EXHIBIT 99
NEWS RELEASE
For Immediate Release
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 56 PERCENT TO $5.9 MILLION
QUARTERLY REVENUE INCREASES 36 PERCENT
BOISE, IDAHO JULY 19, 2005 - American Ecology Corporation [NASDAQ: ECOL]
today reported net income of $3.7 million, or $0.21 per fully diluted share for
the quarter ended June 30, 2005, compared to net income of $16 million, or $0.90
per fully diluted share a year ago. Included in last year's results are
non-operating gains of $12.2 million. Operating income for the quarter increased
to $5.9 million versus $3.8 million for the second quarter of 2004.
SECOND QUARTER RESULTS
Revenue for the second quarter increased $5.0 million, or 36 percent, from
$13.8 million a year ago to $18.8 million in 2005. The increase in revenue was
primarily attributable to a 25 percent increase in disposal volume and an eight
percent increase in average selling price. Revenue for all four of the Company's
operating sites increased over both the same quarter last year and the first
quarter of 2005. The Company's Idaho site experienced the largest increase,
posting a 45 percent increase in quarterly disposal volume and a like increase
in revenue.
"During the second quarter, a number of previously delayed clean-up
projects began shipping in earnest," stated Stephen Romano, President and Chief
Executive Officer. "These shipments, combined with our ongoing business, allowed
us to take advantage of the largely fixed cost nature of the disposal business,"
he explained.
Increased shipments under bundled rail transportation and disposal
contracts significantly improved utilization of the Company's railcar assets,
further contributing to profitability. "Our transportation and disposal price
bundling strategy is proving a successful platform for growth," continued
Romano, adding "Based on ongoing projects and our current sales outlook, we are
confident that American Ecology will achieve 15 percent growth in 2005 operating
income over 2004."
The combined result of higher revenue and a relatively smaller increase in
direct costs was a 45 percent increase in gross profit from $6.3 million, or 46
percent of revenue, in the second quarter of 2004 to $9.2 million, or 49 percent
of revenue in the second quarter of 2005.
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Selling, general & administrative expenses (SG&A) for the second quarter
increased to $3.4 million, or 18 percent of revenue, compared to SG&A of $2.6
million, or 19 percent of revenue in the second quarter last year. The dollar
increase in SG&A was principally attributable to increased legal fees associated
with the Honeywell contract and other legal matters, higher accounting fees
associated with Sarbanes-Oxley internal controls compliance, higher director
fees and expenses and a management incentive plan accrual.
The increase in disposal revenue more than outweighed the increased costs,
pushing operating income higher by $2.1 million to $5.9 million, compared to
$3.8 million in the second quarter of 2004.
"The combination of higher waste volumes and a more profitable service mix
pushed our gross margin to almost 50 percent during the quarter," stated Senior
Vice President and Chief Financial Officer, Jim Baumgardner, adding, "All four
of the Company's operating disposal sites were profitable for the quarter, and
all four showed improvement over results for the first quarter of 2005."
For the quarter just ended, the Company reported after-tax net income of
$3.7 million, or $0.21 per fully diluted share, compared to after-tax net income
of $16 million, or $0.90 per fully diluted share a year ago. Quarterly net
income in 2004 was positively affected by a $920,000 one time gain on the sale
of the Company's former Oak Ridge, Tennessee processing business and an $11.3
million release of a valuation allowance for deferred tax assets.
YEAR-TO-DATE RESULTS
Revenue for the six months ended June 30, 2005 reached $31.3 million, up 13
percent from the first six months of 2004. Waste volumes year-to-date increased
14 percent over 2004. This increase in revenue was substantially offset by
higher costs, including underutilized transportation assets in the first quarter
and volume-related variable costs in the second quarter, resulting in operating
income of $7.2 million, identical to the same period last year. For the first
six months of 2005, the Company reported net income of $4.6 million, or $.26 per
fully diluted share, compared to net income of $18.5 million, or $1.04 per fully
diluted share for the first half of 2004.
At June 30, the Company reported $12.6 million in cash and investments on
hand and working capital of $19.3 million.
OTHER UPDATES
On June 8, 2005, the Company announced the award of a contract to
transport, treat and dispose of contaminated soils from a Honeywell
International Inc. site in Jersey City, New Jersey. Depending on the volume of
waste shipped off-site, which has been estimated at one million tons, and the
Company's ability to successfully perform under the contract, management
estimates revenue in the range of $175 to $240
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million over a four to five year period. The Company began receiving initial
waste shipments under this contract in July 2005.
A significant portion of the revenue derived from the Honeywell contract
will include value added transportation services. As a result, management
expects that while revenue dollars will increase, the Company's gross margin
relative to revenue will decrease.
As previously announced, the Company may invest up to $12 million in
capital expenditures to support the Honeywell contract. Management currently
estimates that total capital spending in 2005 may reach $20 million principally
for railcars, disposal capacity expansion in Idaho, and new treatment buildings
in Texas and Nevada. The new treatment building in Texas is expected to be
completed in the next 30-45 days, allowing for the resumption of full waste
treatment services.
On May 26, 2005 the Company declared a $0.15 per common share quarterly
dividend for stockholders of record on July 1, 2005. The Company paid $2.6
million for the declared quarterly dividend on July 15, 2005. The Company
intends that shareholders of record on October 3, 2005 and January 2, 2006 will
also receive a $0.15 per share dividend, subject to ongoing compliance with
applicable bank covenants.
The Company's second quarter 2005 investor conference call will be held
Wednesday, July 20, 2005 at 10:00 am Mountain Time. President and Chief
Executive Officer Stephen Romano, Senior Vice President and Chief Financial
Officer Jim Baumgardner, Vice President and Controller Michael Gilberg and Vice
President for Sales and Marketing Steve Welling will host the call. Interested
parties are invited to submit questions in advance to info@americanecology.com,
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or by facsimile to 208-331-7900. To join the call, dial 1-(877) 331-8343.
