Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2015 | Aug. 05, 2015 | |
Document and Entity Information | ||
Entity Registrant Name | US ECOLOGY, INC. | |
Entity Central Index Key | 742,126 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q2 | |
Trading Symbol | ECOL | |
Entity Common Stock, Shares Outstanding | 21,706,203 |
CONSOLIDATED BALANCE SHEETS
CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Current Assets: | ||
Cash and cash equivalents | $ 13,077 | $ 22,971 |
Receivables, net | 117,544 | 135,261 |
Prepaid expenses and other current assets | 9,707 | 11,984 |
Income taxes receivable | 584 | 6,912 |
Deferred income taxes | 2,012 | 2,109 |
Total current assets | 142,924 | 179,237 |
Property and equipment, net | 224,557 | 227,684 |
Restricted cash and investments | 5,752 | 5,729 |
Intangible assets, net | 270,011 | 278,667 |
Goodwill | 209,666 | 217,609 |
Other assets | 10,161 | 11,308 |
Deferred income taxes | 85 | |
Total assets | 863,071 | 920,319 |
Current Liabilities: | ||
Accounts payable | 21,383 | 24,513 |
Deferred revenue | 6,674 | 13,190 |
Accrued liabilities | 28,749 | 36,251 |
Accrued salaries and benefits | 11,537 | 13,322 |
Income taxes payable | 4,897 | 4,124 |
Current portion of closure and post-closure obligations | 5,338 | 5,359 |
Current portion of long-term debt | 3,505 | 3,828 |
Total current liabilities | 82,083 | 100,587 |
Long-term closure and post-closure obligations | 67,352 | 67,511 |
Long-term debt | 357,286 | 390,825 |
Other long-term liabilities | 4,578 | 4,336 |
Deferred income taxes | 101,691 | 105,723 |
Total liabilities | $ 612,990 | $ 668,982 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Common stock $0.01 par value, 50,000 authorized; 21,707 and 21,632 shares issued, respectively | $ 217 | $ 216 |
Additional paid-in capital | 167,400 | 165,524 |
Retained earnings | 93,510 | 93,301 |
Treasury stock, at cost, 1 shares | (20) | (18) |
Accumulated other comprehensive loss | (11,026) | (7,686) |
Total stockholders' equity | 250,081 | 251,337 |
Total liabilities and stockholders' equity | $ 863,071 | $ 920,319 |
CONSOLIDATED BALANCE SHEETS (Pa
CONSOLIDATED BALANCE SHEETS (Parenthetical) - $ / shares shares in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
CONSOLIDATED BALANCE SHEETS | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 50,000 | 50,000 |
Common stock, shares issued | 21,707 | 21,632 |
Treasury stock, shares | 1 | 1 |
CONSOLIDATED STATEMENTS OF OPER
CONSOLIDATED STATEMENTS OF OPERATIONS - USD ($) shares in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONSOLIDATED STATEMENTS OF OPERATIONS | ||||
Revenue | $ 139,732 | $ 66,019 | $ 276,383 | $ 119,373 |
Direct operating costs | 98,262 | 40,874 | 195,069 | 72,108 |
Gross profit | 41,470 | 25,145 | 81,314 | 47,265 |
Selling, general and administrative expenses | 22,675 | 14,127 | 47,568 | 20,763 |
Impairment charges | 6,700 | 6,700 | ||
Operating income | 12,095 | 11,018 | 27,046 | 26,502 |
Other income (expense): | ||||
Interest income | 6 | 39 | 47 | 83 |
Interest expense | (5,433) | (858) | (11,127) | (944) |
Foreign currency gain (loss) | 292 | 743 | (775) | (197) |
Other | 233 | 170 | 769 | 256 |
Total other income (expense) | (4,902) | 94 | (11,086) | (802) |
Income before income taxes | 7,193 | 11,112 | 15,960 | 25,700 |
Income tax expense | 5,055 | 4,247 | 7,957 | 9,474 |
Net income | $ 2,138 | $ 6,865 | $ 8,003 | $ 16,226 |
Earnings per share: | ||||
Basic (in dollars per share) | $ 0.10 | $ 0.32 | $ 0.37 | $ 0.75 |
Diluted (in dollars per share) | $ 0.10 | $ 0.32 | $ 0.37 | $ 0.75 |
Shares used in earnings per share calculation: | ||||
Basic (in shares) | 21,617 | 21,528 | 21,600 | 21,503 |
Diluted (in shares) | 21,748 | 21,667 | 21,719 | 21,632 |
Dividends paid per share (in dollars per share) | $ 0.18 | $ 0.18 | $ 0.36 | $ 0.36 |
CONSOLIDATED STATEMENTS OF COMP
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME | ||||
Net income | $ 2,138 | $ 6,865 | $ 8,003 | $ 16,226 |
Other comprehensive income (loss): | ||||
Foreign currency translation gain (loss) | 1,003 | 1,557 | (3,171) | 78 |
Net changes in interest rate hedge, net of taxes of $663, $0, ($91) and $0, respectively | 1,231 | (169) | ||
Comprehensive income, net of tax | $ 4,372 | $ 8,422 | $ 4,663 | $ 16,304 |
CONSOLIDATED STATEMENTS OF COM6
CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Other comprehensive income (loss): | ||||
Net changes in interest rate hedge, tax | $ 663 | $ 0 | $ (91) | $ 0 |
CONSOLIDATED STATEMENTS OF CASH
CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2015 | Jun. 30, 2014 | |
Cash flows from operating activities: | ||
Net income | $ 8,003 | $ 16,226 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Impairment charges | 6,700 | |
Depreciation and amortization of property and equipment | 15,135 | 8,412 |
Amortization of intangible assets | 6,606 | 1,215 |
Accretion of closure and post-closure obligations | 2,077 | 716 |
Unrealized foreign currency loss | 1,510 | 323 |
Deferred income taxes | (3,096) | 2,095 |
Share-based compensation expense | 1,089 | 525 |
Unrecognized tax benefits | 7 | |
Net loss on disposal of property and equipment | 908 | 19 |
Amortization of debt discount | 74 | |
Changes in assets and liabilities (net of effect of business acquisition): | ||
Receivables | 16,952 | 4,661 |
Income taxes receivable | 6,328 | (3,426) |
Other assets | 3,374 | (418) |
Accounts payable and accrued liabilities | (6,241) | (2,347) |
Deferred revenue | (6,089) | (2,349) |
Accrued salaries and benefits | (1,651) | (1,772) |
Income taxes payable | 839 | (3,024) |
Closure and post-closure obligations | (2,136) | (364) |
Net cash provided by operating activities | 50,382 | 20,499 |
Cash flows from investing activities: | ||
Purchases of property and equipment | (19,376) | (8,658) |
Purchases of restricted cash and investments | (840) | (30) |
Proceeds from sale of restricted cash and investments | 817 | |
Proceeds from sale of property and equipment | 314 | 19 |
Business acquisition (net of cash acquired) | (465,895) | |
Net cash used in investing activities | (19,085) | (474,564) |
Cash flows from financing activities: | ||
Payments on long-term debt | (33,935) | |
Dividends paid | (7,792) | (7,750) |
Proceeds from exercise of stock options | 1,042 | 1,420 |
Proceeds from issuance of long-term debt | 413,962 | |
Deferred financing costs paid | (14,001) | |
Other | (262) | 205 |
Net cash (used in) provided by financing activities | (40,947) | 393,836 |
Effect of foreign exchange rate changes on cash | (244) | 86 |
Decrease in cash and cash equivalents | (9,894) | (60,143) |
Cash and cash equivalents at beginning of period | 22,971 | 73,940 |
Cash and cash equivalents at end of period | 13,077 | 13,797 |
Supplemental Disclosures | ||
Income taxes paid, net of receipts | 7,994 | 13,281 |
Interest paid | 9,864 | 124 |
Non-cash investing and financing activities: | ||
Closure and post-closure retirement asset | 2,863 | |
Capital expenditures in accounts payable | 1,804 | 1,328 |
Restricted stock issued from treasury shares | $ 272 | $ 279 |
GENERAL
GENERAL | 6 Months Ended |
Jun. 30, 2015 | |
GENERAL | |
GENERAL | NOTE 1. GENERAL Basis of Presentation The accompanying unaudited consolidated financial statements include the results of operations, financial position and cash flows of US Ecology, Inc. and its wholly-owned subsidiaries. All significant intercompany balances have been eliminated. Throughout these financial statements words such as “we,” “us,” “our,” “US Ecology” and the “Company” refer to US Ecology, Inc. and its subsidiaries. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly, in all material respects, the results of the Company for the periods presented. These consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted pursuant to the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The results for the three and six months ended June 30, 2015 are not necessarily indicative of results to be expected for the entire fiscal year. In these consolidated financial statements, certain amounts in prior periods’ consolidated financial statements have been reclassified to conform with the current period presentation. The Company’s Consolidated Balance Sheet as of December 31, 2014 has been derived from the Company’s audited Consolidated Balance Sheet as of that date and has been revised for purchase price measurement period adjustments related to the acquisition of EQ as disclosed in Note 2. Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements. As it relates to estimates and assumptions in amortization rates and environmental obligations, significant engineering, operations and accounting judgments are required. We review these estimates and assumptions no less than annually. In many circumstances, the ultimate outcome of these estimates and assumptions will not be known for decades into the future. Actual results could differ materially from these estimates and assumptions due to changes in applicable regulations, changes in future operational plans and inherent imprecision associated with estimating environmental impacts far into the future. Recently Issued Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03 Simplifying the Presentation of Debt Issuance Costs . This ASU requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. The guidance is effective for annual and interim reporting periods beginning after December 15, 2015. We do not believe the adoption of this update will have a material effect on our financial position and results of operations. In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers , which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard permits the use of either the retrospective or cumulative effect transition method. The ASU also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. On July 9, 2015, the FASB agreed to delay the effective date of ASU 2014-09 by one year. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted but not before annual periods beginning after December 15, 2016. We are currently assessing the impact the adoption of ASU 2014-09 may have on our consolidated financial statements. |
BUSINESS COMBINATION
BUSINESS COMBINATION | 6 Months Ended |
Jun. 30, 2015 | |
BUSINESS COMBINATION | |
