, which hit targeted production levels and contributed $2.8 million in revenue. Operating income was $6.0 million in the first quarter, down from $9.5 million in the first quarter of 2008. All four of our disposal sites were again profitable, and our cash balance was a healthy $24.1 million at quarter end. We continue to have no debt and delivered a solid return on invested capital of 17.2% for the trailing twelve month period. Our strong cash flow supported a recent Board of Directors decision to affirm our dividend policy and maintain a $0.18 per share quarterly dividend.
$7 billion in stimulus funding for environmental clean-up work provided by the American Recovery and Reinvestment Act of 2009 will clearly benefit the hazardous and radioactive waste services industry. Project funding and timing decisions are still being made by the various federal agencies, limiting our ability to forecast the specific benefit to our business. We are also experiencing a higher level of uncertainty for our industrial customers than in prior years due to the unsettled nature of the economy. We have accordingly revised our 2009 earnings guidance to $0.85 to $1.00 per diluted share.
Looking ahead, we are bullish about our thermal desorption recycling service in Texas and believe that expanded infrastructure at all three of our hazardous waste landfills combined with diversified service offerings will drive a continued increase in market share . The long-term outlook for environmental clean-up work is excellent, particularly given renewed spending commitments by the federal government. We believe that a strong balance sheet and diverse service capabilities uniquely positions American Ecology to take advantage of these new regulatory drivers and an improving economy. The Company is also well-positioned to acquire strategically aligned businesses and technologies.
Stephen A. Romano
Chairman and Chief Executive Officer