US Ecology, Inc. (NASDAQ:ECOL) Q1 2018 Earnings Conference Call Transcript
May 04, 2018 • 10:00 am ET
Absolutely. We will now begin the question-and-answer session. (Operator Instructions) Today's first question comes from Michael Hoffman at Stifel. Please go ahead.
Thanks, Jeff and Eric, for taking the questions. Free cash flow outlook. How do you come out on that in reaffirming the guidance where -- given the first quarter?
Yeah, Michael, we're -- we still think we're going to be in that $55 million, $56 million to $60 million range. So no change at this point.
Okay. And then, on G&A. Help us with what you think that -- either absolute dollars or the percent of EBITDA -- revenues are going to be for the year, given the -- that we had this pretty healthy lift relative to sales in the first quarter?
Yeah. I think in terms of absolute dollars, we still think we're going to be in that $90 million, $91 million range for the full year, which I think puts us in that 16.5% to 17% range of revenue.
Okay. And then, within the context of business, if I take all the data that was in the PowerPoint, your comments today, it feels like you're at the current pace of activity. The mix that's been, sort of, 70-30 Base to Event seems to be shifting more, kind of, 75-80 Base to Event versus it -- Event ramping up, so how do I think about the operating leverage through the model at this point? What are you doing differently to still extract that kind of leverages? Volume comes in, but it's coming in more concentrated in Base versus Event on a mix basis.
Jeffrey R. Feeler
I think, overall, Michael, the first quarter typically tends to be a lower Event business season. So it tends to have lower volumes. We just saw a good year-over-year. We've always been focused on trying to drive those recurring revenue streams, and that's really been the core focus of our overall strategy. As far as leverage goes, we would expect to continue to see leverage as we see volume improvement on the ES side. And as we continue to execute on our services side of the business, we continue to see some operating leverage in that business going forward throughout the balance of the year.
So is it reasonable to expect low double-digit margins in the aggregate for Field and Industrial Services?
Jeffrey R. Feeler
I think, overall, we're going to be at that low double-digit range. First quarter is always a tough quarter on that. And if you really look at those margins, and I'm referring to EBITDA margins on our Field and Industrial Services side, we did see some margin enhancement year-over-year. But, yes, it's in the single digits. And it's consistent with what we saw a year ago but with a slight improvement. We did have some headwinds in that segment during the quarter as we rolled out some new contracts. Our IS business had some revenue quality issues as well some weather issues that hurt their margin profile there. So if you kind