US Ecology, Inc. Q1 2017 Earnings Conference Call April 28, 2017 1 - PowerPoint PPT Presentation

US Ecology, Inc. Q1 2017 Earnings Conference Call April 28, 2017 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 and Chief Operating Officer 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. Forward-looking statements are only predictions and are not guarantees of performance. These statements are based on management's beliefs and assumptions, which in turn are based on currently available information. Important assumptions include, among others, those regarding demand for Company services, expansion of service offerings geographically or through new or expanded service lines, the timing and cost of planned capital expenditures, competitive conditions and general economic conditions. These assumptions could prove inaccurate. Forward-looking statements also involve known and unknown risks and uncertainties, which could cause actual results to differ materially from those contained in any forward- looking statement. Many of these factors are beyond our ability to control or predict. Such factors 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 repurchase shares or 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. Except as required by applicable law, including the securities laws of the United States and the rules and regulations of the Securities and Exchange Commission (the “SEC”), we are under no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. You should not place undue reliance on our forward-looking statements. Although we believe that the expectations reflected in forward-looking statements are reasonable, we cannot guarantee future results or performance. Before you invest in our common stock, you should be aware that the occurrence of the events described in the "Risk Factors" sections of our annual and quarterly reports could harm our business, prospects, operating results, and financial condition. 3 3

Agenda Highlights Financial Review ― Q1 2017 ― Financial Position, Cash Flow & Return Metrics 2017 Business Outlook Questions & Comments Appendix: Financial Results & Reconciliations 4 4

Q1-17 Highlights Financial results are in-line, to slightly better than expectations • ― Lingering impact of 2016 project deferrals ― Headwinds from non-renewal of a field services contract ― Typical seasonality due to winter conditions and production schedules Environmental Services (“ES”) Segment: • ― Base Business up 3%, better than anticipated Growth was over a very strong Q1-16  Revenue up 2% sequentially from Q4-16  Positive trends support our reaffirmed guidance  ― Event Business down 9%, as expected Majority of deferred work to benefit latter quarters  Larger multi-year project expected to contribute starting in  second quarter ― Results in-line with expectations despite winter storm damage to treatment facility Using other network facilities to reroute and service customers  Expect facility to return to full operations by July 1, 2017  5 5

Q1-17 Highlights Field Services (“FIS”) Segment: • ― Performance down over Q1-16 as expected ― Cycling a large contract not renewed last year ― Positive momentum with significant bidding opportunities for revenue replacement ― Industrial Services business lower than expected on industrial maintenance softness and timing of activities We continue to see strong indicators of industrial growth, consistent with • 2017 outlook 6 6

Financial Review 7

Q1-17 Financial Review Q1 ‘17 Revenue by Segment • Total revenue $110.2 million compared with $113.3 million last year • ES revenue $81.3 million compared to $81.5 million in prior year 26% ― 3% higher treatment and disposal revenue ES  Growth in the refining and general FIS manufacturing industry groups, partially offset by 74% declines in the chemical manufacturing and utilities industry groups  Base business up 3% compared to the prior year  Event business down 9% compared to prior year from cycling the completion of nuclear fuels Q1 ‘16 Revenue by Segment fabrication cleanup ― 17% lower transportation revenue 28% • FIS revenue $28.9 million, down from $31.8 million ES in prior year FIS − Cycling a large contract not renewed last year 72% 8

Q1-17 Financial Review Environmental Services T&D Revenue by Industry Percent of Total Percent Change Q1 '17 Q1 '16 Q1 '17 vs. Q1 '16 Metal Manufacturing 16% 16% -3% Broker / TSDF 15% 15% -2% General Manufacturing 14% 11% 23% Refining 14% 12% 23% Chemical Manufacturing 11% 14% -15% Government 6% 6% -7% Utilities 4% 5% -29% Mining and E&P 3% 3% -9% Transportation 2% 3% -25% Waste Management & Remediation 2% 2% 23% Other 13% 13% 5% Environmental Services T&D Revenue by Industry % Change - Q1 '17 vs. Q1 '16 Base Event Metal Manufacturing -2% -19% Broker / TSDF 2% -91% General Manufacturing 7% 373% Refining 8% 245% Chemical Manufacturing 3% -43% Government 22% -22% Utilities 0% -48% Mining and E&P -2% -41% Transportation -23% -98% Waste Management & Remediation 0% 1426% Other 6% -2% 9

Q1-17 Financial Review • Gross profit of $31.9 million, down from $35.2 million in Q1-16 ― ES gross profit of $28.7 million, down from $30.5 million in Q1-16 T&D margin of 38%, down from 41% in Q1-16  ― FIS gross profit of $3.2 million, down from $4.8 million in Q1-16 • SG&A of $19.7 million compared with $19.4 million in Q1-16 ― Includes $37,000 of business development expenses compared to $68,000 in Q1-16 • Operating income of $12.2 million, down from $15.8 million in Q1-16 • Interest expense of $4.1 million, down from $4.5 million in Q1-16 ― Lower debt levels in Q1-17 10 10

Q1-17 Financial Review • Effective tax rate decreased to 37.3% versus 38.4% in Q1-16 ― Higher proportion of earnings from Canadian operations in Q1-17, taxed at a lower corporate tax rate • Net income of $5.2 million, or $0.24 per diluted share, compared with $7.5 million, or $0.35 per diluted share in Q1-16 • Adjusted EPS 1 of $0.23 per share compared with $0.32 per diluted share in Q1-16 • Adjusted EBITDA 1 of $23.5 million, down 10% from $26.1 million in Q1-16 ― Pro Forma adjusted EBITDA 1 of $23.5 million compared with $26.2 million in Q1-16 1 See definition and reconciliation of adjusted earnings per share, adjusted EBITDA , and Pro Forma adjusted EBITDA on pages 18-21 of this presentation or attached as Exhibit A to our earnings release 11 filed with the SEC on Form 8-K 11

Financial Position, Cash Flow & Return Metrics Exited quarter with cash of $10.3 million • Net borrowings on credit agreement of $267.4 million • Working Capital = $55.5 million • YTD Cash generated from operations = $20.9 million • YTD Capital expenditures = $7.2 million • YTD Dividends paid = $3.9 million • YTD Payments on long-term debt = $6.9 million • Return Metrics: Return on total capital = 5.7% • Return on total assets = 4.2% • Return on total equity = 11.7% • 12 12

Debt Refinancing On April 18, 2017, entered into a new $500 million, five-year, senior revolving • credit facility (the “New Credit Agreement”) with a syndicate of banks to refinance the Company’s former credit facility. The interest rate under the New Credit Agreement initially set at LIBOR plus • 1.50%, representing a 150 basis point improvement. New Credit Agreement expected to generate approximately $15 million of • cash interest savings over the five-year term. Expect to write off approximately $5.4 million ($0.15 per diluted share) of • unamortized deferred financing fees related to the former credit facility in the second quarter of 2017. Also expect estimated annual interest savings under the New Credit • Agreement of approximately $0.08 per diluted share in 2017. Additional details on the New Credit Agreement can be found in the • Company’s form 8 -K filed on April 20, 2017 13 13