Q4 2019 Earnings Call
Good day and welcome to the fourth quarter 2019, U.S. Ecology incorporated earnings Conference call. Today's conference is being recorded Aftertaste Chase presentation, there will be an opportunity to ask questions to ask a question. He May press Star then one on your telephone keypad to withdraw your question. Please press star.
That you I would now like to turn the conference over to Eric Gerratt. Please go ahead Sir.
Good morning, and thank you for joining us today.
Joining me on the call. This morning, our chairman and Chief Executive Officer, Jeff Feeler, Executive Vice President and Chief Operating Officer, Simon Bell and executive Vice President of sales and marketing Steve Welling.
Before we begin please note that certain statements contained in this conference call that do not described historical facts or forward looking statements as defined in the private Securities Litigation Reform Act of 1995.
Forward looking statements include risks and uncertainties actual results may differ materially from those expressed or implied by such statements.
Factors that could cause results to differ materially from those expressed include but are not limited to those discussed in the company's filings with the Securities and Exchange Commission.
Management cannot control or predict many factors that determine future results listeners should not place undue reliance on forward looking statements, which reflect management's views only on the do such statements are made.
We undertake 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.
For those joining by webcast you can follow along with today's presentation for those listening by phone you can access today's presentation on our website at www Dot U.S. ecology Dot com.
Throughout yesterday's earnings release, and our Colin presentation today, we refer to adjusted EBITDA adjusted earnings per diluted share cash earnings per diluted share an adjusted free cash flow.
These metrics are not determined in accordance with generally accepted accounting principles and therefore susceptible to varying calculations a definition calculation and reconciliation to the financial statements of adjusted earnings per diluted share cash earnings per diluted share adjusted EBITDA and adjusted free cash flow can be found in exhibit eight of our earnings release.
We're in the appendix included in today's slide presentation.
We believe these non-GAAP metrics are useful in evaluating our reported results and our 2020 guidance.
We also would like to point out that our 2019 results include two months of contribution from the NRC Group Holdings acquisition that closed on November Onest 2019.
Throughout this presentation, we often refer to NRC group holdings as NRC.
We've also provided data on a standalone basis for U.S. oncology, which is referred to as legacy us ecology.
Similarly for Standalone NRC data, we refer to that group as legacy NRC.
This desegregation is an attempt to provide increased transparency and understanding of the underlying business without I'd like to turn the call over to Jeff. Thank you, Eric and good morning, everyone. I'll start this morning's call with a few summary comments on our fourth quarter and full year results released yesterday before before turning it back to Eric for additional details on our financials I will then.
Close out the call with an extended discussion on our 2020 financial outlook before opening up the call for questions for those that are following the webcast presentation. Please direct your attention to slide five.
Yesterday, we reported a strong fourth quarter that delivered $231.3 million of revenue a 47% increase over the fourth quarter last year stripping out NRC.
Legacy US ecology revenues grew 2% over what was a very strong fourth quarter in 2018.
We continued to see growth in our environmental services segment revenue driven by solid performance in our base business and double digit event business growth.
Gains in our field and industrial services segment were driven by the two months contribution of NRC, excluding NRC, our field and industrial services segment revenue was down slightly resulting from continuing headwinds in our industrial services group that service a steel mills and other industrial facilities and also declines in our total waste.
Management Transportation logistics services.
This softness partially offset by strong double digit growth and remediation small quantity generation and emergency response services.
Overall, we delivered adjusted EBITDA of $46.2 million, excluding NRC legacy us ecology delivered $37.8 million representing growth of 14% over the $33.1 million in the fourth quarter last year.
We did recognize $2.1 million of business interruption proceeds related to the Grandview right.
Grandview operations in the fourth quarter of 2019.
Which helped offset the impact of certain projects slipping into 2020.
NRC contributed $8.5 million of adjusted EBITDA during the quarter lower than our $13 million guidance estimate provided the day before closing.
