US Ecology on Friday said a freeze on all discretionary spending and reduced travel are among the cost controls instituted earlier this year as part of an effort to save tens of millions of dollars in annual expenses during the COVID-19 pandemic.
The tightened spending was among a triad of money-saving measures announced in March, alongside up to $30 million in reduced capital spending and a halt to quarterly cash dividends that is expected to save about $18 million.
“Cost controls, including the deferment of noncritical activity, elimination of discretionary spending, reductions in travel, hiring and variable compensation, will save an additional $15 million to $20 million,” Chairman, President, and CEO Jeff Feeler said during the conference call on the Boise, Idaho-based waste management provider’s first-quarter earnings.
Management expects to retain another $8 million in savings this year via deferral of withholding taxes and has drawn $60 million in credit, Feeler said: “These actions are anticipated to generate more than $70 million of cash savings providing its flexibility to preserve our talented workforce by limiting furloughs and staff reductions while positioning us to take advantage of those opportunities when the market rebounds.”
Reduced capital spending will involve tightening outlays on maintenance and delaying certain “growth projects” into 2021, Feeler said in response to an analyst’s question.
For the first quarter, US Ecology reported $300.3 million in goodwill impairment charges, most connected to its energy waste disposal business. That pushed the company into a $298.1 million net loss for the quarter ended March 31.
Some segments of US Ecology’s business are vulnerable to impacts on the health crisis to its customer base, while others are expected to remain strong, executives said.
The Environmental Services branch is expected to remain strong “due to the collection of irreplaceable, primitive facilities and resilient business model,” Feeler said. However, waste disposal services for energy clients are expected to suffer through the year, he added.
