US Ecology grew its second-quarter revenue by 37% this year, to $213.9 million, but nonetheless reported a $5.2 million net loss in the face of the COVID-19 pandemic.
That represented a loss of $0.17 per diluted share, or $0.08 on an adjusted basis, the Boise, Idaho-based waste management company said Thursday in its latest earnings report.
For the second quarter of 2019, US Ecology reported $15.5 million in net income, $0.70 per diluted share.
Novel coronavirus 2019 has led to shelter-in-place orders and temporary shutdowns for US Ecology customers. As the pandemic spread throughout the country, management in March announced a set of measures to limit costs even as operations continued without any break in services. Savings measures included reducing 2020 capital spending by about 30%, “rightsizing,” and suspending quarterly cash dividends to save as much as $18 million. In total, the steps are anticipated to generate as much as $70 million in yearly cash savings, Chairman, President, and CEO Jeff Feeler said Friday during the company’s quarterly earnings call.
In a press release Thursday, the company said spending efforts are ongoing, including additional tweaks to capital spending plans and “cost control initiatives such as hiring practices and other work force actions.”
Management said it believes it will see better numbers starting in the third quarter for overall revenue, adjusted earnings per share, and earnings before interest, taxes, depreciation, and amortization (EBITDA). However, as of this week it was not ready to reinstate its 2020 earnings guidance.
“We are cautiously optimistic that we will continue to see sequential monthly improvement, barring any major pockets of the United States or eastern Canada shutting down again,” Feeler told financial analysts.
US Ecology operates one of four U.S. commercial facilities for disposal of low-level radioactive waste, at the Department of Energy’s Hanford Site in Washington state. With the acquisition of energy industry-focused environmental services and emergency response provider NRC Group Holdings Corp. in late 2019, it now provides various waste disposal and other services at more than 120 locations.
The company also provides field services, now including decontamination in potential cases of COVID-19. Through the end of July, US Ecology had completed about 1,700 COVID-19 decontamination jobs, with “a lot more in the queue,” according to Feeler. As of the end of June, that work generated roughly $12 million in revenue, he said.
NRC Group Holdings operations delivered $70.4 million of revenue for the three-month period ended June 30, the release says.
US Ecology’s Environmental Services business took in $110.4 million in revenue for the second quarter, a slight 2% drop from $112.8 million on a year-over-year basis. Excluding the $7.3 million contribution from NRC, segment revenue was down by 9%. The health crisis slowed business from US Ecology customers, driving treatment and disposal revenue down by 4% and cutting 25% from transportation revenue.
The NRC business was a much larger contributor to US Ecology’s Field and Industrial Services segment, providing $63.1 million in the second quarter. That pushed revenue up 141% from second-quarter 2019, from $43 million to $103.5 million. Excluding the NRC add-on, segment revenue actually dropped by 6% in the latest quarter. That was largely due to less money for transportation and logistics and industrial services, buoyed somewhat by higher revenue in emergency response and small-quantity generation services businesses.
Year to date, US Ecology reported a 58% in year-over-year revenue growth, from $282.8 million to $454.6 million. Of that, an even $157 million came from NRC.
However, a $330.3 million goodwill impairment charge in first-quarter 2020 drove earnings to a net loss of $303.3 million, $9.73 per diluted share, for the six-month period.
Construction of the new waste stabilization building at US Ecology’s Grand View, Idaho, facility began in the second quarter. The site was damaged by a November 2018 explosion that killed one employee. The estimated $7 million construction is expected to be completed in November to December, part of the company’s $60 million to $65 million in capital expenditures for the year.
Perma-Fix Revenue Increases
Separately, Atlanta-based Perma-Fix Environmental Services on Friday reported a revenue increase and positive income for the second quarter.
Year over year, revenue rose by 28.7%, from $17.1 million to $22 million. Business was mixed in its primary business lines: 101.8% revenue growth in Services, from $7 million to $14.2 million, while Treatment revenue fell from $10.1 million to $7.8 million.