BUSINESS COMBINATION | NOTE 2. BUSINESS COMBINATION On June 17, 2014, the Company acquired 100% of the outstanding shares of EQ Holdings, Inc. and its wholly-owned subsidiaries (collectively “EQ”). EQ is a fully integrated environmental services company providing waste treatment and disposal, wastewater treatment, remediation, recycling, industrial cleaning and maintenance, transportation, total waste management, technical services, and emergency response services to a variety of industries and customers in North America. The total purchase price was $460.9 million, net of cash acquired, and was funded through a combination of cash on hand and borrowings under a new $415.0 million term loan. As of June 30, 2015, the Company finalized the purchase accounting for the acquisition of EQ. The following table summarizes the consideration paid for EQ and the fair value estimates of assets acquired and liabilities assumed recognized at the acquisition date, with purchase price allocation adjustments since the preliminary purchase price allocation as previously disclosed as of December 31, 2014: Purchase Price Allocation $s in thousands As Reported in Form 10-K Adjustments As Retrospectively Adjusted Current assets $ $ $ Property and equipment — Identifiable intangible assets — Current liabilities ) ) ) Other liabilities ) ) Total identifiable net assets ) Goodwill Total purchase price $ $ — $ Purchase price allocation adjustments related primarily to the receipt of additional information regarding the fair values of income taxes payable and receivable, deferred income taxes and residual goodwill. Goodwill of $197.6 million arising from the acquisition is the result of several factors. EQ has an assembled workforce that serves the U.S. industrial market utilizing state-of-the-art technology to treat a wide range of industrial and hazardous waste. The acquisition of EQ increases our geographic base providing a coast-to-coast presence and an expanded service platform to better serve key North American hazardous waste markets. In addition, the acquisition of EQ provides us with an opportunity to compete for additional waste clean-up project work; expand penetration with national accounts; improve and enhance transportation, logistics, and service offerings with existing customers and attract new customers. $132.4 million of the goodwill recognized was allocated to reporting units in our Environmental Services segment and $65.2 million of the goodwill recognized was allocated to reporting units in our Field & Industrial Services segment. None of the goodwill recognized is expected to be deductible for income tax purposes. The fair value estimate of identifiable intangible assets by major intangible asset class and related weighted average amortization period are as follows: $s in thousands Fair Value Weighted Average Amortization Period (Years) Customer relationships $ 15 Permits and licenses 45 Permits and licenses, nonamortizing — Tradename 3 Customer backlog 10 Developed software 9 Non-compete agreements 1 Internet domain and website 19 Database 15 Total identifiable intangible assets $ The following unaudited pro forma financial information presents the combined results of operations as if EQ had been combined with us at the beginning of each of the periods presented. The pro forma financial information includes the accounting effects of the business combination, including the amortization of intangible assets, depreciation of property, plant and equipment, and interest expense. The unaudited pro forma financial information is presented for informational purposes only and is not indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the periods presented, nor should it be taken as indication of our future consolidated results of operations. (unaudited) (unaudited) Three Months Ended Six Months Ended $s in thousands, except per share amounts June 30, 2014 June 30, 2014 Pro forma combined: Revenue $ $ Net income $ $ Earnings per share Basic $ $ Diluted $ $ Revenue from EQ included in the Company’s consolidated statements of operations for the three and six months ended June 30, 2015 was $89.2 million and $173.8 million, respectively. Operating income from EQ included in the Company’s consolidated statements of operations for the three and six months ended June 30, 2015 was $751,000 and $4.3 million, respectively. Acquisition-related costs of $133,000 and $915,000, respectively, were included in Selling, general and administrative expenses in the Company’s consolidated statements of operations for the three and six months ended June 30, 2015. |
ACCUMULATED OTHER COMPREHENSIVE
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | 6 Months Ended |
Jun. 30, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | NOTE 3. ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) Changes in accumulated other comprehensive income (loss) (“AOCI”) consisted of the following: Foreign Currency Translation Unrealized Loss on Interest Rate Hedge Total Balance at December 31, 2014 $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications, net of tax ) ) ) Amounts reclassified out of AOCI, net of tax (1) — Other comprehensive loss ) ) ) Balance at June 30, 2015 $ ) $ ) $ ) (1) Before-tax reclassifications of $879,000 ($572,000 after-tax) and $1.8 million ($1.1 million after-tax) for the three and six months ended June 30, 2015, respectively, were included in Interest expense in the Company’s consolidated statements of operations. Amount relates to interest rate swap which is designated as a cash flow hedge. Changes in fair value of the swap recognized in AOCI are reclassified to interest expense when hedged interest payments on the underlying debt are made. Amounts in AOCI expected to be recognized in interest expense over the next 12 months total approximately $3.5 million ($2.3 million after tax). |
CONCENTRATIONS AND CREDIT RISK
CONCENTRATIONS AND CREDIT RISK | 6 Months Ended |
Jun. 30, 2015 | |
CONCENTRATIONS AND CREDIT RISK | |
CONCENTRATIONS AND CREDIT RISK | NOTE 4. CONCENTRATIONS AND CREDIT RISK Major Customers No customer accounted for more than 10% of total revenue for the three or six months ended June 30, 2015 or the three or six months ended June 30, 2014. No customer accounted for more than 10% of total trade receivables as of June 30, 2015 or December 31, 2014. Credit Risk Concentration We maintain most of our cash and cash equivalents with nationally recognized financial institutions like Wells Fargo Bank, National Association (“Wells Fargo”) and Comerica, Inc. Substantially all balances are uninsured and are not used as collateral for other obligations. Concentrations of credit risk on accounts receivable are believed to be limited due to the number, diversification and character of the obligors and our credit evaluation process. |
RECEIVABLES
RECEIVABLES | 6 Months Ended |
Jun. 30, 2015 | |
RECEIVABLES | |
RECEIVABLES | NOTE 5. RECEIVABLES Receivables consisted of the following: June 30, December 31, $s in thousands 2015 2014 Trade $ $ Unbilled revenue Other Total receivables Allowance for doubtful accounts ) ) Receivables, net $ $ |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | NOTE 6. FAIR VALUE MEASUREMENTS Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Assets and liabilities recorded at fair value are categorized using defined hierarchical levels directly related to the amount of subjectivity associated with the inputs to fair value measurements, as follows: Level 1 - Quoted prices in active markets for identical assets or liabilities; Level 2 - Inputs other than quoted prices included within Level 1 that are either directly or indirectly observable; Level 3 - Unobservable inputs in which little or no market activity exists, requiring an entity to develop its own assumptions that market participants would use to value the asset or liability. The Company’s financial instruments consist of cash and cash equivalents, accounts receivable, restricted cash and investments, accounts payable, accrued liabilities, debt and interest rate swap agreements. The estimated fair value of cash and cash equivalents, accounts receivable, accounts payable and accrued liabilities approximate their carrying value due to the short-term nature of these instruments. The Company estimates the fair value of its variable-rate debt using Level 2 inputs, such as interest rates, related terms and maturities of similar obligations. The fair value of the Company’s debt approximated its carrying amount as of June 30, 2015. The Company’s assets and liabilities measured at fair value on a recurring basis consisted of the following: June 30, 2015 Quoted Prices in Active Markets Other Observable Inputs Unobservable Inputs $s in thousands (Level 1) (Level 2) (Level 3) Total Assets: Fixed-income securities (1) $ $ $ — $ Money market funds (2) — — Total $ $ $ — $ Liabilities: Interest rate swap agreement (3) $ — $ $ — $ Total $ — $ $ — $ December 31, 2014 Quoted Prices in Active Markets Other Observable Inputs Unobservable Inputs $s in thousands (Level 1) (Level 2) (Level 3) Total Assets: Fixed-income securities (1) $ $ $ — $ Money market funds (2) — — Total $ $ $ — $ Liabilities: Interest rate swap agreement (3) $ — $ $ — $ Total $ — $ $ — $ (1) We invest a portion of our Restricted cash and investments in fixed-income securities, including U.S. Treasury and U.S. agency securities. We measure the fair value of U.S. Treasury securities using quoted prices for identical assets in active markets. We measure the fair value of U.S. agency securities using observable market activity for similar assets. The fair value of our fixed-income securities approximates our cost basis in the investments. (2) We invest a portion of our Restricted cash and investments in money market funds. We measure the fair value of these money market fund investments using quoted prices for identical assets in active markets. (3) In order to manage interest rate exposure, we entered into an interest rate swap agreement in October 2014 that effectively converts a portion of our variable-rate debt to a fixed interest rate. The swap is designated as a cash flow hedge, with gains and losses deferred in other comprehensive income to be recognized as an adjustment to interest expense in the same period that the hedged interest payments affect earnings. The interest rate swap has an effective date of December 31, 2014 in an initial notional amount of $250.0 million. The fair value of the interest rate swap agreement represents the difference in the present value of cash flows calculated (i) at the contracted interest rates and (ii) at current market interest rates at the end of the period. We calculate the fair value of interest rate swap agreements quarterly based on the quoted market price for the same or similar financial instruments. The fair value of the interest rate swap agreement is included in Other long-term liabilities in the Company’s consolidated balance sheet. |
PROPERTY AND EQUIPMENT
PROPERTY AND EQUIPMENT | 6 Months Ended |
Jun. 30, 2015 | |
PROPERTY AND EQUIPMENT | |
PROPERTY AND EQUIPMENT | NOTE 7. PROPERTY AND EQUIPMENT Property and equipment consisted of the following: June 30, December 31, $s in thousands 2015 2014 Cell development costs $ $ Land and improvements Buildings and improvements Railcars Vehicles and other equipment Construction in progress Total property and equipment Accumulated depreciation and amortization ) ) Property and equipment, net $ $ Depreciation and amortization expense for the three months ended June 30, 2015 and 2014 was $7.7 million and $4.6 million, respectively. Depreciation and amortization expense for the six months ended June 30, 2015 and 2014 was $15.1 million and $8.4 million, respectively. |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS | 6 Months Ended |
Jun. 30, 2015 | |
GOODWILL AND INTANGIBLE ASSETS | |
