EXHIBIT 99
NEWS RELEASE
For Immediate Release / July 20, 2004
Contact: Chad Hyslop or Jim Baumgardner (208) 331-8400
info@americanecology.com www.americanecology.com
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AMERICAN ECOLOGY SECOND QUARTER OPERATING INCOME
UP 41% TO $3.8 MILLION
SALE OF OAK RIDGE AND TAX BENEFIT PUSH QUARTERLY NET INCOME TO $16.0 MILLION
BOISE, Idaho - Jim Baumgardner, Senior Vice President and Chief Financial
Officer of American Ecology Corporation [NASDAQ: ECOL], today announced
financial results for the three and six months ending June 30, 2004.
SECOND QUARTER RESULTS
For the quarter ending June 30, 2004, the Company reported net income of
$16.0 million or $0.90 per fully diluted share, compared to net income of $2.0
million or $0.11 per diluted share for the quarter ending June 30, 2003. The
large increase in net income was primarily attributable to an $11.3 million tax
benefit recognized during the quarter. Operating income, a key measure of
financial performance, increased from $2.7 million for the second quarter last
year to $3.8 million for the second quarter this year.
"The growth in quarterly operating income highlights the continued
strength of our Grand View, Idaho operation and also reflects a significant
increase in waste volumes shipped to our Beatty, Nevada facility," Baumgardner
stated, adding "American Ecology's business plan, built on increased waste
throughput at our disposal facilities, expanded delivery of niche services and a
lean overhead structure is working."
Revenue during the second quarter of 2004 reached $13.8 million, a 15%
increase over the $12.0 million reported for the same quarter last year.
Significant increases in waste throughput at the Company's Idaho and Nevada
disposal facilities were partially offset by lower average selling prices at
both facilities. For the quarter just ended, total waste volume increased 26%
over the same quarter last year.
Selling, General and Administrative expenses ("SG&A") dropped 22% to $2.6
million from the same period last year. SG&A as a percent of revenue also
continued to improve, dropping to 19% of revenue in the second quarter of 2004,
down from 27% of revenue in the second quarter of 2003. The reduction in SG&A
primarily resulted from lower legal and administrative expenses.
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Higher revenue and lower spending produced operating income of $3.8
million, an increase of 41% over the $2.7 million in operating income posted in
the second quarter of 2003.
On June 30, 2004 the Company sold principally all of the assets of its
discontinued low-level radioactive waste processing operation in Oak Ridge,
Tennessee to Toxco Inc. Toxco received all of the land, buildings, equipment and
licenses of the facility and $1.65 million in cash. In exchange, Toxco assumed
all environmental obligations, including the costs for future closure and
decommissioning of the facility at the end of its operational life. As a result
of the transaction, $4.6 million of future closure liabilities were relieved
from American Ecology's balance sheet and a gain on sale of $0.9 million was
recognized in discontinued operations. In addition, management believes it is
now more likely than not that the Company will fully utilize its tax benefits,
including net-operating loss carry-forwards. Consequently, the Company reversed
the valuation allowance previously held against its deferred tax assets,
generating a $11.3 million tax benefit in the quarter.
"Our sale of the Oak Ridge facility and related transfer of liabilities
completes American Ecology's successful campaign to exit all non-core
businesses," President and Chief Executive Officer Stephen Romano noted, adding
"Our energy and resources are now fully focused on our core waste treatment and
disposal business."
6 MONTHS YEAR-TO-DATE
Revenue for the first six months of 2004 reached $27.7 million or 22%
higher than the $22.8 million posted for the first six months of 2003. For the
six months ending June 30, 2004, total waste volume was up 15% over the same
six-month period last year.
For the six months ending June 30, 2004 SG&A dropped 30% to $5.5 million.
This $2.3 million reduction in SG&A over the same period last year was
principally the result of $1.8 million of non-recurring legal expenses for the
Ward Valley, California damages claim in 2003 and continued cost containment.
Consistent with second quarter results, higher revenue combined with lower
spending generated first half operating income of $7.2 million compared to the
$3.0 million reported in the first half of 2003.
For the first half of 2004, the Company reported net income of $18.5
million or $1.04 per fully diluted share, compared to a net loss of $15.2
million or ($0.94) per diluted share for the same period last year. The large
increase in net income was primarily attributable to an $11.3 million tax
benefit recognized during the quarter.
A series of one-time events in the first half of both years accounted for
the large swing in reported net income. In the first half of 2003, the Company
wrote off $21 million following an adverse trial court
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ruling in the Ward Valley damages claim, posted a $5 million gain on the sale of
its former El Centro municipal waste landfill, and expensed $2 million for the
former Oak Ridge operation. As noted above, the Oak Ridge, Tennessee facility
was sold in the second quarter of 2004, resulting in a $0.9 million gain and
allowing management to reevaluate its tax assets and record a tax benefit of
$11.3 million.
"Aggressive execution of our business plan combined with a strong balance
sheet positions American Ecology to continue generating solid cash flows and
consistent earnings," Baumgardner concluded.
UPDATE ON TEXAS FACILITY
As previously reported, hazardous waste treatment operations at the
Company's Robstown, Texas facility were suspended following a July 1, 2004 fire
in the facility's permitted containment building. Treatment performed in the
containment building represents approximately 50% of the Texas facility's
year-to-date revenue. Direct disposal operations continue without interruption
and generate the balance of the facility's revenue. While the Company is insured
for property and equipment damage and business interruption, insurance
deductibles, operational upgrades, loss of customers and an expected regulatory
agency fine will negatively impact the Texas facility's second half financial
performance.
