While US Ecology’s revenue rose in the third quarter of the year, two hurricanes and other challenges dragged down the company’s net income, according to its latest earnings report Thursday. Accordingly, the Boise, Idaho-based waste disposal and environmental services provider reduced its full-year earnings outlook.
US Ecology reported $134.1 million in revenue for the quarter ended Sept. 30, up from $124.8 million in the same period of 2016. Year-to-date revenue is also tracking ahead by about $10 million: rising from $360.5 million last year to $370.3 million in the first nine months of 2017.
However, other third-quarter numbers weren’t as promising: gross profit fell and selling, general, and administrative (SG&A) expenses spiked, driving operating income down on a year-over-year basis from $20.9 million to $15.2 million.
Net income landed at $8.4 million ($0.38 per basic share) in the latest reporting period, a drop from $10.1 million ($0.47 per share) in 2016. For the first three quarters of the year, net income fell from $26.6 million ($1.22 per basic share) in 2016 to $18.6 million ($0.86 per basic share) in 2017.
“During the quarter we experienced lower revenue and higher expenses in our business as a result of Hurricanes Harvey and Irma,” US Ecology Executive Vice President and Chief Financial Officer Eric Gerratt said in the company’s press release. “We were fortunate that our team members were safe and that our Robstown, Texas and Tampa, Florida facilities didn’t suffer any major damage. However, we did shut down operations for several days and continue to see delays in shipments in the Texas market.”
The Texas and Florida sites are both hazardous waste treatment facilities. The Robstown location, near Corpus Christi in south Texas, sustained $1 million in costs during the quarter due to Hurricane Harvey, which pummelled the region in late August. That was largely connected to stormwater management, Gerratt stated.
Separately, the quarter also brought a $1.1 million charge in connection with a property tax assessment, which the company is appealing, and a delay to the fourth quarter in an anticipated $2.6 million insurance payout for a treatment facility damaged early this year.
US Ecology is one of three U.S. companies licensed for disposal of low-level radioactive waste, covering Class A, B, and C materials at its facility on the Energy Department’s Hanford Site in Washington state. The Energy Department is preparing to issue new contracts for low-level and mixed-low-level radioactive waste disposal services, but US Ecology has not said publicly whether it bid on the work now provided by its rivals: Dallas-based Waste Control Specialists and Salt Lake City-based EnergySolutions.
Revenue in US Ecology’s Environmental Services business, which includes its LLRW operations, rose from $87.8 million in third-quarter 2016 to $97.7 million this year. Gross profit dropped by about $500,000 to just over $33 million, while SG&A costs spiked from $4.7 million to $7.1 million.
“The impacts of Hurricane Harvey, the property tax assessment charge, a less favorable service mix and Event Business shifting to 2018 will be difficult to overcome in one quarter,” CEO Jeff Feeler said in the release.
Given those issues, US Ecology reduced its outlook for 2017 earnings before interest, taxes, depreciation, and amortization from a range of $120 million to $130 million to a range of $114 million to $119 million. The forecast for full-year adjusted earnings per share has similarly fallen from $1.69-$1.93 to $1.60 to $1.72.