GOODWILL AND INTANGIBLE ASSETS | NOTE 8. GOODWILL AND INTANGIBLE ASSETS Changes in goodwill for the six months ended June 30, 2015 consisted of the following: $s in thousands Environmental Services Field & Industrial Services Total Balance at December 31, 2014 (1) $ $ $ Impairment charges (2) — ) ) Foreign currency translation ) — ) Balance at June 30, 2015 $ $ $ (1) Balances have been revised to reflect purchase accounting measurement period adjustments related to the acquisition of EQ as disclosed in Note 2. (2) As disclosed in Note 16, on August 4, 2015, we entered into a definitive agreement to sell our Allstate Power Vac., Inc. (“Allstate”) subsidiary to a private investor group for approximately $58.0 million cash, subject to adjustments for working capital and capital expenditures. Allstate represents the majority of the industrial services business we acquired with the acquisition of EQ. As a result of this agreement and management’s strategic review, we evaluated the recoverability of the assets associated with our industrial services business. Based on this analysis, we recorded a non-cash goodwill impairment charge of $6.7 million, or $0.31 per diluted share, in the second quarter of 2015. We calculated the estimated fair value of the industrial services business using a combination of quoted market prices and discounted cash flows. Intangible assets, net consisted of the following: June 30, 2015 December 31, 2014 $s in thousands Cost Accumulated Amortization Net Cost Accumulated Amortization Net Amortizing intangible assets: Permits, licenses and lease $ $ ) $ $ $ ) $ Customer relationships ) ) Technology - formulae and processes ) ) Customer backlog ) ) Tradename ) ) Developed software ) ) Non-compete agreements ) ) Internet domain and website ) ) Database ) ) Total amortizing intangible assets ) ) Nonamortizing intangible assets: Permits and licenses — — Tradename — — Total intangible assets, net $ $ ) $ $ $ ) $ Amortization expense for the three months ended June 30, 2015 and 2014 was $3.3 million and $862,000, respectively. Amortization expense for the six months ended June 30, 2015 and 2014 was $6.6 million and $1.2 million, respectively. Foreign intangible asset carrying amounts are affected by foreign currency translation. |
DEBT
DEBT | 6 Months Ended |
Jun. 30, 2015 | |
DEBT | |
DEBT | NOTE 9. DEBT Long-term debt consisted of the following: June 30, December 31, $s in thousands 2015 2014 Term loan $ $ Net discount on term loan ) ) Total debt Current portion of long-term debt ) ) Long-term debt $ $ On June 17, 2014, in connection with the acquisition of EQ, the Company entered into a new $540.0 million senior secured credit agreement (the “Credit Agreement”) with a syndicate of banks comprised of a $415.0 million term loan (the “Term Loan”) with a maturity date of June 17, 2021 and a $125.0 million revolving line of credit (the “Revolving Credit Facility”) with a maturity date of June 17, 2019. Upon entering into the Credit Agreement, the Company terminated its existing credit agreement with Wells Fargo, dated October, 29, 2010, as amended (the “Former Agreement”). Immediately prior to the termination of the Former Agreement, there were no outstanding borrowings under the Former Agreement. No early termination penalties were incurred as a result of the termination of the Former Agreement. Term Loan The Term Loan provides an initial commitment amount of $415.0 million, the proceeds of which were used to acquire 100% of the outstanding shares of EQ and pay related transaction fees and expenses. The Term Loan bears interest at a base rate (as defined in the Credit Agreement) plus 2.00% or LIBOR plus 3.00%, at the Company’s option. The Term Loan is subject to amortization in equal quarterly installments in an aggregate annual amount equal to 1.00% of the original principal amount of the Term Loan. At June 30, 2015, the effective interest rate on the Term Loan, including the impact of our interest rate swap, was 4.66%. Interest only payments are due either monthly or on the last day of any interest period, as applicable. As set forth in the Credit Agreement, the Company is required to enter into one or more interest rate hedge agreements in amounts sufficient to fix the interest rate on at least 50% of the principal amount of the $415.0 million Term Loan. In October 2014, the Company entered into an interest rate swap agreement with Wells Fargo, effectively fixing the interest rate on $245.0 million, or 68%, of the Term Loan principal outstanding as of June 30, 2015. Revolving Credit Facility The Revolving Credit Facility provides up to $125.0 million of revolving credit loans or letters of credit with the use of proceeds restricted solely for working capital and other general corporate purposes. Under the Revolving Credit Facility, revolving loans are available based on a base rate (as defined in the Credit Agreement) or LIBOR, at the Company’s option, plus an applicable margin which is determined according to a pricing grid under which the interest rate decreases or increases based on our ratio of funded debt to earnings before interest, taxes, depreciation and amortization (“EBITDA”). The Company is required to pay a commitment fee of 0.50% per annum on the unused portion of the Revolving Credit Facility, with such commitment fee to be reduced based upon the Company’s total leverage ratio as defined in the Credit Agreement. The maximum letter of credit capacity under the new revolving credit facility is $50.0 million and the Credit Agreement provides for a letter of credit fee equal to the applicable margin for LIBOR loans under the Revolving Credit Facility. Interest only payments are due either monthly or on the last day of any interest period, as applicable. At June 30, 2015, there were no borrowings outstanding on the Revolving Credit Facility. The availability under the Revolving Credit Facility was $119.5 million with $5.5 million of the Revolving Credit Facility issued in the form of standby letters of credit utilized as collateral for closure and post-closure financial assurance and other assurance obligations. Except as set forth below, the Company may prepay the Term Loan or permanently reduce the Revolving Credit Facility commitment under the Credit Agreement at any time without premium or penalty (other than customary “breakage” costs with respect to the early termination of LIBOR loans). On or prior to six months after the closing of the Credit Agreement, if we prepay the initial term loans or amend the pricing terms of the initial term loans, in each case in connection with a reduction of the effective yield, we are required to pay a 1% prepayment premium (unless in connection with a change of control, sale or permitted acquisition). Subject to certain exceptions, the Credit Agreement provides for mandatory prepayment upon certain asset dispositions, casualty events and issuances of indebtedness. The Credit Agreement is also subject to mandatory annual prepayments commencing in December 2015 if our total leverage (defined as the ratio of our consolidated funded debt as of the last day of the applicable fiscal year to our adjusted EBITDA for such period) exceeds certain ratios as follows: 50% of our adjusted excess cash flow (as defined in the Credit Agreement and which takes into account certain adjustments) if our total leverage ratio is greater than 2.50 to 1.00, with step-downs to 0% if our total leverage ratio is equal to or less than 2.50 to 1.00. Pursuant to (i) an unconditional guarantee agreement (the “Guarantee”) and (ii) a collateral agreement (the “Collateral Agreement”), each entered into by the Company and its domestic subsidiaries on June 17, 2014, the Company’s obligations under the Credit Agreement are jointly and severally and fully and unconditionally guaranteed on a senior basis by all of the Company’s existing and certain future domestic subsidiaries and the Credit Agreement is secured by substantially all of the Company’s and its domestic subsidiaries’ assets except the Company’s and its domestic subsidiaries’ real property. The Credit Agreement contains customary restrictive covenants, subject to certain permitted amounts and exceptions, including covenants limiting the ability of the Company to incur additional indebtedness, pay dividends and make other restricted payments, repurchase shares of our outstanding stock and create certain liens. We may only declare quarterly or annual dividends if on the date of declaration, no event of default has occurred and no other event or condition has occurred that would constitute default due to the payment of the dividend. The Credit Agreement also contains a financial maintenance covenant, which is a maximum Consolidated Senior Secured Leverage Ratio, as defined in the Credit Agreement, and is only applicable to the Revolving Credit Facility. Our Consolidated Senior Secured Leverage Ratio as of the last day of any fiscal quarter, commencing with June 30, 2014, may not exceed the ratios indicated below: Fiscal Quarters Ending Maximum Ratio June 30, 2014 through September 30, 2015 4.00 to 1.00 December 31, 2015 through September 30, 2016 3.75 to 1.00 December 31, 2016 through September 30, 2017 3.50 to 1.00 December 31, 2017 through September 30, 2018 3.25 to 1.00 December 31, 2018 and thereafter 3.00 to 1.00 At June 30, 2015, we were in compliance with all of the financial covenants in the Credit Agreement. |
CLOSURE AND POST-CLOSURE OBLIGA
CLOSURE AND POST-CLOSURE OBLIGATIONS | 6 Months Ended |
Jun. 30, 2015 | |
CLOSURE AND POST-CLOSURE OBLIGATIONS | |
CLOSURE AND POST-CLOSURE OBLIGATIONS | NOTE 10. CLOSURE AND POST-CLOSURE OBLIGATIONS Our accrued closure and post-closure obligations represent the expected future costs, including corrective actions, associated with closure and post-closure of our operating and non-operating disposal facilities. Liabilities are recorded when work is probable and the costs can be reasonably estimated. We perform periodic reviews of both non-operating and operating facilities and revise accruals for estimated closure and post-closure, remediation or other costs as necessary. Recorded liabilities are based on our best estimates of current costs and are updated periodically to include the effects of existing technology, presently enacted laws and regulations, inflation and other economic factors. Changes to closure and post-closure obligations consisted of the following: Three Months Ended Six Months Ended $s in thousands June 30, 2015 June 30, 2015 Closure and post-closure obligations, beginning of period $ $ Accretion expense Payments ) ) Currency translation ) Closure and post-closure obligations, end of period Less current portion ) ) Long-term portion $ $ |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2015 | |
INCOME TAXES | |
INCOME TAXES | NOTE 11. INCOME TAXES Our effective tax rate for the three months ended June 30, 2015 was 70.3%, up from 38.2% for the three months ended June 30, 2014. Our effective tax rate for the six months ended June 30, 2015 was 49.9%, up from 36.9% for the six months ended June 30, 2014. The increases for both the three and six months ended June 30, 2015 primarily reflects non-deductible impairment charges of $6.7 million offset by lower non-tax deductible business development expenses in the three and six months ended June 30, 2015 compared to the same periods in 2014. We file a consolidated U.S. federal income tax return with the Internal Revenue Service as well as income tax returns in various states and Canada. We may be subject to examination by taxing authorities in the U.S. and Canada for tax years 2011 through 2014. Additionally, we may be subject to examinations by various state and local taxing jurisdictions for tax years 2010 through 2014. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 6 Months Ended |
Jun. 30, 2015 | |
EARNINGS PER SHARE | |
EARNINGS PER SHARE | NOTE 12. EARNINGS PER SHARE Three Months Ended June 30, $s and shares in thousands, except per share 2015 2014 amounts Basic Diluted Basic Diluted Net income $ $ $ $ Weighted average basic shares outstanding Dilutive effect of stock-based awards (1) Weighted average diluted shares outstanding Earnings per share $ $ $ $ Anti-dilutive shares excluded from calculation Six Months Ended June 30, $s and shares in thousands, except per share 2015 2014 amounts Basic Diluted Basic Diluted Net income $ $ $ $ Weighted average basic shares outstanding Dilutive effect of stock-based awards (1) Weighted average diluted shares outstanding Earnings per share $ $ $ $ Anti-dilutive shares excluded from calculation |
