EXHIBIT 99
NEWS RELEASE
For Immediate Release / October 19, 2004
Contact: Chad Hyslop or Jim Baumgardner (208) 331-8400
info@americanecology.com www.americanecology.com
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AMERICAN ECOLOGY POSTS $2.6 MILLION OPERATING INCOME
JULY 2004 TEXAS FIRE, REPORTED TAX EXPENSE IMPACT QUARTER
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 nine months ending September 30, 2004.
THIRD QUARTER RESULTS
For the quarter ending September 30, 2004, the Company reported net income
of $1.7 million or $0.10 per fully diluted share, compared to net income of $3.5
million or $0.20 per diluted share for the quarter ending September 30, 2003.
The decrease in net income was primarily attributable to lost revenue and
incremental costs at the Company's Robstown, Texas facility, where a July 1,
2004 fire has resulted in temporary suspension of the facility's waste treatment
services. Additionally, as a result of the recognition of a deferred tax asset
during the second quarter of 2004, the Company now recognizes income tax
expense. During this quarter the Company recorded $884,000 in primarily non-cash
tax expense which was not reflected in second quarter 2003 results. Operating
income decreased from $3.6 million for the third quarter last year to $2.6
million for the third quarter this year.
The Company reported third quarter 2004 revenue of $12.9 million, down from
$17.3 million in the same quarter last year. The decrease in revenue resulted
from a $3 million decrease in transportation revenue, a 5% decrease in waste
volume and a 12% decrease in average selling price. Average selling price can
vary widely from quarter to quarter due to the Company's diverse service mix and
wide price range for different services. Revenue and average selling price for
the third quarter of 2004 were adversely affected by suspension of higher priced
treatment services following the fire at the Texas facility. Also, a large New
Jersey clean up project shipped to the Company's Idaho facility in the second
half of 2003 under a bundled rail transport and disposal contract was only
partially replaced by increased disposal revenue from the U.S. Army Corps of
Engineers and other customers.
Selling, General and Administrative expenses ("SG&A") dropped 10% to $3.0
million from $3.3 million from the same period last year. This reduction
primarily resulted from lower legal expenses and improved efficiencies following
centralization of the Company's accounting and information systems in
the past year. During the third quarter of 2004, the Company also recognized
$138,320 for an administrative penalty proposed by the State of Texas, and spent
approximately $100,000 preparing to comply with internal control requirements
under Section 404 of the Corporate Reform Act of 2002 ("Sarbanes-Oxley").
Spending on Section 404 compliance will continue in the fourth quarter of 2004.
"Given near record volumes in the second half of 2003 driven by the New
Jersey cleanup, we're pleased to have replaced most of the volume from this
large project through growth in our existing business," Baumgardner stated,
adding "70% of the reduced revenue for the quarter was directly attributable to
lower transportation revenue associated with the New Jersey cleanup last year."
9 MONTHS YEAR-TO-DATE
Revenue for the first nine months of 2004 reached $40.6 million or 1%
higher than the $40.1 million posted for the first nine months of 2003. For the
nine months ending September 30, 2004, total waste volume was up 7% over the
same nine months last year.
For the nine months ending September 30, 2004 SG&A dropped 24% to $8.4
million. This $2.7 million spending reduction over the same nine month period
last year resulted from $1.8 million of non-recurring legal expenses for the
Ward Valley, California damages claim in 2003 and overall lower spending due to
cost control measures implemented in 2003.
Operating profit for the nine months reached $9.8 million, a 48% increase,
compared to $6.6 million reported for the first nine months of 2003.
For the first nine months of 2004, the Company reported net income of $20.2
million or $1.14 per fully diluted share, compared to a net loss of $11.7
million or ($0.71) per diluted share for the same period last year. Large
one-time events in both years account for the swing in reported net income year
to year. In 2003, the Company wrote off $21 million following an adverse trial
court ruling in the California damages claim, posted a $5 million gain on the
sale of its former El Centro municipal waste landfill, and expensed $2.4 million
for its former Oak Ridge, Tennessee operation. The Oak Ridge facility was sold
in the second quarter of 2004, yielding a $900,000 gain and the recognition of
an $11.3 million tax benefit.
TEXAS FACILITY UPDATE
While waste treatment at the Texas facility was suspended following the
July 1, 2004 fire, direct disposal operations continued throughout the quarter
without interruption. The Company maintains business interruption insurance and
submitted a claim for part of the third quarter's lost treatment revenue. Due to
the complexity of this claim and pending further information, the Company has
not yet recorded an expected benefit from its business interruption insurance.
The Company expects to recognize
income based on communication with its insurer on the pending claim as well as
additional claims to be submitted in the coming months.
The Company is also insured for buildings and equipment damaged or
destroyed in the fire. The Company did not recognize any property insurance
proceeds in the quarter pending more detailed information and further
communication with its insurer. Proceeds from the pending property claim and
related asset impairments are expected to be recognized in the fourth quarter of
2004.
"The temporary suspension of waste treatment services and incremental costs
had a significant adverse impact on the third quarter results" Baumgardner
stated, concluding "We expect fourth quarter results to reflect the economic
protection provided by the insurance policies."
On October 1, 2004 the Company reported that the Texas Commission on
Environmental Quality ("TCEQ") had proposed an Agreed Order for the July 1, 2004
fire and alleged violations noted during TCEQ inspections conducted earlier this
year. The Order proposes an administrative penalty of $138,320 which was fully
recognized in the third quarter of 2004. Negotiations to conclude the Agreed
Order setting a final administrative penalty and operational requirements
related to the Order are underway.
