Exhibit 99
NEWS RELEASE
For Immediate Release
Contact: Chad Hyslop or Jim Baumgardner (208) 331-8400
info@americanecology.com www.americanecology.com
- ------------------------ -----------------------
AMERICAN ECOLOGY THIRD QUARTER OPERATING INCOME INCREASES TO $6.9 MILLION, UP
168 PERCENT
QUARTERLY REVENUE INCREASES 92 PERCENT ON HIGHER WASTE RECEIPTS
BOISE, IDAHO OCTOBER 18, 2005 - American Ecology Corporation [NASDAQ: ECOL]
today reported net income of $7.7 million or $0.43 per fully diluted share for
the quarter ended September 30, 2005, compared to net income of $1.7 million or
$0.10 per fully diluted share a year ago. Included in third quarter results is a
$5.3 million pre-tax gain in other income associated with litigation settlement
proceeds. Operating income for the quarter increased to $6.9 million, a 168
percent increase over the $2.6 million in operating income posted in the third
quarter of 2004.
THIRD QUARTER RESULTS
Revenue for the third quarter increased to $24.8 million, an $11.9 million
or 92 percent increase from the $12.9 million in revenue recognized a year ago.
The increase in revenue reflects a 71 percent increase in disposal volume and
slightly lower average selling price. Revenue and volume increased at all four
of the Company's operating disposal sites over the same quarter last year. The
Company's Idaho disposal site delivered the largest increase, posting a 95
percent increase in quarterly disposal volume and an 80 percent increase in
disposal revenue.
"During the third quarter American Ecology continued to grow, receiving and
disposing record waste volumes," stated Stephen Romano, President and Chief
Executive Officer, adding "Our focused, high-volume, low-overhead strategy is
working. We are securing large clean-up jobs, continuing to provide quality
service, and retaining key customers."
Increased waste volumes reflect a combination of ongoing base business, a
strong spring-summer clean-up project season, initiation of the Honeywell
project and receipt of waste shipments from several large clean-up projects that
were delayed in late 2004 and early 2005 by weather and other factors outside
the Company's control. Waste shipments under bundled rail transportation and
disposal contracts continued to result in high utilization of the Company's
railcar assets, further contributing to the increased quarterly profitability.
5
Higher revenue was slightly offset by higher transportation and other
direct costs. However, the Company still increased gross profit from $5.5
million, or 43 percent of revenue, in the third quarter of 2004 to $10.0
million, or 40 percent of revenue in the third quarter of 2005.
In dollars, selling, general & administrative expenses (SG&A) for the third
quarter increased slightly to $3.1 million compared to SG&A of $3.0 million in
the third quarter of 2004. However, SG&A dropped to 13 percent of revenue from
23 percent of revenue in the same quarter last year.
The substantially increased disposal revenue drove operating income to $6.9
million, $4.3 million higher than the $2.6 million of operating income posted in
the third quarter of 2004.
Increased waste volumes combined with a favorable service mix and
controlled spending were again key drivers in the Company's financial results
for the quarter.
"High volume throughput and the largely fixed cost nature of the disposal
business drove our revenue and earnings growth," stated Senior Vice President
and Chief Financial Officer Jim Baumgardner, adding "All four of American
Ecology's operating disposal sites were profitable for the quarter and delivered
improved results over the same quarter last year."
During the quarter, the Company received an $11.8 million payment from the
Central Interstate Low-Level Radioactive Waste Compact. This payment fully
resolved the Company's claim on proceeds from a settled lawsuit brought against
the State of Nebraska for bad faith in the licensing process for a formerly
proposed low-level radioactive waste disposal facility near Butte, Nebraska. The
Company had previously recognized a $6.5 million deferred asset for its
investment in the Nebraska project. Consequently, a pre-tax gain of $5.3 million
was recognized in the third quarter as Other Income.
For the quarter just ended, the Company reported after-tax net income of
$7.7 million, or $0.43 per fully diluted share, compared to after-tax net income
of $1.7 million, or $0.10 per fully diluted share a year ago.