EQUITY
EQUITY | 6 Months Ended |
Jun. 30, 2015 | |
EQUITY | |
EQUITY | NOTE 13. EQUITY Omnibus Incentive Plan On May 27, 2015, our stockholders approved the Omnibus Incentive Plan (“Omnibus Plan”), which was approved by our Board of Directors on April 7, 2015. The Omnibus Plan provides, among other things, the ability for the Company to grant restricted stock, performance stock, options, stock appreciation rights (“SARs”), restricted stock units (“RSUs”), performance stock units (“PSUs”) and other stock-based awards or cash awards to officers, employees, consultants and non-employee directors. We will cease to grant equity awards under our 2008 Stock Option Incentive Plan and our 2006 Restricted Stock Plan (“Previous Plans”), and the Previous Plans will remain in effect solely for the settlement of awards granted under the Previous Plans. No shares that are reserved but unissued under the Previous Plans or that are outstanding under the Previous Plans and reacquired by the Company for any reason will be available for issuance under the Omnibus Plan. The Omnibus Plan expires on April 7, 2025 and authorizes 1.5 million shares of common stock for grant over the life of the Omnibus Plan. Performance Stock Units On May 27, 2015, the Company granted 6,929 PSUs to the Company’s named executive officers. Each PSU represents the right to receive, on the settlement date, one share of the Company’s common stock. The total number of PSUs each participant is eligible to earn ranges from 0% to 200% of the target number of PSUs granted. The actual number of PSUs that will vest and be settled in shares is determined at the end of a three-year performance period beginning January 1, 2015, based on total stockholder return relative to a set of peer companies. The fair value of the PSUs estimated on the grant date using a Monte Carlo simulation was $65.78 per unit. Compensation expense is recorded over the awards’ vesting period. The following table presents the range of assumptions used in the Monte Carlo simulation to calculate the fair value of the PSUs granted on May 27, 2015: Expected volatility % Stock price on grant date $ Risk-free interest rate % Expected term (years) Expected dividend yield % Stock Options and Restricted Stock During the six months ended June 30, 2015, option holders exercised 43,009 options with a weighted-average exercise price of $24.94 per option. Option holders exercised 1,042 of these options via net share settlement. During the six months ended June 30, 2015, the Company issued 5,811 shares of restricted stock from our treasury stock at an average cost of $46.82 per share. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES. | |
COMMITMENTS AND CONTINGENCIES | NOTE 14. COMMITMENTS AND CONTINGENCIES Litigation and Regulatory Proceedings In the ordinary course of business, we are involved in judicial and administrative proceedings involving federal, state, provincial or local governmental authorities, including regulatory agencies that oversee and enforce compliance with permits. Fines or penalties may be assessed by our regulators for non-compliance. Actions may also be brought by individuals or groups in connection with permitting of planned facilities, modification or alleged violations of existing permits, or alleged damages suffered from exposure to hazardous substances purportedly released from our operated sites, as well as other litigation. We maintain insurance intended to cover property and damage claims asserted as a result of our operations. Periodically, management reviews and may establish reserves for legal and administrative matters, or other fees expected to be incurred in relation to these matters. We are not currently a party to any material pending legal proceedings and are not aware of any other claims that could, individually or in the aggregate, have a materially adverse effect on our financial position, results of operations or cash flows . |
OPERATING SEGMENTS
OPERATING SEGMENTS | 6 Months Ended |
Jun. 30, 2015 | |
OPERATING SEGMENTS | |
OPERATING SEGMENTS | NOTE 15. NOTE 15. OPERATING SEGMENTS Financial Information by Segment Our operations are managed in two reportable segments reflecting our internal reporting structure and nature of services offered as follows: Environmental Services - This segment includes all of the legacy US Ecology operations and the legacy EQ treatment and disposal facilities. It provides a broad range of hazardous material management services including transportation, recycling, treatment and disposal of hazardous and non-hazardous waste at Company-owned landfill, wastewater and other treatment facilities. Field & Industrial Services - This segment includes all of the field and industrial service business of the legacy EQ operation. It provides packaging and collection of hazardous waste and total waste management solutions at customer sites and through our 10-day transfer facilities. Services include on-site management, waste characterization, transportation and disposal of non-hazardous and hazardous waste. This segment also provides specialty services such as high-pressure and chemical cleaning, centrifuge and materials processing, tank cleaning, decontamination, remediation, transportation, spill cleanup and emergency response and other services to commercial and industrial facilities and to government entities. The operations not managed through our two reportable segments are recorded as “Corporate.” Corporate selling, general and administrative expenses include typical corporate items such as legal, accounting and other items of a general corporate nature. Income taxes are assigned to Corporate, but all other items are included in the segment where they originated. Inter-company transactions have been eliminated from the segment information and are not significant between segments. Summarized financial information of our reportable segments is as follows: Three Months Ended June 30, 2015 $s in thousands Environmental Services Field & Industrial Services Corporate Total Treatment & Disposal Revenue $ $ — $ — $ Services Revenue: Transportation and Logistics (1) — Industrial Cleaning (2) — — Technical Services (3) — — Remediation (4) — — Other (5) — — Total Revenue $ $ $ — $ Depreciation, amortization and accretion $ $ $ $ Capital expenditures $ $ $ $ Total assets $ $ $ $ Three Months Ended June 30, 2014 $s in thousands Environmental Services Field & Industrial Services Corporate Total Treatment & Disposal Revenue $ $ — $ — $ Services Revenue: Transportation and Logistics (1) — Industrial Cleaning (2) — — Technical Services (3) — — Remediation (4) — — Other (5) — — Total Revenue $ $ $ — $ Depreciation, amortization and accretion $ $ $ $ Capital expenditures $ $ $ $ Total assets $ $ $ $ Six Months Ended June 30, 2015 $s in thousands Environmental Services Field & Industrial Services Corporate Total Treatment & Disposal Revenue $ $ — $ — $ Services Revenue: Transportation and Logistics (1) — Industrial Cleaning (2) — — Technical Services (3) — — Remediation (4) — — Other (5) — — Total Revenue $ $ $ — $ Depreciation, amortization and accretion $ $ $ $ Capital expenditures $ $ $ $ Total assets $ $ $ $ Six Months Ended June 30, 2014 $s in thousands Environmental Services Field & Industrial Services Corporate Total Treatment & Disposal Revenue $ $ — $ — $ Services Revenue: Transportation and Logistics (1) — Industrial Cleaning (2) — — Technical Services (3) — — Remediation (4) — — Other (5) — — Total Revenue $ $ $ — $ Depreciation, amortization and accretion $ $ $ $ Capital expenditures $ $ $ $ Total assets $ $ $ $ (1) Includes such services as collection, transportation and disposal of non-hazardous and hazardous waste. Prior to the acquisition of EQ on June 17, 2014, services within Environmental Services included transportation services. (2) Includes such services as industrial cleaning and maintenance for utilities, refineries, chemical plants, pulp and paper mills, steel and automotive plants, and refinery services such as tank cleaning, centrifuge and temporary storage. (3) Includes such services as Total Waste Management (“TWM”) programs, retail services, laboratory packing, less-than-truck-load (LTL) service and Household Hazardous Waste (“HHW”) collection. (4) Includes such services as site assessment, onsite treatment, project management and remedial action planning and execution. (5) Includes such services as emergency response and marine. Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization (“Adjusted EBITDA”) The primary financial measure used by management to assess segment performance is Adjusted EBITDA. Adjusted EBITDA is defined as net income before net interest expense, income tax expense, depreciation, amortization, stock based compensation, accretion of closure and post-closure liabilities, foreign currency gain/loss, non-cash impairment charges and other income/expense, which are not considered part of usual business operations. Adjusted EBITDA is a complement to results provided in accordance with accounting principles generally accepted in the United States (“GAAP”) and we believe that such information provides additional useful information to analysts, stockholders and other users to understand the Company’s operating performance. Since Adjusted EBITDA is not a measurement determined in accordance with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as presented may not be comparable to other similarly titled measures of other companies. Items excluded from Adjusted EBITDA are significant components in understanding and assessing our financial performance. Adjusted EBITDA should not be considered in isolation or as an alternative to, or substitute for, net income, cash flows generated by operations, investing or financing activities, or other financial statement data presented in the consolidated financial statements as indicators of financial performance or liquidity. Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or a substitute for analyzing our results as reported under GAAP. Some of the limitations are: Adjusted EBITDA does not reflect changes in, or cash requirements for, our working capital needs; Adjusted EBITDA does not reflect our interest expense, or the requirements necessary to service interest or principal payments on our debt; Adjusted EBITDA does not reflect our income tax expenses or the cash requirements to pay our taxes; Adjusted EBITDA does not reflect our cash expenditures or future requirements for capital expenditures or contractual commitments; and Although depreciation and amortization charges are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and Adjusted EBITDA does not reflect any cash requirements for such replacements. A reconciliation of Adjusted EBITDA to Net Income is as follows: Three Months Ended June 30, Six Months Ended June 30, $s in thousands 2015 2014 2015 2014 Adjusted EBITDA: Environmental Services $ $ $ $ Field & Industrial Services Corporate ) ) ) ) Total Reconciliation to Net income: Income tax expense ) ) ) ) Interest expense ) ) ) ) Interest income Foreign currency gain (loss) ) ) Other income Impairment charges ) — ) — Depreciation and amortization of plant and equipment ) ) ) ) Amortization of intangibles ) ) ) ) Stock-based compensation ) ) ) ) Accretion and non-cash adjustment of closure & post-closure liabilities ) ) ) ) Net income $ $ $ $ Revenue, Property and Equipment and Intangible Assets Outside of the United States We provide services in the United States and Canada. Revenues by geographic location where the underlying services were performed were as follows: Three Months Ended June 30, Six Months Ended June 30, $s in thousands 2015 2014 2015 2014 United States $ $ $ $ Canada Total revenue $ $ $ $ Long-lived assets, comprised of property and equipment and intangible assets net of accumulated depreciation and amortization, by geographic location are as follows: June 30, December 31, $s in thousands 2015 2014 United States $ $ Canada Total long-lived assets $ $ |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2015 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | NOTE 16. SUBSEQUENT EVENTS Quarterly Dividend On July 1, 2015, we declared a quarterly dividend of $0.18 per common share to stockholders of record on July 21, 2015. The dividend was paid using cash on hand on July 28, 2015 in an aggregate amount of $3.9 million. Definitive Agreement On August 4, 2015, we entered into a definitive agreement to sell our Allstate Power Vac., Inc. (“Allstate”) subsidiary to a private investor group for approximately $58.0 million cash, subject to adjustments for working capital and capital expenditures. The transaction is subject to customary closing conditions and is expected to close in the fourth quarter of 2015, with the cash proceeds from the transaction expected to be used to repay indebtedness. Allstate represents the majority of the industrial services business we acquired with the acquisition of EQ. As a result of this agreement and management’s strategic review, we evaluated the recoverability of the assets associated with our industrial services business. Based on this analysis, we recorded a non-cash goodwill impairment charge of $6.7 million, or $0.31 per diluted share, in the second quarter of 2015. |
