US Ecology, Inc. (NASDAQ:ECOL) Q2 2020 Earnings Conference Call - Final Transcript

Aug 07, 2020 • 10:00 am ET

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US Ecology, Inc. (NASDAQ:ECOL) Q2 2020 Earnings Conference Call - Final Transcript

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Presentation
Executive
Eric Gerratt

2020 compared to $0.75 per share in the second quarter of 2019. Consolidated adjusted EBITDA was $38.7 million in the second quarter of 2020, up 2% from the same quarter last year, reflecting $5.2 million from NRC. This was partially offset by a 6% decline from the legacy US Ecology business when excluding $2.2 million of business interruption insurance recoveries in the second quarter of 2019.

Shifting to legacy US Ecology results on Slide 13, revenues were $143.5 million in the second quarter of 2020, down 8% from $155.8 million in the second quarter last year. Our Environmental Services segment revenues were down 9% to $103.1 million on a 25% decrease in transportation revenue and a 4% decrease in treatment and disposal revenue. As Jeff mentioned, the primary decline in our treatment and disposal revenue was a 10% decrease in base business, partially offset by a 12% increase in event business in the second quarter of 2020 compared to the second quarter last year.

Legacy US Ecology Field and Industrial Services revenue was $40.4 million in the second quarter of 2020, down 6% driven primarily by lower revenues in our transportation and logistics and industrial services business lines, partially offset by strong growth in our emergency response and small quantity generation service lines.

Gross margin for the legacy US Ecology business was 33% in the second quarter, up slightly from 32% in the second quarter last year. Our Environmental Services segment treatment and disposal margin was 45% for both the second quarters of 2020 and 2019. Treatment and disposal margin for the second quarter of 2019 benefited by approximately $2.2 million in business interruption insurance recoveries that were not repeated in the second quarter of 2020. Excluding this insurance recovery in the second quarter of 2019, we saw a 290 basis point improvement in the second quarter of 2020 on a more favorable service mix.

Gross margin for the legacy US Ecology Field and Industrial Services segment declined to 11% in the second quarter of 2020 compared to 15% in the second quarter of 2019 on a less favorable service mix and lower revenues resulting from the shutdown.

SG&A for legacy US Ecology was $29 million compared to $24 million in the second quarter last year. SG&A for the second quarter of 2019 reflected the favorable $4.5 million property insurance recovery that was not repeated in the second quarter this year. The increase in SG&A for the second quarter of 2020 was also partially due to higher insurance costs and higher labor and benefits related costs compared to the second quarter of 2019. Legacy US Ecology adjusted EBITDA was down 12% to $33.5 million for the second quarter of 2020. This compares to $37.9 million in the second quarter last year.

Looking at the first six months of 2020 for legacy US Ecology, despite the shutdown we delivered strong results with year-over-year growth. Revenue for the first six months of 2020 was up 4% to $297.6 million. This was driven