U.S. Ecology Inc. on July 31 reported second quarter net income of $6.4 million, or 35 cents per diluted share, up 36 percent from $4.7 million, or 26 percent per share, a year earlier. Revenue was $40 million, up 1.26 percent.
Analysts expected the Boise-based provider of waste management and recycling services to commercial and government customers to earn 22 cents per share, according to Yahoo Finance.
U.S. Ecology posted strong results across all sites and service sectors so far this year, President and CEO Jim Baumgardner said in a conference call with analysts. Results were driven by a diverse set of offerings and customers rather than by one project, site or service offering, as they have been in other years, he said.
Treatment and disposal revenue increased by 13 percent from the year-earlier quarter, partly offset by a 48 percent drop in transportation revenue as fewer customers used the company’s transport and logistics services for cleanup projects, U.S. Ecology reported.
Treatment and disposal revenue growth included 16 percent from recurring waste streams. Revenue from single, event-related projects was similar to that of a year ago.
The amount of material disposed of or processed at U.S. Ecology’s five facilities increased by 21 percent. A higher proportion of direct-disposal material and other changes in the service mix pushed average selling prices down by 6 percent. U.S. Ecology has waste facilities in Idaho, Nevada, Texas, Michigan and Quebec.
Baumgardner said the company has more opportunity to set prices on its business from recurring waste streams than on the 30 percent to 40 percent of work that is event-driven and subject to competitive bidding.
Gross profit in the recent quarter was $17.3 million, up 32 percent from a year earlier. Total gross margin rose 10 percentage points to 43 percent. Transport-and-disposal gross margin was 48 percent, up from 43 percent, on higher volumes and a favorable service mix as direct costs stayed flat.
Selling, general and administrative expense rose to $6.4 million or 16 percent of revenue, from $5.3 million or 13 percent of revenue, as U.S. Ecology incurred higher variable incentive compensation to staff.
U.S. Ecology had $5.9 million in cash June 30, up from $4.29 million Dec. 31. The company had $50 million in line-of-credit borrowings June 30, up from $40.6 million Dec. 31. The company on May 31 acquired Dynecol Inc. for $11.3 million and renamed it U.S. Ecology Michigan Inc. The Dynecol facility generated just more than $1 million in revenue, and a small profit, in the final month of U.S. Ecology’s quarter.
Baumgardner said economic conditions and U.S. Ecology’s commercial business have improved from a year ago and from the first quarter of 2012, one reason U.S. Ecology boosted its earnings outlook for the rest of the year.
U.S. Ecology stock was up 34 cents to $19.84 in early trading Aug. 1 compared to a one-year range from $14.82 to $22.71.