"The Company is working with its Texas regulators to expeditiously enter an
Agreed Order, upgrade its operations and restore treatment services" stated
President and Chief Executive Officer Steve Romano. "We plan to resume limited
treatment services on a phased basis beginning in late 2004, with full service
restored in the first half of 2005," Romano added.
DIVIDEND
On August 31, 2004, the Company declared an annual dividend of $0.25 per
share, or $4.3 million. The dividend, paid to shareholders of record on
September 30, 2004, was paid on October 15, 2004.
OUTLOOK
Disposal volumes and revenue are projected to increase in the fourth
quarter of 2004 based on several new clean-up projects now shipping or expected
to ship to the Company's Idaho and Nevada facilities. This includes a large
project in Tulsa, Oklahoma utilizing the Idaho facility under a bundled rail
transport and disposal contract. "American Ecology continues to execute a
focused growth strategy based on maximizing disposal volumes and delivering
niche services", Romano stated, concluding "Our core business remains strong and
we look forward to solid earnings."
INVESTOR CALL
Company management will discuss the third quarter financial results,
provide an update on resumption of Texas treatment services and address the year
end outlook on its regularly-scheduled third quarter investor conference call to
be held Wednesday, October 20, 2004 at 10:00 am Mountain Time. Interested
parties may participate by dialing 877-331-8343.
RELEASE OF FOURTH QUARTER AND FULL YEAR 2004 RESULTS
The Company will release financial results for the quarter and year ending
December 31, 2004 on Tuesday, February 8, 2005 and will hold an investor
conference call following the release of earnings.
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, refineries and chemical
manufacturing 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 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 full service, obtain
full recovery on insurance claims 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 Nine Months Ended
September 30, September 30,
2004 2003 2004 2003
-------- -------- -------- ---------
Revenue $12,929 $17,324 $40,629 $ 40,115
Direct operating costs 7,396 10,383 22,457 22,423
-------- -------- -------- ---------
Gross profit 5,533 6,941 18,172 17,692
Selling, general and administrative expenses 2,967 3,302 8,417 11,088
-------- -------- -------- ---------
Operating income 2,566 3,639 9,755 6,604
Interest income 52 312 133 334
Interest expense 48 60 146 219
Loss on write off of Ward Valley facility development costs -- -- -- 20,951
Other income 9 20 74 113
-------- -------- -------- ---------
Income (loss) before income tax and discontinued operations 2,579 3,911 9,816 (14,119)
Income tax expense (benefit) 884 18 (9,290) 73
-------- -------- -------- ---------
Income (loss) before discontinued operations 1,695 3,893 19,106 (14,192)
Gain (loss) from discontinued operations - El Centro Landfill -- (15) -- 4,945
Gain (loss) from discontinued operations - Oak Ridge Facility (1) (400) 1,068 (2,429)
-------- -------- -------- ---------
Net income (loss) 1,694 3,478 20,174 (11,676)
Preferred stock dividends -- -- -- 64
-------- -------- -------- ---------
Net income (loss) available to common shareholders $ 1,694 $ 3,478 $20,174 $(11,740)
======== ======== ======== =========
Basic earnings (loss) from continuing operations .10 .23 1.12 (.86)
Basic earnings (loss) from discontinued operations .00 (.02) .06 .15
-------- -------- -------- ---------
Basic earnings (loss) per share $ .10 $ .21 $ 1.18 $ (.71)
======== ======== ======== =========
Diluted earnings (loss) from continuing operations .10 .22 1.08 (.86)
Diluted earnings (loss) from discontinued operations .00 (.02) .06 .15
-------- -------- -------- ---------
Diluted earnings (loss) per share $ .10 $ .20 $ 1.14 $ (.71)
======== ======== ======== =========
Dividends paid per common share $ -- $ -- $ -- $ --
======== ======== ======== =========
AMERICAN ECOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
($ IN 000'S EXCEPT PER SHARE AMOUNTS)
September 30, 2004 December 31, 2003
-------------------- -------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 9,712 $ 6,674
Short term investments 4,989 --
Receivables, net 8,328 12,596
Prepayments and other 1,263 1,051
Deferred income taxes 1,323 3,222
Assets held for sale or closure 43 938
-------------------- -------------------
Total current assets 25,658 24,481
Property and equipment, net 27,445 28,317
Facility development costs 6,478 6,478
Other assets 655 731
Prepaid income taxes 225 --
Deferred income taxes 16,284 5,062
Assets held for sale or closure -- 1,557
-------------------- -------------------
Total assets $ 76,745 $ 66,626
==================== ===================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt $ 1,456 $ 1,475
Accounts payable 2,016 1,678
Accrued liabilities 6,446 4,788
Dividend payable on common stock 4,345 --
Accrued closure and post closure obligation, current portion 1,828 1,828
Current liabilities of assets held for sale or closure 111 1,907
-------------------- -------------------
Total current liabilities 16,202 11,676
Long term debt 3,099 4,200
Long term accrued liabilities 474 454
Accrued closure and post closure obligation, excluding current portion 9,294 9,296
Liabilities of assets held for sale or closure, excluding current portion -- 4,649
-------------------- -------------------
Total liabilities 29,069 30,275
-------------------- -------------------
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock, 1,000,000 shares authorized
Common stock, $.01 par value, 50,000,000 authorized,
17,380,203 and 17,033,118 shares issued and outstanding 174 170
Additional paid-in capital 50,316 54,824
Accumulated deficit (2,814) (18,643)
-------------------- -------------------
Total shareholders' equity 47,676 36,351
-------------------- -------------------
Total Liabilities and Shareholders' Equity $ 76,745 $ 66,626
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