6
YEAR-TO-DATE RESULTS
Revenue for the nine months ended September 30, 2005 reached $56.1 million,
up $15.5 million or 38 percent over the first nine months of 2004. Waste
receipts year-to-date increased 33 percent over 2004, and have already exceeded
total 2004 waste receipts. The volume-driven increase in revenue was partially
offset by higher costs, including underutilized transportation assets in the
first quarter of 2005, and certain volume-related variable costs in the second
and third quarters. However, growth in revenue at all four operating disposal
facilities produced operating income of $14.1 million, 44 percent higher than
the $9.8 million of operating income posted for the first nine months last year.
For the first nine months of 2005, the Company reported net income of $12.3
million, or $0.68 per fully diluted share, compared to net income of $20.2
million, or $1.14 per fully diluted share for the first nine months of 2004.
Financial results for the first nine months of 2004 were 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.
At September 30, 2005 the Company reported $23.8 million in cash and
investments on hand. At quarter-end, working capital was $33.3 million, up from
$19.3 million at the end of the previous quarter.
OUTLOOK
"Management expects to exceed its target of 15 percent annual growth in
operating income in 2005," Romano noted, concluding, "While we expect a solid
fourth quarter, we have now received and disposed of much of the waste from
previously delayed clean-up projects."
OTHER UPDATES
American Ecology Corporation declared a $0.15 per common share quarterly
dividend for stockholders of record on October 3, 2005. The Company paid $2.6
million for the declared quarterly dividend on October 14, 2005. The Company
presently intends that shareholders of record on January 2, 2006 will also
receive a $0.15 per share dividend subject to ongoing compliance with applicable
bank covenants.
Management will host an investor conference call on Wednesday, October 19,
2005 at 10 a.m. mountain time to discuss financial results for the quarter.
Chief Executive Officer Stephen Romano, Chief Financial Officer James
Baumgardner, Vice President of Sales and Marketing Steve Welling, and Controller
Michael Gilberg will present information and answer questions during the call.
Interested parties may send questions in advance to info@americanecology.com, or
------------------------
by facsimile to (208) 331-7900. Questions will also be invited during the call
following presentations. To join the call, dial (877) 331-8343. Participants
--------------
will be asked to provide their name and affiliation.
7
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, American Ecology 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 meet or exceed its 2005 earnings
estimates, receive projected waste shipments, continue to increase earnings
through the bundling of transportation and disposal services, collect on pending
insurance claims, or 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.
##
8
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,
2005 2004 2005 2004
-------- -------- -------- --------
Revenue $24,791 $12,929 $56,124 $40,629
Direct operating costs 14,822 7,396 33,094 22,457
-------- -------- -------- --------
Gross profit 9,969 5,533 23,030 18,172
Selling, general and administrative expenses 3,103 2,967 8,975 8,417
Business interruption insurance claim -- -- (41) --
-------- -------- -------- --------
Operating income 6,866 2,566 14,096 9,755
Interest income 164 52 342 133
Interest expense 45 48 140 146
Gain on settlement of Nebraska litigation 5,327 -- 5,327 --
Other income (loss) (31) 9 8 74
-------- -------- -------- --------
Income before income tax and discontinued operations 12,281 2,579 19,633 9,816
Income tax (benefit) expense 4,545 884 7,335 (9,290)
-------- -------- -------- --------
Income before discontinued operations 7,736 1,695 12,298 19,106
Gain (loss) from discontinued operations - Oak Ridge Facility -- (1) -- 1,068
-------- -------- -------- --------
Net income $ 7,736 $ 1,694 $12,298 $20,174
======== ======== ======== ========
Basic earnings from continuing operations .44 .10 .70 1.12
Basic earnings from discontinued operations -- .00 -- .06
-------- -------- -------- --------
Basic earnings per share $ .44 $ .10 $ .70 $ 1.18
======== ======== ======== ========
Diluted earnings from continuing operations .43 .10 .68 1.08