GENERAL (Policies)
GENERAL (Policies) | 6 Months Ended |
Jun. 30, 2015 | |
GENERAL | |
Basis of presentation | Basis of Presentation The accompanying unaudited consolidated financial statements include the results of operations, financial position and cash flows of US Ecology, Inc. and its wholly-owned subsidiaries. All significant intercompany balances have been eliminated. Throughout these financial statements words such as “we,” “us,” “our,” “US Ecology” and the “Company” refer to US Ecology, Inc. and its subsidiaries. In the opinion of management, the accompanying unaudited consolidated financial statements include all adjustments necessary to present fairly, in all material respects, the results of the Company for the periods presented. These consolidated financial statements have been prepared by the Company pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States (“GAAP”) have been omitted pursuant to the rules and regulations of the SEC. These consolidated financial statements should be read in conjunction with the consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2014. The results for the three and six months ended June 30, 2015 are not necessarily indicative of results to be expected for the entire fiscal year. In these consolidated financial statements, certain amounts in prior periods’ consolidated financial statements have been reclassified to conform with the current period presentation. The Company’s Consolidated Balance Sheet as of December 31, 2014 has been derived from the Company’s audited Consolidated Balance Sheet as of that date and has been revised for purchase price measurement period adjustments related to the acquisition of EQ as disclosed in Note 2. |
Use of Estimates | Use of Estimates The preparation of financial statements in conformity with accounting principles generally accepted in the United States requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements, as well as the reported amounts of revenue and expenses during the reporting period. Actual results could differ materially from the estimates and assumptions that we use in the preparation of our financial statements. As it relates to estimates and assumptions in amortization rates and environmental obligations, significant engineering, operations and accounting judgments are required. We review these estimates and assumptions no less than annually. In many circumstances, the ultimate outcome of these estimates and assumptions will not be known for decades into the future. Actual results could differ materially from these estimates and assumptions due to changes in applicable regulations, changes in future operational plans and inherent imprecision associated with estimating environmental impacts far into the future. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements In April 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) No. 2015-03 Simplifying the Presentation of Debt Issuance Costs . This ASU requires an entity to present debt issuance costs in the balance sheet as a direct deduction from the related debt liability rather than as an asset. The guidance is effective for annual and interim reporting periods beginning after December 15, 2015. We do not believe the adoption of this update will have a material effect on our financial position and results of operations. In May 2014, the FASB issued ASU No. 2014-09 Revenue from Contracts with Customers , which provides guidance for revenue recognition. The standard’s core principle is that a company will recognize revenue when it transfers promised goods or services to customers in an amount that reflects the consideration to which the company expects to be entitled in exchange for those goods or services. The standard permits the use of either the retrospective or cumulative effect transition method. The ASU also requires enhanced disclosures regarding the nature, amount, timing, and uncertainty of revenues and cash flows from contracts with customers. On July 9, 2015, the FASB agreed to delay the effective date of ASU 2014-09 by one year. The new guidance is effective for annual reporting periods beginning after December 15, 2017, including interim periods within that reporting period. Early adoption is permitted but not before annual periods beginning after December 15, 2016. We are currently assessing the impact the adoption of ASU 2014-09 may have on our consolidated financial statements. |
BUSINESS COMBINATION (Tables)
BUSINESS COMBINATION (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
BUSINESS COMBINATION | |
Summary of consideration paid and the preliminary fair value of assets acquired and liabilities assumed at the acquisition date with purchase price allocation adjustments | The following table summarizes the consideration paid for EQ and the fair value estimates of assets acquired and liabilities assumed recognized at the acquisition date, with purchase price allocation adjustments since the preliminary purchase price allocation as previously disclosed as of December 31, 2014: Purchase Price Allocation $s in thousands As Reported in Form 10-K Adjustments As Retrospectively Adjusted Current assets $ $ $ Property and equipment — Identifiable intangible assets — Current liabilities ) ) ) Other liabilities ) ) Total identifiable net assets ) Goodwill Total purchase price $ $ — $ |
Schedule of fair value estimate of identifiable intangible assets by major intangible assets and related weighted average amortization period | $s in thousands Fair Value Weighted Average Amortization Period (Years) Customer relationships $ 15 Permits and licenses 45 Permits and licenses, nonamortizing — Tradename 3 Customer backlog 10 Developed software 9 Non-compete agreements 1 Internet domain and website 19 Database 15 Total identifiable intangible assets $ |
Schedule of unaudited pro forma financial information | (unaudited) (unaudited) Three Months Ended Six Months Ended $s in thousands, except per share amounts June 30, 2014 June 30, 2014 Pro forma combined: Revenue $ $ Net income $ $ Earnings per share Basic $ $ Diluted $ $ |
ACCUMULATED OTHER COMPREHENSI26
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) | |
Schedule of changes in accumulated other comprehensive income (loss) | Foreign Currency Translation Unrealized Loss on Interest Rate Hedge Total Balance at December 31, 2014 $ ) $ ) $ ) Other comprehensive income (loss) before reclassifications, net of tax ) ) ) Amounts reclassified out of AOCI, net of tax (1) — Other comprehensive loss ) ) ) Balance at June 30, 2015 $ ) $ ) $ ) (1) Before-tax reclassifications of $879,000 ($572,000 after-tax) and $1.8 million ($1.1 million after-tax) for the three and six months ended June 30, 2015, respectively, were included in Interest expense in the Company’s consolidated statements of operations. Amount relates to interest rate swap which is designated as a cash flow hedge. Changes in fair value of the swap recognized in AOCI are reclassified to interest expense when hedged interest payments on the underlying debt are made. Amounts in AOCI expected to be recognized in interest expense over the next 12 months total approximately $3.5 million ($2.3 million after tax). |
RECEIVABLES (Tables)
RECEIVABLES (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
RECEIVABLES | |
Schedule of receivables | June 30, December 31, $s in thousands 2015 2014 Trade $ $ Unbilled revenue Other Total receivables Allowance for doubtful accounts ) ) Receivables, net $ $ |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
Schedule of assets measured at fair value on a recurring basis | June 30, 2015 Quoted Prices in Active Markets Other Observable Inputs Unobservable Inputs $s in thousands (Level 1) (Level 2) (Level 3) Total Assets: Fixed-income securities (1) $ $ $ — $ Money market funds (2) — — Total $ $ $ — $ Liabilities: Interest rate swap agreement (3) $ — $ $ — $ Total $ — $ $ — $ December 31, 2014 Quoted Prices in Active Markets Other Observable Inputs Unobservable Inputs $s in thousands (Level 1) (Level 2) (Level 3) Total Assets: Fixed-income securities (1) $ $ $ — $ Money market funds (2) — — Total $ $ $ — $ Liabilities: Interest rate swap agreement (3) $ — $ $ — $ Total $ — $ $ — $ (1) We invest a portion of our Restricted cash and investments in fixed-income securities, including U.S. Treasury and U.S. agency securities. We measure the fair value of U.S. Treasury securities using quoted prices for identical assets in active markets. We measure the fair value of U.S. agency securities using observable market activity for similar assets. The fair value of our fixed-income securities approximates our cost basis in the investments. (2) We invest a portion of our Restricted cash and investments in money market funds. We measure the fair value of these money market fund investments using quoted prices for identical assets in active markets. (3) In order to manage interest rate exposure, we entered into an interest rate swap agreement in October 2014 that effectively converts a portion of our variable-rate debt to a fixed interest rate. The swap is designated as a cash flow hedge, with gains and losses deferred in other comprehensive income to be recognized as an adjustment to interest expense in the same period that the hedged interest payments affect earnings. The interest rate swap has an effective date of December 31, 2014 in an initial notional amount of $250.0 million. The fair value of the interest rate swap agreement represents the difference in the present value of cash flows calculated (i) at the contracted interest rates and (ii) at current market interest rates at the end of the period. We calculate the fair value of interest rate swap agreements quarterly based on the quoted market price for the same or similar financial instruments. The fair value of the interest rate swap agreement is included in Other long-term liabilities in the Company’s consolidated balance sheet. |
