A message from Steve Romano, President and CEO—American Ecology Corporation
After record financial performance in 2006, American Ecology set new records in both the first and second quarters of 2007. This continued outperformance was driven by record waste volume throughput and a favorable mix of higher margin niche services. In the first half of 2007, revenue grew by 56% to $80.2 million. Operating income rose 18% to $16.1 million. At June 30, 2007 we had working capital of $25 million and no term debt. We also continued to pay a $0.15 per share quarterly dividend.
Our internal growth strategy continues to be focused on aggressively pricing commoditized business lines to win market share from competitors while expanding delivery of higher margin work. Our efforts to increase business with customers that generate waste on a recurring basis have been successful, with “base business” revenue growing a solid 22% in our second quarter. We also continue to bundle rail transport and disposal services to drive waste volumes to our sites and take advantage of the operating leverage inherent to the disposal business. This innovative service bundling has helped us land multiple rail-served projects originating more than a thousand miles from our disposal operations. A $50 million capital projects campaign over the last four years has provided the waste handling infrastructure needed for continued growth. In addition to expanded land disposal capacity and heavy equipment upgrades, these investments provided a new rail transfer station for our Texas site, a second railcar unloading building and additional track in Idaho, a company-owned fleet of 234 new gondola railcars, new waste treatment and storage facilities at our Texas and Nevada sites, and a state-of-the-art testing laboratory that serves all of our operations. With a return on invested capital of over 17% in the last 12 months, our cash is being invested wisely.
American Ecology is proud to be the nation’s most comprehensive supplier of hazardous, PCB and low-level radioactive waste disposal services. We offer more than five decades of industry experience, an exceptional safety and environmental record and a reputation for customer service second to none. With a solid pipeline of future business, a highly skilled work force and ample debt capacity for strategic acquisitions, we are well positioned for growth in the years to come.
Stephen A. Romano
President and Chief Executive Officer