Diluted earnings from discontinued operations -- .00 -- .06
-------- -------- -------- --------
Diluted earnings per share $ .43 $ .10 $ .68 $ 1.14
======== ======== ======== ========
Dividends paid per common share $ .15 $ -- $ .15 $ --
======== ======== ======== ========
9
AMERICAN ECOLOGY CORPORATION
CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
($ IN 000'S EXCEPT PER SHARE AMOUNTS)
September 30,2005 December 31, 2004
------------------ ------------------
ASSETS
Current Assets:
Cash and cash equivalents $ 2,808 $ 2,160
Short term investments 20,971 10,967
Receivables, net 15,866 8,963
Insurance receivable 636 1,285
Prepayments and other 2,311 1,469
Deferred income taxes 5,613 5,613
------------------ ------------------
Total current assets 48,205 30,457
Property and equipment, net 35,274 27,363
Facility development costs -- 6,478
Other assets 956 462
Deferred income taxes 6,595 12,473
------------------ ------------------
Total assets $ 91,030 $ 77,233
================== ==================
LIABILITIES AND SHAREHOLDERS' EQUITY
Current Liabilities:
Current portion of long term debt $ 1,460 $ 1,457
Accounts payable 3,385 3,022
Deferred revenue 1,684 724
State burial fees payable 1,698 1,446
Management incentive plan payable 995 934
Customer advances 1,784 --
Customer refunds 657 2,512
Accrued liabilities 1,690 725
Accrued closure and post closure obligation, current portion 1,577 2,323
------------------ ------------------
Total current liabilities 14,930 13,143
Long term debt 1,638 2,734
Long term customer advances 1,574 --
Long term accrued liabilities 498 441
Accrued closure and post closure obligation, excluding current portion 9,421 9,304
------------------ ------------------
Total liabilities 28,061 25,622
------------------ ------------------
Commitments and contingencies
Shareholders' equity:
Convertible preferred stock, 1,000,000 shares authorized,
Common stock, $.01 par value, 50,000,000 authorized, 17,635,919
and 17,398,494 shares issued and outstanding 176 174
Additional paid-in capital 52,718 51,015
Retained earnings 10,075 422
------------------ ------------------
Total shareholders' equity 62,969 51,611
------------------ ------------------
Total Liabilities and Shareholders' Equity $ 91,030 $ 77,233
================== ==================
10
AMERICAN ECOLOGY CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
(UNAUDITED, $ IN 000'S)
Nine Months Ended September 30,
--------------------------------
2005 2004
--------------- ---------------
Cash flows from operating activities:
Net income $ 12,298 $ 20,174
Adjustments to reconcile net income to net
cash provided by operating activities:
Depreciation, amortization, and accretion 4,851 4,508
Gain on settlement of Nebraska litigation (5,327) --
Income from discontinued operations -- (1,068)
Income tax benefit on exercise of stock options 654 --
Deferred tax asset 5,878 (9,323)
Stock compensation 180 --
Changes in assets and liabilities:
Receivables (6,903) 4,268
Other assets (1,398) (152)
Closure and post closure obligation (1,440) (773)
Income taxes payable/receivable -- (226)
Accounts payable and accrued liabilities 4,161 2,016
--------------- ---------------
Net cash provided by operating activities 12,954 19,424
Cash flows from investing activities:
Capital expenditures (12,118) (2,964)
Proceeds from sale of assets 878 116
Proceeds from settlement of Nebraska litigation 11,805 --
Transfers from cash to short term investments, net (10,004) (4,989)
--------------- ---------------
Net cash used by investing activities (9,439) (7,837)
Cash flows from financing activities:
Payments of indebtedness (1,093) (1,120)
Retirement of common stock warrants -- (5,500)
Dividends paid (2,645) --
Stock options exercised 871 996
--------------- ---------------
Net cash provided (used) by financing activities (2,867) (5,624)
--------------- ---------------
Increase in cash and cash equivalents 648 5,963
Net cash used in discontinued operations -- (2,925)
Cash and cash equivalents at beginning of period 2,160 6,674
--------------- ---------------
Cash and cash equivalents at end of period $ 2,808 $ 9,712
=============== ===============
Supplemental disclosures of cash flow information:
Cash paid during the year for:
Interest $ 140 $ 146
Income taxes paid 804 274
Non-cash investing and financing activities:
Common stock dividends accrued -- 4,345
Common stock issued for director compensation 180 --
11