PROPERTY AND EQUIPMENT (Tables)
PROPERTY AND EQUIPMENT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
PROPERTY AND EQUIPMENT | |
Schedule of property and equipment | June 30, December 31, $s in thousands 2015 2014 Cell development costs $ $ Land and improvements Buildings and improvements Railcars Vehicles and other equipment Construction in progress Total property and equipment Accumulated depreciation and amortization ) ) Property and equipment, net $ $ |
GOODWILL AND INTANGIBLE ASSETS
GOODWILL AND INTANGIBLE ASSETS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
GOODWILL AND INTANGIBLE ASSETS | |
Schedule of changes in goodwill | $s in thousands Environmental Services Field & Industrial Services Total Balance at December 31, 2014 (1) $ $ $ Impairment charges (2) — ) ) Foreign currency translation ) — ) Balance at June 30, 2015 $ $ $ (1) Balances have been revised to reflect purchase accounting measurement period adjustments related to the acquisition of EQ as disclosed in Note 2. (2) As disclosed in Note 16, on August 4, 2015, we entered into a definitive agreement to sell our Allstate Power Vac., Inc. (“Allstate”) subsidiary to a private investor group for approximately $58.0 million cash, subject to adjustments for working capital and capital expenditures. Allstate represents the majority of the industrial services business we acquired with the acquisition of EQ. As a result of this agreement and management’s strategic review, we evaluated the recoverability of the assets associated with our industrial services business. Based on this analysis, we recorded a non-cash goodwill impairment charge of $6.7 million, or $0.31 per diluted share, in the second quarter of 2015. We calculated the estimated fair value of the industrial services business using a combination of quoted market prices and discounted cash flows. |
Schedule of intangible assets | June 30, 2015 December 31, 2014 $s in thousands Cost Accumulated Amortization Net Cost Accumulated Amortization Net Amortizing intangible assets: Permits, licenses and lease $ $ ) $ $ $ ) $ Customer relationships ) ) Technology - formulae and processes ) ) Customer backlog ) ) Tradename ) ) Developed software ) ) Non-compete agreements ) ) Internet domain and website ) ) Database ) ) Total amortizing intangible assets ) ) Nonamortizing intangible assets: Permits and licenses — — Tradename — — Total intangible assets, net $ $ ) $ $ $ ) $ |
DEBT (Tables)
DEBT (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
DEBT | |
Schedule of long-term debt | June 30, December 31, $s in thousands 2015 2014 Term loan $ $ Net discount on term loan ) ) Total debt Current portion of long-term debt ) ) Long-term debt $ $ |
Schedule of maximum consolidated senior secured leverage ratio for different periods | Fiscal Quarters Ending Maximum Ratio June 30, 2014 through September 30, 2015 4.00 to 1.00 December 31, 2015 through September 30, 2016 3.75 to 1.00 December 31, 2016 through September 30, 2017 3.50 to 1.00 December 31, 2017 through September 30, 2018 3.25 to 1.00 December 31, 2018 and thereafter 3.00 to 1.00 |
CLOSURE AND POST-CLOSURE OBLI32
CLOSURE AND POST-CLOSURE OBLIGATIONS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
CLOSURE AND POST-CLOSURE OBLIGATIONS | |
Schedule of changes in closure and post-closure obligations | Three Months Ended Six Months Ended $s in thousands June 30, 2015 June 30, 2015 Closure and post-closure obligations, beginning of period $ $ Accretion expense Payments ) ) Currency translation ) Closure and post-closure obligations, end of period Less current portion ) ) Long-term portion $ $ |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
EARNINGS PER SHARE | |
Schedule of earnings per share | Three Months Ended June 30, $s and shares in thousands, except per share 2015 2014 amounts Basic Diluted Basic Diluted Net income $ $ $ $ Weighted average basic shares outstanding Dilutive effect of stock-based awards (1) Weighted average diluted shares outstanding Earnings per share $ $ $ $ Anti-dilutive shares excluded from calculation Six Months Ended June 30, $s and shares in thousands, except per share 2015 2014 amounts Basic Diluted Basic Diluted Net income $ $ $ $ Weighted average basic shares outstanding Dilutive effect of stock-based awards (1) Weighted average diluted shares outstanding Earnings per share $ $ $ $ Anti-dilutive shares excluded from calculation |
EQUITY (Tables)
EQUITY (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
EQUITY | |
Schedule of assumptions for determining the fair value for TSR awards using Monte Carlo simulation models | The following table presents the range of assumptions used in the Monte Carlo simulation to calculate the fair value of the PSUs granted on May 27, 2015: Expected volatility % Stock price on grant date $ Risk-free interest rate % Expected term (years) Expected dividend yield % |
OPERATING SEGMENTS (Tables)
OPERATING SEGMENTS (Tables) | 6 Months Ended |
Jun. 30, 2015 | |
OPERATING SEGMENTS | |
Summary of financial information concerning reportable segments | Three Months Ended June 30, 2015 $s in thousands Environmental Services Field & Industrial Services Corporate Total Treatment & Disposal Revenue $ $ — $ — $ Services Revenue: Transportation and Logistics (1) — Industrial Cleaning (2) — — Technical Services (3) — — Remediation (4) — — Other (5) — — Total Revenue $ $ $ — $ Depreciation, amortization and accretion $ $ $ $ Capital expenditures $ $ $ $ Total assets $ $ $ $ Three Months Ended June 30, 2014 $s in thousands Environmental Services Field & Industrial Services Corporate Total Treatment & Disposal Revenue $ $ — $ — $ Services Revenue: Transportation and Logistics (1) — Industrial Cleaning (2) — — Technical Services (3) — — Remediation (4) — — Other (5) — — Total Revenue $ $ $ — $ Depreciation, amortization and accretion $ $ $ $ Capital expenditures $ $ $ $ Total assets $ $ $ $ Six Months Ended June 30, 2015 $s in thousands Environmental Services Field & Industrial Services Corporate Total Treatment & Disposal Revenue $ $ — $ — $ Services Revenue: Transportation and Logistics (1) — Industrial Cleaning (2) — — Technical Services (3) — — Remediation (4) — — Other (5) — — Total Revenue $ $ $ — $ Depreciation, amortization and accretion $ $ $ $ Capital expenditures $ $ $ $ Total assets $ $ $ $ Six Months Ended June 30, 2014 $s in thousands Environmental Services Field & Industrial Services Corporate Total Treatment & Disposal Revenue $ $ — $ — $ Services Revenue: Transportation and Logistics (1) — Industrial Cleaning (2) — — Technical Services (3) — — Remediation (4) — — Other (5) — — Total Revenue $ $ $ — $ Depreciation, amortization and accretion $ $ $ $ Capital expenditures $ $ $ $ Total assets $ $ $ $ (1) Includes such services as collection, transportation and disposal of non-hazardous and hazardous waste. Prior to the acquisition of EQ on June 17, 2014, services within Environmental Services included transportation services. (2) Includes such services as industrial cleaning and maintenance for utilities, refineries, chemical plants, pulp and paper mills, steel and automotive plants, and refinery services such as tank cleaning, centrifuge and temporary storage. (3) Includes such services as Total Waste Management (“TWM”) programs, retail services, laboratory packing, less-than-truck-load (LTL) service and Household Hazardous Waste (“HHW”) collection. (4) Includes such services as site assessment, onsite treatment, project management and remedial action planning and execution. (5) Includes such services as emergency response and marine. |
Reconciliation of Adjusted EBITDA to Net Income | Three Months Ended June 30, Six Months Ended June 30, $s in thousands 2015 2014 2015 2014 Adjusted EBITDA: Environmental Services $ $ $ $ Field & Industrial Services Corporate ) ) ) ) Total Reconciliation to Net income: Income tax expense ) ) ) ) Interest expense ) ) ) ) Interest income Foreign currency gain (loss) ) ) Other income Impairment charges ) — ) — Depreciation and amortization of plant and equipment ) ) ) ) Amortization of intangibles ) ) ) ) Stock-based compensation ) ) ) ) Accretion and non-cash adjustment of closure & post-closure liabilities ) ) ) ) Net income $ $ $ $ |
Summary of revenues by geographic location | Three Months Ended June 30, Six Months Ended June 30, $s in thousands 2015 2014 2015 2014 United States $ $ $ $ Canada Total revenue $ $ $ $ |
Schedule of long-lived assets by geographic location | June 30, December 31, $s in thousands 2015 2014 United States $ $ Canada Total long-lived assets $ $ |
BUSINESS COMBINATION (Details)
BUSINESS COMBINATION (Details) - USD ($) | Jun. 17, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 |
BUSINESS ACQUISITIONS | ||||||
Payment to acquire business, net of cash acquired | $ 465,895,000 | |||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Goodwill | $ 209,666,000 | $ 209,666,000 | $ 217,609,000 | |||
Field & Industrial Services | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Goodwill | 58,513,000 | 58,513,000 | 65,213,000 | |||
Environmental Services | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Goodwill | 151,153,000 | 151,153,000 | 152,396,000 | |||
EQ | ||||||
BUSINESS ACQUISITIONS | ||||||
Percentage of outstanding shares acquired | 100.00% | |||||
Payment to acquire business, net of cash acquired | $ 460,900,000 | |||||
Amount of term loan which was used to funded acquisition | 415,000,000 | |||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Current assets | 112,009,000 | |||||
Property and equipment | 101,543,000 | |||||
Identifiable intangible assets | 252,874,000 | 252,874,000 | ||||
Current liabilities | (58,312,000) | |||||
Other liabilities | (139,068,000) | |||||
Total identifiable net assets | 269,046,000 | |||||
Goodwill | 197,600,000 | 197,600,000 | 197,600,000 | |||
Total purchase price | 466,646,000 | |||||
Additional information | ||||||
Revenue since acquisition included in consolidated statements of operations | 89,200,000 | 173,800,000 | ||||
Operating income since acquisition included in consolidated statements of operations | 751,000 | 4,300,000 | ||||
Acquisition-related costs included in selling, general and administrative expenses | 133,000 | 915,000 | ||||
Pro forma combined: | ||||||
Revenue | $ 149,121,000 | 287,232,000 | ||||
Net income | $ 6,297,000 | $ 11,503,000 | ||||
Earnings per share - Basic (in dollars per share) | $ 0.29 | $ 0.53 | ||||
Earnings per share - Diluted (in dollars per share) | $ 0.29 | $ 0.53 | ||||
EQ | Field & Industrial Services | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Goodwill | 65,200,000 | 65,200,000 | ||||
EQ | Environmental Services | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Goodwill | $ 132,400,000 | $ 132,400,000 | ||||
EQ | Permits and licenses | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | 49,000,000 | |||||
Previously Reported | EQ | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Current assets | 111,982,000 | |||||
Property and equipment | 101,543,000 | |||||
Identifiable intangible assets | 252,874,000 | |||||
Current liabilities | (57,585,000) | |||||
Other liabilities | (139,331,000) | |||||
Total identifiable net assets | 269,483,000 | |||||
Goodwill | 197,163,000 | |||||
Total purchase price | 466,646,000 | |||||
Adjustments | EQ | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Current assets | 27,000 | |||||
Current liabilities | (727,000) | |||||
Other liabilities (debit balance) | 263,000 | |||||
Total identifiable net assets | (437,000) | |||||
