US Ecology, Inc. Q1 2016 Earnings Conference Call April 29, 2016 1 - PowerPoint PPT Presentation

US Ecology, Inc. Q1 2016 Earnings Conference Call April 29, 2016 1

Today’s Hosts Jeff Feeler Chairman & Chief Executive Officer Eric Gerratt Executive Vice President & Chief Financial Officer Steve Welling Executive Vice President of Sales and Marketing Simon Bell Executive Vice President of Operations – Environmental Services Mario Romero Executive Vice President of Operations – Field and Industrial Services 2 2

Safe Harbor During the course of this presentation the Company will be making forward-looking statements (as such term is defined in the Private Securities Litigation Reform Act of 1995) that are based on our current expectations, beliefs and assumptions about the industry and markets in which US Ecology, Inc. and its subsidiaries operate. Such statements may include, but are not limited to, statements about the Company's ability to integrate its acquisition of EQ — The Environmental Quality Company (EQ), expected synergies from the transaction, projections of the financial results of the combined company and other statements that are not historical facts. Such statements involve known and unknown risks, uncertainties and other factors that could cause the actual results of the Company to differ materially from the results expressed or implied by such statements, including general economic and business conditions, conditions affecting the industries served by US Ecology, EQ and their respective subsidiaries, conditions affecting our customers and suppliers, competitor responses to our products and services, the overall market acceptance of such products and services, the integration and performance of acquisitions (including the acquisition of EQ) and other factors disclosed in the Company's periodic reports filed with the Securities and Exchange Commission. For information on other factors that could cause actual results to differ materially from expectations, please refer to US Ecology, Inc.'s December 31, 2015 Annual Report on Form 10-K and other reports filed with the Securities and Exchange Commission. Many of the factors that will determine the Company's future results are beyond the ability of management to control or predict. Readers should not place undue reliance on forward-looking statements, which reflect management's views only as of the date such statements are made. The Company undertakes no obligation to revise or update any forward-looking statements, or to make any other forward-looking statements, whether as a result of new information, future events or otherwise. Important assumptions and other important factors that could cause actual results to differ materially from those set forth in the forward-looking information include the replacement of non-recurring event clean-up projects, a loss of a major customer, our ability to permit and contract for timely construction of new or expanded disposal cells, our ability to renew our operating permits or lease agreements with regulatory bodies, loss of key personnel, compliance with and changes to applicable laws, rules, or regulations, access to insurance, surety bonds and other financial assurances, a deterioration in our labor relations or labor disputes, our ability to perform under required contracts, failure to realize anticipated benefits and operational performance from acquired operations, adverse economic or market conditions, government funding or competitive pressures, incidents or adverse weather conditions that could limit or suspend specific operations, access to cost effective transportation services, fluctuations in foreign currency markets, lawsuits, our willingness or ability to pay dividends, implementation of new technologies, limitations on our available cash flow as a result of our indebtedness and our ability to effectively execute our acquisition strategy and integrate future acquisitions. 3 3

Agenda Highlights Financial Review ― Q1 2016 ― Financial Position, Cash Flow & Return Metrics 2016 Business Outlook Questions & Comments Appendix: Financial Results & Reconciliations 4 4

Q1-16 Highlights Quarter slightly ahead of expectations • ― Strong Field and Industrial Services (“FIS”) segment growth ― Focus on corporate cost control ― Environmental Services (“ES) segment results were in - line with expectations Strength in Base Business offsetting softer Event Business  Adjusted EBITDA 1 of $26.1 million, down 4% from Q1-15 • ― Excluding Allstate & business development expenses, pro forma adjusted EBITDA 1 was down 6% from Q1-15 Adjusted EPS 1 was $0.32 per share compared with $0.36 per • share in Q1-15 1 See definition and reconciliation of adjusted EBITDA, pro forma adjusted EBITDA and adjusted earnings per share on pages 20-24 of this presentation or attached as Exhibit A to our earnings release filed with the SEC on Form 8-K 5 5

