US Ecology, Inc. Q1 2019 Earnings Conference Call May 3, 2019 1 - PowerPoint PPT Presentation

US Ecology, Inc. Q1 2019 Earnings Conference Call May 3, 2019 1

Today’s Hosts Jeff Feeler Chairman & Chief Executive Officer Eric Gerratt Executive Vice President & Chief Financial Officer Simon Bell Executive Vice President and Chief Operating Officer Steve Welling Executive Vice President of Sales and Marketing 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 an accident at one of our facilities, incidents resulting from the handling of dangerous substances, the loss or failure to renew significant contracts, competition in our markets, adverse economic conditions, our compliance with applicable laws and regulations, the realization of anticipated benefits from acquired operations, our ability to perform under required contracts, limitations on our available cash flow as a result of our indebtedness, liabilities arising from our participation in multi-employer pension plans, cyber security threats, unanticipated changes in tax rules and regulations, loss of key personnel, a deterioration in our labor relations or labor disputes, our ability to pay dividends or repurchase stock, anti-takeover regulations, stock market volatility, our access to insurance, surety bonds and other financial assurances, our litigation risk not covered by insurance, the replacement of non- recurring event projects, our ability to permit and contract for timely construction of new or expanded disposal space, renewals of our operating permits or lease agreements with regulatory bodies, our ability or the timing of reconstructing and receiving regulatory approvals for the reopening of the Grand View, Idaho treatment facility, the timing or amount of insurance recoveries associated with the reconstruction and business interruption losses for the Grand View, Idaho treatment facility, our access to cost-effective transportation services, lawsuits, our implementation of new technologies, fluctuations in foreign currency markets and foreign affairs. 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” section in this report could harm our business, prospects, operating results, and financial condition. 3 3

Agenda Highlights Financial Review ― Q1 2019 ― Financial Position, Cash Flow & Return Metrics 2019 Business Outlook Questions & Comments Appendix: Financial Results & Reconciliations 4 4

Q1-19 Highlights Revenues up 9% to $131.0 million Environmental Services segment revenue grew 7% Strong Base Business revenue growth of 8% • Event Business down 1% • Continued headwinds from Idaho’s limited operations • Field and Industrial Services segment revenue grew 15% Organic growth of 3% driven by solid execution in transportation, small • quantity generation and total waste management services Adjusted EBITDA 1 down 4% to $23.6 million Idaho facility still not at full capacity • No business interruption proceeds recognized during quarter • Excluding Idaho, adjusted EBITDA 1 would have grown in line with revenue • 1 See definition and reconciliation of adjusted EBITDA and adjusted earnings per diluted share on pages 16-19 of this presentation or attached as Exhibit A to our earnings release filed with the SEC on 5 Form 8-K 5

Financial Review 6

Q1-19 Financial Review Total revenue $131.0 million, up 9% compared with $120.1 million last year ES revenue $92.3 million compared to $86.5 million in prior year • 7% higher treatment and disposal revenue – Base business up 8% compared to Q1-18 – Event business down 1% compared Q1-18 – Excluding Idaho, Base up 13% and Event up 8% • 6% higher transportation revenue FIS revenue $38.7 million, up 15% from $33.6 million in prior year • Reflects acquired field and industrial services group based out of Dallas, TX and Midland, TX • Organic growth in Transportation, Industrial Services and Emergency Response business lines 7

Q1-19 Financial Review Three Months Ended March 31, (in t housands) 2019 2018 Environmental Field & Industrial Environmental Field & Industrial Total Total Services Services Services Services Treatment & Disposal Revenue $ 77,713 $ 2,796 $ 80,509 $ 72,710 $ 2,646 $ 75,356 Service Revenue: Transportation and Logistics 14,619 7,093 21,712 13,761 5,651 19,412 Industrial Services - 6,016 6,016 - 3,879 3,879 Small Quantity Generation - 8,189 8,189 - 8,327 8,327 Total Waste Management - 8,714 8,714 - 10,222 10,222 Remediation - 1,726 1,726 - 2,190 2,190 Emergency Response - 3,046 3,046 - 642 642 Other - 1,125 1,125 - 31 31 Total Revenue $ 92,332 $ 38,705 $ 131,037 $ 86,471 $ 33,588 $ 120,059 8

Q1-19 Financial Review Environmental Services T&D Revenue by Industry Percent of Total Percent Change Q1 '19 Q1 '18 Q1 '19 vs. Q1 '18 Metal Manufacturing 16% 14% 17% Chemical Manufacturing 15% 13% 23% Broker / TSDF 15% 13% 17% General Manufacturing 13% 12% 5% Refining 10% 11% -8% Government 7% 5% 30% Transportation 4% 3% 58% Utilities 3% 4% -1% Waste Management & Remediation 2% 4% -50% Mining and E&P 2% 2% 13% Other 13% 19% -19% Environmental Services T&D Revenue by Industry % Change - Q1 '19 vs. Q1 '18 Base Event Metal Manufacturing 19% -40% Chemical Manufacturing -6% 168% Broker / TSDF 18% -100% General Manufacturing 4% 137% Refining 1% -44% Government 19% 38% Transportation 26% 6048% Utilities 39% -24% Waste Management & Remediation -27% -100% Mining and E&P -16% 1588% Other 5% -75% 9

Q1-19 Financial Review Gross profit of $35.2 million, down 1% from $35.7 million in Q1-18 ES gross profit of $31.6 million, down from $32.5 million in Q1-18 • – T&D margin of 39%, consistent with Q1-18 FIS gross profit of $3.7 million, up from $3.2 million in Q1-18 • – FIS margin of 10%, consistent with Q1-18 SG&A of $20.3 million compared with $22.2 million in Q1-18 $4.7 million benefit from property insurance recoveries • Excluding property insurance recoveries, SG&A would have been up 12% as a result of • higher labor cost and intangible asset amortization Operating income of $14.9 million, up 11% from $13.4 million in Q1-18 Net interest expense of $3.8 million, up from $2.8 million in Q1-18 Higher borrowings in Q1-19 and higher interest rates on variable portion of credit facility • Net income of $8.0 million, or $0.36 per diluted share, compared with $9.2 million, or $0.42 per diluted share, in Q1-18 Adjusted EPS 1 of $0.22 per diluted share compared with $0.35 per diluted share in Q1-18 Adjusted EBITDA 1 of $23.6 million, down 4% from $24.5 million in Q1-18 1 See definition and reconciliation of adjusted earnings per diluted share and adjusted EBITDA on 10 pages 16-19 of this presentation or attached as Exhibit A to our earnings release filed with the SEC on 10 Form 8-K