Goodwill | $ 437,000 | |||||
Customer relationships | EQ | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | $ 98,400,000 | |||||
Additional information | ||||||
Weighted average amortization period | 15 years | |||||
Permits and licenses | EQ | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | $ 89,600,000 | |||||
Additional information | ||||||
Weighted average amortization period | 45 years | |||||
Tradename | EQ | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | $ 5,481,000 | |||||
Additional information | ||||||
Weighted average amortization period | 3 years | |||||
Customer backlog | EQ | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | $ 4,600,000 | |||||
Additional information | ||||||
Weighted average amortization period | 10 years | |||||
Developed software | EQ | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | $ 3,443,000 | |||||
Additional information | ||||||
Weighted average amortization period | 9 years | |||||
Non-compete agreements | EQ | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | $ 900,000 | |||||
Additional information | ||||||
Weighted average amortization period | 1 year | |||||
Internet domain and website | EQ | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | $ 869,000 | |||||
Additional information | ||||||
Weighted average amortization period | 19 years | |||||
Database | EQ | ||||||
Consideration paid and the fair value of assets acquired and liabilities assumed | ||||||
Identifiable intangible assets | $ 581,000 | |||||
Additional information | ||||||
Weighted average amortization period | 15 years |
ACCUMULATED OTHER COMPREHENSI37
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details) $ in Thousands | 6 Months Ended |
Jun. 30, 2015USD ($) | |
Accumulated other comprehensive loss, net of taxes | |
Balance at the beginning | $ (7,686) |
Other comprehensive income (loss) before reclassifications, net of tax | (4,489) |
Amounts reclassified out of AOCI, net of tax (1) | 1,149 |
Other comprehensive loss | (3,340) |
Balance at the end | (11,026) |
Foreign Currency Translation | |
Accumulated other comprehensive loss, net of taxes | |
Balance at the beginning | (5,648) |
Other comprehensive income (loss) before reclassifications, net of tax | (3,171) |
Other comprehensive loss | (3,171) |
Balance at the end | (8,819) |
Unrealized Loss on Interest Rate Hedge | |
Accumulated other comprehensive loss, net of taxes | |
Balance at the beginning | (2,038) |
Other comprehensive income (loss) before reclassifications, net of tax | (1,318) |
Amounts reclassified out of AOCI, net of tax (1) | 1,149 |
Other comprehensive loss | (169) |
Balance at the end | $ (2,207) |
ACCUMULATED OTHER COMPREHENSI38
ACCUMULATED OTHER COMPREHENSIVE INCOME (LOSS) (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Reclassification adjustments | ||||
Interest expense | $ 5,433 | $ 858 | $ 11,127 | $ 944 |
Reclassification out of accumulated other comprehensive income | ||||
Reclassification adjustments | ||||
Interest expense | 879,000 | 1,800 | ||
Interest expense, net of tax | 572,000 | 1,100 | ||
Amounts in AOCI expected to be recognized over the next 12 months before tax | $ 3,500 | 3,500 | ||
Amounts in AOCI expected to be recognized over the next 12 months, net of taxes | $ 2,300 |
RECEIVABLES (Details)
RECEIVABLES (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
RECEIVABLES | ||
Trade | $ 93,860 | $ 116,218 |
Unbilled revenue | 24,473 | 17,857 |
Other | 1,714 | 1,890 |
Total receivables | 120,047 | 135,965 |
Allowance for doubtful accounts | (2,503) | (704) |
Receivables, net | $ 117,544 | $ 135,261 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2015 | Dec. 31, 2014 |
Assets measured at fair value on a recurring basis | ||
Initial notional amount | $ 250,000 | |
Recurring | ||
Assets measured at fair value on a recurring basis | ||
Assets fair value disclosure | $ 5,752 | 5,729 |
Liabilities fair value disclosure | 3,397 | 3,136 |
Recurring | Interest rate swap agreement | ||
Assets measured at fair value on a recurring basis | ||
Liabilities fair value disclosure | 3,397 | 3,136 |
Recurring | Fixed-income securities | ||
Assets measured at fair value on a recurring basis | ||
Assets fair value disclosure | 3,997 | 3,990 |
Recurring | Money market funds | ||
Assets measured at fair value on a recurring basis | ||
Assets fair value disclosure | 1,755 | 1,739 |
Recurring | Quoted Prices in Active Markets (Level 1) | ||
Assets measured at fair value on a recurring basis | ||
Assets fair value disclosure | 2,156 | 2,139 |
Recurring | Quoted Prices in Active Markets (Level 1) | Fixed-income securities | ||
Assets measured at fair value on a recurring basis | ||
Assets fair value disclosure | 401 | 400 |
Recurring | Quoted Prices in Active Markets (Level 1) | Money market funds | ||
Assets measured at fair value on a recurring basis | ||
Assets fair value disclosure | 1,755 | 1,739 |
Recurring | Other Observable Inputs (Level 2) | ||
Assets measured at fair value on a recurring basis | ||
Assets fair value disclosure | 3,596 | 3,590 |
Liabilities fair value disclosure | 3,397 | 3,136 |
Recurring | Other Observable Inputs (Level 2) | Interest rate swap agreement | ||
Assets measured at fair value on a recurring basis | ||
Liabilities fair value disclosure | 3,397 | 3,136 |
Recurring | Other Observable Inputs (Level 2) | Fixed-income securities | ||
Assets measured at fair value on a recurring basis | ||
Assets fair value disclosure | $ 3,596 | $ 3,590 |
PROPERTY AND EQUIPMENT (Details
PROPERTY AND EQUIPMENT (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
PROPERTY AND EQUIPMENT | |||||
Total property and equipment | $ 363,910 | $ 363,910 | $ 355,481 | ||
Accumulated depreciation and amortization | (139,353) | (139,353) | (127,797) | ||
Property and equipment, net | 224,557 | 224,557 | 227,684 | ||
Depreciation and amortization expense | 7,656 | $ 4,573 | 15,135 | $ 8,412 | |
Cell development costs | |||||
PROPERTY AND EQUIPMENT | |||||
Total property and equipment | 120,766 | 120,766 | 120,878 | ||
Land and improvements | |||||
PROPERTY AND EQUIPMENT | |||||
Total property and equipment | 33,399 | 33,399 | 33,002 | ||
Buildings and improvements | |||||
PROPERTY AND EQUIPMENT | |||||
Total property and equipment | 73,355 | 73,355 | 74,518 | ||
Railcars | |||||
PROPERTY AND EQUIPMENT | |||||
Total property and equipment | 17,375 | 17,375 | 17,375 | ||
Vehicles and other equipment | |||||
PROPERTY AND EQUIPMENT | |||||
Total property and equipment | 104,187 | 104,187 | 98,877 | ||
Construction in progress | |||||
PROPERTY AND EQUIPMENT | |||||
Total property and equipment | $ 14,828 | $ 14,828 | $ 10,831 |
GOODWILL AND INTANGIBLE ASSET42
GOODWILL AND INTANGIBLE ASSETS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2015 | Dec. 31, 2014 | |
Changes in goodwill | ||||||
Balance at the beginning of the period | $ 217,609 | |||||
Impairment charges | $ (6,700) | (6,700) | ||||
Foreign Currency Translation | (1,243) | |||||
Balance at the end of the period | 209,666 | 209,666 | ||||
Intangible Assets | ||||||
Amortizing intangible assets, Cost | 238,524 | 238,524 | $ 240,905 | |||
Accumulated amortization | (18,396) | (18,396) | (12,135) | |||
Amortizing intangible assets, Net | 220,128 | 220,128 | 228,770 | |||
Total intangible assets, cost | 288,407 | 288,407 | 290,802 | |||
Total intangible assets, net | 270,011 | 270,011 | 278,667 | |||
Amortization expense | 3,304 | $ 862 | 6,606 | $ 1,215 | ||
Permits and licenses | ||||||
Intangible Assets | ||||||
Nonamortizing intangible assets | 49,750 | 49,750 | 49,750 | |||
Tradename | ||||||
Intangible Assets | ||||||
Nonamortizing intangible assets | 133 | 133 | 147 | |||
Allstate | Forecast | ||||||
Changes in goodwill | ||||||
Cash consideration | $ 58,000 | |||||
Allstate | Forecast | Subsequent event | ||||||
Changes in goodwill | ||||||
Cash consideration | $ 58,000 | |||||
Permits, licenses and lease | ||||||
Intangible Assets | ||||||
Amortizing intangible assets, Cost | 112,090 | 112,090 | 113,693 | |||
Accumulated amortization | (5,688) | (5,688) | (4,427) | |||
Amortizing intangible assets, Net | 106,402 | 106,402 | 109,266 | |||
Customer relationships | ||||||
Intangible Assets | ||||||
Amortizing intangible assets, Cost | 102,852 | 102,852 | 103,086 | |||
Accumulated amortization | (7,840) | (7,840) | (4,488) | |||
Amortizing intangible assets, Net | 95,012 | 95,012 | 98,598 | |||
Technology - formulae and processes | ||||||
Intangible Assets | ||||||
Amortizing intangible assets, Cost | 7,322 | 7,322 | 7,844 | |||
Accumulated amortization | (1,059) | (1,059) | (1,009) | |||
Amortizing intangible assets, Net | 6,263 | 6,263 | 6,835 | |||
Customer backlog | ||||||
Intangible Assets | ||||||
Amortizing intangible assets, Cost | 4,600 | 4,600 | 4,600 | |||
Accumulated amortization | (476) | (476) | (246) | |||
Amortizing intangible assets, Net | 4,124 | 4,124 | 4,354 | |||
Tradename | ||||||
Intangible Assets | ||||||
Amortizing intangible assets, Cost | 5,485 | 5,485 | 5,481 | |||
Accumulated amortization | (1,892) | (1,892) | (979) | |||
Amortizing intangible assets, Net | 3,593 | 3,593 | 4,502 | |||
Developed software | ||||||
Intangible Assets | ||||||
Amortizing intangible assets, Cost | 3,725 | 3,725 | 3,745 | |||
Accumulated amortization | (629) | (629) | (428) | |||
Amortizing intangible assets, Net | 3,096 | 3,096 | 3,317 | |||
Non-compete agreements | ||||||
Intangible Assets | ||||||
Amortizing intangible assets, Cost | 920 | 920 | 920 | |||
Accumulated amortization | (671) | (671) | (462) | |||
Amortizing intangible assets, Net | 249 | 249 | 458 | |||
Internet domain and website | ||||||
Intangible Assets | ||||||
Amortizing intangible assets, Cost | 869 | 869 | 869 | |||
Accumulated amortization | (47) | (47) | (24) | |||
Amortizing intangible assets, Net | 822 | 822 | 845 | |||
Database | ||||||
Intangible Assets | ||||||
Amortizing intangible assets, Cost | 661 | 661 | 667 | |||
Accumulated amortization | (94) | (94) | (72) | |||
Amortizing intangible assets, Net | 567 | 567 | $ 595 | |||
Environmental Services | ||||||
Changes in goodwill | ||||||
Balance at the beginning of the period | 152,396 | |||||
Foreign Currency Translation | (1,243) | |||||
Balance at the end of the period | 151,153 | 151,153 | ||||
Field & Industrial Services | ||||||
Changes in goodwill | ||||||
Balance at the beginning of the period | 65,213 | |||||
Impairment charges | (6,700) | (6,700) | ||||
Balance at the end of the period | $ 58,513 | $ 58,513 | ||||
Goodwill impairment charge per diluted share | $ 0.31 |
DEBT (Details)
DEBT (Details) - USD ($) $ in Thousands | Jun. 17, 2014 | Jun. 30, 2015 | Dec. 31, 2014 | Jun. 16, 2014 |
Long-term debt | ||||
Term loan | $ 361,680 | $ 395,616 | ||
Net discount on term loan | (889) | (963) | ||
Total debt | 360,791 | 394,653 | ||
Current portion of long-term debt | (3,505) | (3,828) | ||
Long-term debt | $ 357,286 | $ 390,825 | ||
Credit Agreement | ||||
Long-term debt | ||||
Period after closing of the credit agreement considered for calculation of prepayment premium | 6 months | |||
Mandatory prepayments as a percentage of adjusted excess cash flow if entity's total leverage ratio is greater than the specified leverage ratio | 50.00% | |||
Total leverage ratio | 2.50 | |||
Mandatory prepayments as a percentage of adjusted excess cash flow if entity's total leverage ratio is equal to or less than the specified leverage ratio | 0.00% | |||
Credit Agreement | EQ | ||||
Long-term debt | ||||
Maximum borrowing capacity | $ 540,000 | |||
Term Loan | ||||