Earnings numbers were down from second-quarter 2019, but still firmly in the black. Net income attributable to common stockholders slid from $289,000, $0.02 per share, to $204,000, $0.02 per share. Adjusted EBITDA came in at $847,000, down from $1 million the year before.
Among other services, Perma-Fix operates four treatment facilities for treatment of low-level radioactive waste and other waste types.
“Before COVID-19 was beginning to unfold in Q1 of this year, we were energetic and enthusiastic about our growth strategy for 2020, which included continued expansion of our plants and broadening our base for nuclear services as well,” President and CEO Mark Duff said Friday during the quarterly earnings call. “The impact of working from home for a few months and the limited communications with our clients threw a significant wrench into our strategy and required adjustments that subsequently demanded real creativity and innovation by our team.”
Management has not just sustained it business, Duff added, but has identified areas for expansion in coming quarters.
In April, Perma-Fix secured a $5.7 million bank loan under the federal CARES Act’s Paycheck Protection Program, which enabled the company to avoid layoffs and recall furloughed employees as work slowed due to the pandemic. Some or all of the loan can be forgiven if 75% or more is used for payroll purposes.
“The Company continues to make adjustments and implement precautions necessary to limit the impact of the COVID-19 pandemic on its ongoing operations,” Perma-Fix said in a press release. “Most projects within the Services Segment that were previously shutdown have recommenced in the latter part of the second quarter of 2020. The Company’s Treatment Segment continues to see delays in waste shipments from certain customers due to the planning time that is required to restart waste shipments as they return to work on-site. As the situations surrounding COVID-19 remain fluid, the full impact and extent of the pandemic on the Company’s financial results cannot be estimated with any degree of certainty.”
Discussing work for the Department of Energy, Perma-Fix said it still expects to proceed this year with the Hanford Test Bed Initiative. The program is intended to try out an alternative means for processing and disposal of some portion of the 56 million gallons of radioactive waste stored in underground tanks at the Hanford Site in Washington state.
The low-activity waste is processed into a solid grout form and then shipped to the Waste Control Specialists low-level waste disposal facility in Texas. The first phase of the trial program was completed in December 2017 at the Perma-Fix Northwest facility near Hanford in Richland, Wash., involving just 3 gallons. The status of a second phase with 2,000 gallons has appeared uncertain.
Based on guidance from DOE, Perma-Fix management said Friday they expect to receive the 2,000-gallon tranche of liquid radioactive waste by the end of 2020. Congress appropriated $10 million for the program this year.
A third phase of the Test Bed Initiative could involve 100,000 gallons of waste.
If successful, the program could complement the Waste Treatment Plant being built at Hanford to process the waste. Officials have acknowledged the Bechtel-built facility does not have the capacity to vitrify all the Hanford waste, 90% of which is believed to be low-activity.
Perma-Fix is also part of a team led by Jacobs Engineering that is among nine corporate ventures selected by the Energy Department to compete over a decade for up to $3 billion worth of deactivation, decommissioning, and removal projects around the nation. It would cover sites operated by DOE’s Office of Environmental Management, semiautonomous National Nuclear Security Administration, and other agency branches.
The Energy Department has said several task orders should be issued before the close of 2020, according to Perma-Fix. A schedule of task orders is also anticipated.
The company was more circumspect about the status of the new Tank Closure Contract for the Hanford Site. The Energy Department in May issued the $13 billion contract to BWX Technologies-led Hanford Works Restoration. However, a DOE attorney said last month the agency would take “corrective action” to address concerns about the award. While the department has not said what that might involve, industry sources said have said the award could be withdrawn.
Perma-Fix is believed to have teamed with Jacobs and Honeywell in a bid on the tanks contract. The other bidder is believed to have been comprised of Atkins, Amentum, and Westinghouse. Both groups protested the award to the Government Accountability Office, which dismissed both challenges while the Energy Department determines its path forward on the matter.
Duff said Perma-Fix only knows what has been released publicly on the contract dustup. “DOE did say in another meeting informally … that they would notify all the proposal offerors once the corrective actions were completed. But no indications of schedules or anything. So far our team has not been notified of any of these corrective actions. We’re all just anxiously awaiting to hear what the phrase … new award determination means.”