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Participants will be asked to provide their name and affiliation.
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,
having operated for more than fifty years.
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 will successfully meet its 2005 earnings
estimates, receive projected waste shipments, resume full treatment services in
Texas, increase earnings through the bundling of transportation and disposal
services, prevail in pending litigation, collect on pending insurance claims, or
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declare or pay future dividends. For information on other factors that could
cause actual results to differ from expectations, please refer to American
Ecology Corporation's most recent Annual Report on Form 10-K and Quarterly
Report 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 Six Months Ended
June 30, June 30,
2005 2004 2005 2004
----------- ------------ ------------ ------------
Revenue $ 18,779 $ 13,795 $ 31,333 $ 27,700
Direct operating costs 9,559 7,449 18,272 15,061
----------- ------------ ------------ ------------
Gross profit 9,220 6,346 13,061 12,639
Selling, general and administrative expenses 3,358 2,578 5,872 5,450
Business interruption insurance claim -- -- (41) --
----------- ------------ ------------ ------------
Operating income 5,862 3,768 7,230 7,189
Interest income 93 45 178 81
Interest expense 48 49 95 98
Other income 22 20 39 65
----------- ------------ ------------ ------------
Income before income tax and discontinued operations 5,929 3,784 7,352 7,237
Income tax (benefit) expense 2,223 (11,338) 2,790 (10,174)
----------- ------------ ------------ ------------
Income before discontinued operations 3,706 15,122 4,562 17,411
Gain from discontinued operations - Oak Ridge Facility -- 920 -- 1,069
----------- ------------ ------------ ------------
Net income $ 3,706 $ 16,042 $ 4,562 $ 18,480
=========== ============ ============ ============
Basic earnings from continuing operations .21 .88 .26 1.02
Basic earnings from discontinued operations -- .05 -- .06
----------- ------------ ------------ ------------
Basic earnings per share $ .21 $ .93 $ .26 $ 1.08
=========== ============ ============ ============
Diluted earnings from continuing operations .21 .85 .26 .98
Diluted earnings from discontinued operations -- .05 -- .06
----------- ------------ ------------ ------------
Diluted earnings per share $ .21 $ .90 $ .26 $ 1.04
=========== ============ ============ ============
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, 2005 December 31, 2004
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ASSETS
Current Assets:
Cash and cash equivalents $ 1,685 $ 2,160
Short term investments 10,960 10,967
Receivables, net 13,636 8,963
Insurance receivable 636 1,285
Prepayments and other 2,616 1,469
Deferred income taxes 5,613 5,613
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Total current assets 35,146 30,457
Property and equipment, net 32,008 27,363
Facility development costs 6,478 6,478
Other assets 1,136 462
Deferred income taxes 10,338 12,473
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Total assets $ 85,106 $ 77,233
============== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt $ 1,459 $ 1,457
Accounts payable 3,176 3,022
Dividends payable 2,645 --
Deferred revenue 1,248 724
State burial fees payable 1,541 1,446
Management incentive plan payable 630 934
Customer advances 1,364 --
Customer refunds -- 2,512
Accrued liabilities 1,443 725
Accrued closure and post closure obligation, current portion 2,323 2,323
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Total current liabilities 15,829 13,143
Long term debt 2,004 2,734
Long term customer advances 2,136 --
Long term accrued liabilities 522 441
Accrued closure and post closure obligation, excluding current portion 9,385 9,304
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Total liabilities 29,876 25,622
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Commitments and contingencies
Shareholders' equity:
Convertible preferred stock, 1,000,000 shares authorized,
Common stock, $.01 par value, 50,000,000 authorized, 17,635,709
and 17,398,494 shares issued and outstanding 176 174
Additional paid-in capital 52,715 51,015
Retained earnings 2,339 422
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Total shareholders' equity 55,230 51,611
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Total Liabilities and Shareholders' Equity $ 85,106 $ 77,233
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AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED)
($ IN 000'S EXCEPT PER SHARE AMOUNTS)
Six Months Ended June 30,
------------------------------
2005 2004
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Cash flows from operating activities:
Net income $ 4,562 $ 18,480
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization, and accretion 3,066 3,029
Income from discontinued operations -- (1,069)
Income tax benefit on exercise of stock options 652 --
Deferred tax asset 2,135 (10,171)
Stock compensation 180 --
Changes in assets and liabilities:
Receivables (4,673) 3,059
Other assets (1,874) (685)
Closure and post closure obligation (460) (382)
Income taxes payable/receivable -- (201)
Accounts payable and accrued liabilities 2,256 1,494
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Net cash provided by operating activities 5,844 13,554
Cash flows from investing activities:
Capital expenditures (7,217) (2,394)
Proceeds from sale of assets 749 106
Transfers from cash to short tem investments, net 7 (6,398)
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Net cash used by investing activities (6,461) (8,686)
Cash flows from financing activities:
Payments of indebtedness (728) (758)
Retirement of common stock warrants -- (5,500)
Stock options exercised 870 511
-------------- --------------
Net cash provided (used) by financing activities 142 (5,747)
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Increase (decrease) in cash and cash equivalents (475) (879)
Net cash used in discontinued operations -- (2,594)
Cash and cash equivalents at beginning of period 2,160 6,674
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Cash and cash equivalents at end of period $ 1,685 $ 3,201
============== ==============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 95 $ 98
Income taxes paid 4 201
Non-cash investing and financing activities:
Common stock dividends accrued 2,645 --
Common stock issued for director compensation 180 --
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