Q1-16 FIS Segment Highlights Better than expected segment results • 425 basis point improvement in EBITDA margin compared to • Q1-15 after adjusting for the divested Allstate business Continued focus on revenue quality reduced total segment • revenues by 10% ― Cycling of an event project where we provided transportation and logistics support through our FIS segment ― Growth in our managed services, small quantity generator services and industrial services Milder winter conditions drove additional services work and • contributed to lower costs year over year 6 6

Q1-16 ES Segment Highlights Segment performed as expected • Base Business up 7% over Q1-15 • ― Down 6% sequentially from Q4-15, as expected ― Stronger Base Business across several industry verticals: Refining  Other industry  General manufacturing  Event Business down, as expected • ― Cycled completion of large east coast cleanup project and nuclear fuels fabrication cleanup ― Excluding these two large projects, Event Business was down 2% from compared to Q1-15 ― No benefit from milder winter conditions 7 7

Q1-16 Other Highlights Overall, the quarter slight better than expected • Continued focus on our core assets • Divested our Augusta non-haz facility on April 4 th • ― Will generate a gain in Q2-16 Cash generation remains a key focus • Further delevering of our balance sheet • ― Paid down $10.8 million of debt in the first quarter 8 8

Financial Review 9

Q1-16 Financial Review Q1 ‘16 Revenue by Segment • Total revenue $113.3 million compared with $136.7 million last year • ES revenue $81.5 million, down from $87.4 million in prior year 28% ― 7% lower treatment and disposal revenue ― 4% lower service (transportation & logistics) revenue ES ― Lower revenues from the chemical manufacturing, FIS government and metal manufacturing industry groups, partially offset by higher revenues from the 72% other, utilities and general manufacturing industry groups ― Base business up 7% compared to the prior year Q1 ‘15 Revenue by Segment ― Event business down 44% compared to prior year from cycling the completion of large east coast cleanup project and nuclear fuels fabrication cleanup • FIS revenue $31.8 million, down from $49.3 million in prior year 36% ES − Allstate revenue of $13.9 million in Q1-15 FIS 64% − Remaining decrease primarily from lower transportation services revenues due to cycling the completion of large east coast cleanup project 10

Q1-16 Financial Review Environmental Services T&D Revenue by Industry Percent of Total Percent Change Q1 '16 Q1 '15 Q1 '16 vs. Q1 '15 Metal Manufacturing 16% 16% -6% Broker / TSDF 15% 15% -3% Chemical Manufacturing 14% 25% -50% Refining 12% 10% 5% General Manufacturing 11% 9% 11% Government 6% 7% -15% Utilities 5% 3% 36% Mining and E&P 3% 2% 13% Transportation 3% 2% 14% Waste Management & Remediation 2% 2% -6% Other 13% 9% 51% Environmental Services T&D Revenue by Industry % Change - Q1 '16 vs. Q1 '15 Base Event Metal Manufacturing -2% -76% Broker / TSDF -2% -24% Chemical Manufacturing -17% -69% Refining 57% -82% General Manufacturing 15% -30% Government -26% -8% Utilities 6% 67% Mining and E&P -2% 306% Transportation 14% 13% Waste Management & Remediation -1% -76% Other 31% 762% 11

Q1-16 Financial Review • Gross profit of $35.2 million, down from $39.8 million in Q1-15 ― ES gross profit of $30.5 million, down from $33.2 million in Q1-15 T&D margin of 41% in Q1-16 vs. 42% in Q1-15  ― FIS gross profit of $4.8 million, down from $6.7 million in Q1-15 Allstate contributed $2.6 million of gross profit in Q1-15  • SG&A of $19.4 million compared with $24.9 million in Q1-15 ― Total SG&A includes $68,000 of business development expenses, compared to $1.7 million in Q1-15 ― Allstate contributed $3.0 million of SG&A in Q1-15 • Operating income of $15.8 million, up from $15.0 million in Q1-15 ― Allstate contributed $398,000 of operating loss in Q1-15 • Interest expense of $4.6 million, down from $5.7 million in Q1-15 ― Lower debt levels ― Q1-16 includes $200,000 of incremental non-cash amortization of deferred financing fees associated with debt prepayments during the quarter 12 12