Long-term debt | ||||
Debt instrument, aggregate annual amortization as a percentage of original principal amount | 1.00% | |||
Effective interest rate (as a percent) | 4.66% | |||
Percentage of principal amount of debt instrument for which the Company is required to enter into one or more interest rate hedge agreements | 68.00% | |||
Amount of debt hedged | $ 245,000 | |||
Prepayment premium (as a percent) | 1.00% | |||
Term Loan | Minimum | ||||
Long-term debt | ||||
Percentage of principal amount of debt instrument for which the Company is required to enter into one or more interest rate hedge agreements | 50.00% | |||
Term Loan | Base rate | ||||
Long-term debt | ||||
Percentage points added to the reference rate | 2.00% | |||
Term Loan | LIBOR | ||||
Long-term debt | ||||
Percentage points added to the reference rate | 3.00% | |||
Term Loan | EQ | ||||
Long-term debt | ||||
Maximum borrowing capacity | $ 415,000 | |||
Percentage of outstanding shares acquired | 100.00% | |||
Revolving Line of Credit | ||||
Long-term debt | ||||
Maximum borrowing capacity | $ 125,000 | |||
Amount outstanding | 0 | |||
Commitment fee (as a percent) | 0.50% | |||
Availability for borrowings under line of credit | 119,500 | |||
Line of credit issued in the form of a standby letters of credit | $ 5,500 | |||
Revolving Line of Credit | June 30, 2014 through September 30, 2015 | ||||
Long-term debt | ||||
Maximum consolidated senior secured leverage ratio | 4 | |||
Revolving Line of Credit | December 31, 2015 through September 30, 2016 | ||||
Long-term debt | ||||
Maximum consolidated senior secured leverage ratio | 3.75 | |||
Revolving Line of Credit | December 31, 2016 through September 30, 2017 | ||||
Long-term debt | ||||
Maximum consolidated senior secured leverage ratio | 3.50 | |||
Revolving Line of Credit | December 31, 2017 through September 30, 2018 | ||||
Long-term debt | ||||
Maximum consolidated senior secured leverage ratio | 3.25 | |||
Revolving Line of Credit | December 31, 2018 and thereafter | ||||
Long-term debt | ||||
Maximum consolidated senior secured leverage ratio | 3 | |||
Letter of credit | ||||
Long-term debt | ||||
Maximum borrowing capacity | $ 50,000 | |||
Former Agreement | ||||
Long-term debt | ||||
Amount outstanding | $ 0 | |||
Early termination penalties incurred | $ 0 |
CLOSURE AND POST-CLOSURE OBLI44
CLOSURE AND POST-CLOSURE OBLIGATIONS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Changes to closure and post-closure obligations | ||||
Closure and post-closure obligations, beginning of period | $ 73,164 | $ 72,870 | ||
Accretion expense | 1,042 | 2,077 | $ 716 | |
Payments | (1,553) | (2,136) | ||
Currency translation | 37 | (121) | ||
Closure and post-closure obligations, end of period | 72,690 | 72,690 | ||
Less current portion | (5,338) | (5,338) | $ (5,359) | |
Long-term portion | $ 67,352 | $ 67,352 | $ 67,511 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2013 | |
INCOME TAXES | ||||
Effective tax rate (as a percent) | 70.30% | 38.20% | 49.90% | 36.90% |
Impairment charges not deductible for tax purposes | $ 6.7 | $ 6.7 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Basic | ||||
Net income, basic | $ 2,138 | $ 6,865 | $ 8,003 | $ 16,226 |
Weighted average basic shares outstanding | 21,617,000 | 21,528,000 | 21,600,000 | 21,503,000 |
Earnings per share (in dollars per share) | $ 0.10 | $ 0.32 | $ 0.37 | $ 0.75 |
Diluted | ||||
Net income, diluted | $ 2,138 | $ 6,865 | $ 8,003 | $ 16,226 |
Weighted average basic shares outstanding | 21,617,000 | 21,528,000 | 21,600,000 | 21,503,000 |
Dilutive effect of stock-based awards (in shares) | 131,000 | 139,000 | 119,000 | 129,000 |
Weighted average diluted shares outstanding | 21,748,000 | 21,667,000 | 21,719,000 | 21,632,000 |
Earnings per share (in dollars per share) | $ 0.10 | $ 0.32 | $ 0.37 | $ 0.75 |
Anti-dilutive shares excluded from calculation | 178,000 | 36,000 | 197,000 | 36,000 |
EQUITY (Details)
EQUITY (Details) - USD ($) | May. 27, 2015 | Jan. 01, 2015 | Jun. 30, 2015 |
Omnibus Plan | |||
Stock-Based Compensation Plans | |||
Number of shares authorized for grant | 1,500,000 | ||
PSUs | |||
Stock-Based Compensation Plans | |||
Performance Stock Units granted | 6,929 | ||
Weighted-average grant-date fair value (per unit) | $ 65.78 | ||
Performance period | 3 years | ||
Assumptions used in Monte Carlo simulation | |||
Expected volatility | 29.30% | ||
Stock price on grant date | $ 46.89 | ||
Risk-free interest rate | 0.86% | ||
Expected term (years) | 2 years 7 months 6 days | ||
Expected dividend yield | 1.50% | ||
PSUs | Minimum | |||
Stock-Based Compensation Plans | |||
Percentage payout rate | 0.00% | ||
PSUs | Maximum | |||
Stock-Based Compensation Plans | |||
Percentage payout rate | 200.00% | ||
Stock options | |||
Stock-Based Compensation Plans | |||
Number of options exercised (in shares) | 43,009 | ||
Weighted-average exercise price of options exercised (in dollars per share) | $ 24.94 | ||
Number of options exercised via share settlement | 1,042 | ||
Restricted stock | |||
Stock-Based Compensation Plans | |||
Issuance of restricted stock from treasury stock (in shares) | 5,811 | ||
Average cost (in dollars per share) | $ 46.82 |
OPERATING SEGMENTS (Details)
OPERATING SEGMENTS (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015USD ($)segment | Jun. 30, 2014USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2014USD ($) | Dec. 31, 2014USD ($) | |
OPERATING SEGMENTS | |||||
Number of reportable segments | segment | 2 | ||||
Total revenue | $ 139,732 | $ 66,019 | $ 276,383 | $ 119,373 | |
Depreciation, amortization & accretion | 12,002 | 5,821 | 23,818 | 10,343 | |
Capital expenditures | 10,145 | 3,883 | 19,376 | 8,658 | |
Total assets | 863,071 | 905,385 | 863,071 | 905,385 | $ 920,319 |
Treatment and Disposal Revenue | |||||
OPERATING SEGMENTS | |||||
Total revenue | 73,949 | 47,813 | 147,928 | 92,760 | |
Transportation and Logistics | |||||
OPERATING SEGMENTS | |||||
Total revenue | 22,085 | 10,587 | 48,979 | 18,994 | |
Industrial Cleaning | |||||
OPERATING SEGMENTS | |||||
Total revenue | 23,331 | 4,401 | 42,448 | 4,401 | |
Technical Services | |||||
OPERATING SEGMENTS | |||||
Total revenue | 16,827 | 2,009 | 30,223 | 2,009 | |
Remediation | |||||
OPERATING SEGMENTS | |||||
Total revenue | 2,579 | 1,027 | 4,239 | 1,027 | |
Other | |||||
OPERATING SEGMENTS | |||||
Total revenue | 961 | 182 | 2,566 | 182 | |
Corporate | |||||
OPERATING SEGMENTS | |||||
Depreciation, amortization & accretion | 143 | 174 | 279 | 188 | |
Capital expenditures | 901 | 61 | 1,443 | 243 | |
Total assets | 64,166 | 80,747 | 64,166 | 80,747 | |
Environmental Services | Operating Segment | |||||
OPERATING SEGMENTS | |||||
Total revenue | 91,190 | 57,162 | 182,615 | 110,516 | |
Depreciation, amortization & accretion | 8,834 | 5,159 | 17,504 | 9,667 | |
Capital expenditures | 6,149 | 3,234 | 13,084 | 7,827 | |
Total assets | 599,607 | 626,996 | 599,607 | 626,996 | |
Environmental Services | Operating Segment | Treatment and Disposal Revenue | |||||
OPERATING SEGMENTS | |||||
Total revenue | 73,949 | 47,813 | 147,928 | 92,760 | |
Environmental Services | Operating Segment | Transportation and Logistics | |||||
OPERATING SEGMENTS | |||||
Total revenue | 17,241 | 9,349 | 34,687 | 17,756 | |
Field & Industrial Services | Operating Segment | |||||
OPERATING SEGMENTS | |||||
Total revenue | 48,542 | 8,857 | 93,768 | 8,857 | |
Depreciation, amortization & accretion | 3,025 | 488 | 6,035 | 488 | |
Capital expenditures | 3,095 | 588 | 4,849 | 588 | |
Total assets | 199,298 | 197,642 | 199,298 | 197,642 | |
Field & Industrial Services | Operating Segment | Transportation and Logistics | |||||
OPERATING SEGMENTS | |||||
Total revenue | 4,844 | 1,238 | 14,292 | 1,238 | |
Field & Industrial Services | Operating Segment | Industrial Cleaning | |||||
OPERATING SEGMENTS | |||||
Total revenue | 23,331 | 4,401 | 42,448 | 4,401 | |
Field & Industrial Services | Operating Segment | Technical Services | |||||
OPERATING SEGMENTS | |||||
Total revenue | 16,827 | 2,009 | 30,223 | 2,009 | |
Field & Industrial Services | Operating Segment | Remediation | |||||
OPERATING SEGMENTS | |||||
Total revenue | 2,579 | 1,027 | 4,239 | 1,027 | |
Field & Industrial Services | Operating Segment | Other | |||||
OPERATING SEGMENTS | |||||
Total revenue | $ 961 | $ 182 | $ 2,566 | $ 182 |
OPERATING SEGMENTS (Details 2)
OPERATING SEGMENTS (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | |
Reconciliation of adjusted EBITDA to Net Income | ||||
Adjusted EBITDA | $ 31,424 | $ 17,094 | $ 58,653 | $ 37,370 |
Reconciliation to Net Income | ||||
Income tax expense | (5,055) | (4,247) | (7,957) | (9,474) |
Interest expense | (5,433) | (858) | (11,127) | (944) |
Interest income | 6 | 39 | 47 | 83 |
Foreign currency gain (loss) | 292 | 743 | (775) | (197) |
Other income | 233 | 170 | 769 | 256 |
Impairment charges | (6,700) | (6,700) | ||
Depreciation and amortization of plant and equipment | (7,656) | (4,573) | (15,135) | (8,412) |
Amortization of intangibles | (3,304) | (862) | (6,606) | (1,215) |
Stock-based Compensation | (627) | (255) | (1,089) | (525) |
Accretion and non-cash adjustment of closure & post-closure liabilities | (1,042) | (386) | (2,077) | (716) |
Net income | 2,138 | 6,865 | 8,003 | 16,226 |
Field & Industrial Services | ||||
Reconciliation to Net Income | ||||
Impairment charges | (6,700) | (6,700) | ||
Operating Segment | Environmental Services | ||||
Reconciliation of adjusted EBITDA to Net Income | ||||
Adjusted EBITDA | 36,450 | 24,723 | 73,616 | 48,767 |
Operating Segment | Field & Industrial Services | ||||
Reconciliation of adjusted EBITDA to Net Income | ||||
Adjusted EBITDA | 5,026 | 1,836 | 8,098 | 1,836 |
Corporate | ||||
Reconciliation of adjusted EBITDA to Net Income | ||||
Adjusted EBITDA | $ (10,052) | $ (9,465) | $ (23,061) | $ (13,233) |
OPERATING SEGMENTS (Details 3)
OPERATING SEGMENTS (Details 3) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2015 | Jun. 30, 2014 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2014 | |
Revenue, Property and Equipment and Intangible Assets Outside of the United States | |||||
Total revenue | $ 139,732 | $ 66,019 | $ 276,383 | $ 119,373 | |
Total long- lived assets | 494,568 | 494,568 | $ 506,351 | ||
United States | |||||
Revenue, Property and Equipment and Intangible Assets Outside of the United States | |||||
Total revenue | 129,568 | 51,375 | 254,331 | 88,646 | |
Total long- lived assets | 439,458 | 439,458 | 446,412 | ||
Canada | |||||
Revenue, Property and Equipment and Intangible Assets Outside of the United States | |||||
Total revenue | 10,164 | $ 14,644 | 22,052 | $ 30,727 | |
Total long- lived assets | $ 55,110 | $ 55,110 | $ 59,939 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - USD ($) $ / shares in Units, $ in Thousands | Jul. 28, 2015 | Jul. 01, 2015 | Jun. 30, 2015 | Jun. 30, 2015 | Jun. 30, 2014 | Dec. 31, 2015 |
SUBSEQUENT EVENT | ||||||
Dividend paid in cash | $ 7,792 | $ 7,750 | ||||
Goodwill impairment charges | $ 6,700 | 6,700 | ||||
Allstate | Forecast | ||||||
SUBSEQUENT EVENT | ||||||
Cash consideration | $ 58,000 | |||||
Subsequent event | ||||||
SUBSEQUENT EVENT | ||||||
Quarterly dividend declared (in dollars per share) | $ 0.18 | |||||
Dividend paid in cash | $ 3,900 | |||||
Subsequent event | Allstate | Forecast | ||||||
SUBSEQUENT EVENT | ||||||
Cash consideration | $ 58,000 | |||||
Field & Industrial Services | ||||||
SUBSEQUENT EVENT | ||||||
Goodwill impairment charges | $ 6,700 | $ 6,700 | ||||
Goodwill impairment charge per diluted share | $ 0.31 |