"While the precise costs of the fire and regulatory enforcement actions
cannot yet be estimated, we are working hard to return the Texas treatment and
containment building to service with expanded capabilities and address
regulatory compliance matters as soon as practical." Romano stated, adding "This
event does not alter our previous guidance of greater than 15% growth in
operating income for 2004."
INVESTOR CALL
Company management will host an investor conference call on Wednesday, July
21 at 10:00 a.m. Mountain Time to discuss second quarter and year to date
results, sale of its Oak Ridge assets and resumption of treatment services in
Texas. Interested parties are invited to participate in the investor conference
by calling 1-888-747-3446.
ABOUT AMERICAN ECOLOGY
American Ecology Corporation, through its subsidiaries, provides
radioactive, PCB, hazardous, and non-hazardous waste services to commercial and
government customers throughout the United States, such as nuclear power plants,
steel mills, medical and academic institutions and petro-chemical facilities.
Headquartered in Boise, Idaho, the Company is the oldest radioactive and
hazardous waste services company in the United States.
This press release contains forward-looking statements that are based on
our current expectations, beliefs, and assumptions about the industry and
markets in which American Ecology Corporation and its
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subsidiaries operate. Actual results may differ materially from what is
expressed herein and no assurance can be given that the Company can successfully
generate improved earnings, timely return the Texas treatment facility to
service, or prevail in pending litigation. For information on other factors that
could cause actual results to differ from expectations, please refer to American
Ecology Corporation's Annual Report on Form 10-K and Quarterly Reports on Form
10-Q filed with the Securities and Exchange Commission.
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AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
($ in 000's except per share amounts)
Three Months Ended June 30, Six Months Ended June 30,
2004 2003 2004 2003
-------------- ---------------- --------------- --------------
Revenue $ 13,795 $ 12,020 $ 27,700 $ 22,791
Direct operating costs 7,449 6,056 15,061 12,040
-------------- ---------------- --------------- --------------
Gross profit 6,346 5,964 12,639 10,751
Selling, general and administrative expenses 2,578 3,289 5,450 7,786
-------------- ---------------- --------------- --------------
Operating income 3,768 2,675 7,189 2,965
Interest income 45 22 81 22
Interest expense 49 38 98 159
Loss on write off of Ward Valley facility development costs -- -- -- 20,951
Other income 20 93 65 93
-------------- ---------------- --------------- --------------
Income (loss) before income tax and discontinued operations 3,784 2,752 7,237 (18,030)
Income tax (benefit) expense (11,338) 63 (10,174) 55
-------------- ---------------- --------------- --------------
Income (loss) before discontinued operations 15,122 2,689 17,411 (18,085)
Gain from discontinued operations - El Centro Landfill -- 16 -- 4,960
Gain (Loss) from discontinued operations - Oak Ridge Facility 920 (692) 1,069 (2,029)
-------------- ---------------- --------------- --------------
Net income (loss) 16,042 2,013 18,480 (15,154)
Preferred stock dividends -- -- -- 64
-------------- ---------------- --------------- --------------
Net income (loss) available to common shareholders $ 16,042 $ 2,013 $ 18,480 $ (15,218)
============== ================ =============== ==============
Basic earnings (loss) from continuing operations .88 .16 1.02 (1.12)
Basic earnings (loss) from discontinued operations .05 (.04) .06 .18
-------------- ---------------- --------------- --------------
Basic earnings (loss) per share $ .93 $ .12 $ 1.08 $ (.94)
============== ================ =============== ==============
Diluted earnings (loss) from continuing operations .85 .15 .98 (1.12)
Diluted earnings (loss) from discontinued operations .05 (.04) .06 .18
-------------- ---------------- --------------- --------------
Diluted earnings (loss) per share $ .90 $ .11 $ 1.04 $ (.94)
============== ================ =============== ==============
Dividends paid per common share $ -- $ -- $ -- $ --
============== ================ =============== ==============
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AMERICAN ECOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(Unaudited)
($ in 000's except per share amounts)
June 30, 2004 December 31, 2003
--------------- -------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 3,201 $ 6,674
Short term investments 6,398 --
Receivables, net 9,537 12,596
Prepaid income taxes 53 2
Prepayments and other 1,780 1,049
Deferred income taxes 2,229 3,222
Assets held for sale or closure -- 938
--------------- -------------------
Total current assets 23,198 24,481
Property and equipment, net 28,102 28,317
Facility development costs 6,478 6,478
Other assets 673 731
Prepaid income taxes 150 --
Deferred income taxes 16,226 5,062
Assets held for sale or closure -- 1,557
--------------- -------------------
Total assets $ 74,827 $ 66,626
=============== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt $ 1,455 $ 1,475
Accounts payable 2,022 1,678
Accrued liabilities 5,890 4,788
Accrued closure and post closure obligation, current portion 1,828 1,828
Current liabilities of assets held for sale or closure 398 1,907
--------------- -------------------
Total current liabilities 11,593 11,676
Long term debt 3,462 4,200
Long term accrued liabilities 502 454
Accrued closure and post closure obligation, excluding current portion 9,428 9,296
Liabilities of assets held for sale or closure, excluding current portion -- 4,649
--------------- -------------------
Total liabilities 24,985 30,275
--------------- -------------------
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock, 1,000,000 shares authorized
Common stock, $.01 par value, 50,000,000 authorized, 17,212,218
and 17,033,118 shares issued and outstanding 172 170
Additional paid-in capital 49,833 54,824
Accumulated deficit (163) (18,643)
--------------- -------------------
Total shareholders' equity 49,842 36,351
--------------- -------------------
Total Liabilities and Shareholders' Equity $ 74,827 $ 66,626
=============== ===================
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