This shortfall was primarily in our domestic environmental services business and was partially a seasonally as seasonal in nature.
We also we also experienced an earlier than expected completion of a large marine emergency response project and saw some increase in our corporate costs to support a support the post merged company.
Shifting to full year results on slide six total company revenues were $685.5 million, excluding NRC legacy US ecology is revenue grew 9% to a record $615.3 million. This growth is even more impressive when you.
Consider revenue at our Grandview facility was down 31% in 2019, as we work to regain operational capabilities throughout the year.
I guess the US ecology revenue was driven by a 10% growth in our environmental services segment, and a 6% growth in our field and industrial services segment.
Legacy Us ecology delivered a record $140.9 million of adjusted EBITDA for 2019, representing 13% growth over 2018 results.
Overall, I'm extremely pleased with our fourth quarter and full of full year results the trends in our business remain healthy and the team is executing at a high level across the organization as you'll see when we review our business outlook a little later in the presentation. The combination of a store of the strong legacy us ecology growth profile and the addition of and.
Our C is expected to drive solid performance in 2020 with that I'll turn it back to Eric.
Thank you Jeff.
As I cover the detailed financial review I'll, just I'll be discussing consolidated results that include in our C. Before spending more time on legacy us ecology Standalone results were full year.
Starting with consolidated results on slide nine revenue for the fourth quarter of 2019 was $231.3 million up 47% from the same quarter last year and included $70.2 million for our two months of ownership of NRC [noise].
Revenue for the environmental serve environmental services segment increased 16% to $125.7 million, including $12.5 million from NRC, which compares to $108.1 million in the fourth quarter last year.
Fulfilled industrial services segment delivered revenue of $105.5 million in the fourth quarter of 2019, which included $57.7 million from NRC.
This was up 113% from $49.5 million in the fourth quarter of 2018.
Adjusted diluted earnings per share was 38 cents in the fourth quarter of 2019 compared to 60 cents in the same quarter last year.
Our fourth quarter 2019, adjusted earnings per share was impacted by approximately 15 cents per diluted share for the new shares issued in connection with the NRC acquisition.
Consolidated adjusted EBITDA was $46.2 million in the fourth quarter of 2019 up 20% from the same period last year.
Reflecting reflecting strong growth in the legacy us ecology business and the addition of NRC for our two months of ownership.
Shifting to Standalone legacy Us ecology results on slide nine revenues were $161 million in the fourth quarter of 2019 up 2% from $157.5 million in the fourth quarter last year.
Our environmental services revenues were up 5% to $113.2 million on an 8% increase in treatment and disposal revenue, partially offset by 5% lower transportation revenues.
Our base business grew 5% and our event business was up 12% and the fourth quarter of 2019 compared to the same quarter last year.
Legacy Us ecology field and industrial services revenues were $47.9 million in the fourth quarter of 2019 down 3% on headwinds in our industrial services total waste management and transportation and logistics service lines.
As Jeff noted earlier these declines were partially offset by double digit revenue increases in a remediation small quantity generation and emergency response service lines.
Turning to slide 10 gross profit for the legacy US ecology business was $54.5 million in the fourth quarter of 2019 up 19% from $45.7 million in the same quarter last year.
Our environmental services segment contributed gross profit of $47 million in the fourth quarter compared to $39.2 million in the fourth quarter last year.
Legacy Us ecology environmental services gross profit benefited from $2.1 million in business interruption insurance recoveries related to the Idaho facility that we recognized in the fourth quarter of 2019.
Treatment and disposal margins were 47% for the fourth quarter of 2019 compared to 43% for the fourth quarter of 2018.
Gross profit for legacy Us ecology filled industrial services segment was $7.5 million up from $6.5 million in the fourth quarter last year gross margin was 16% in the fourth quarter of 2019 compared to 13% in the fourth quarter of 2018.
Selling general and administrative spending or SG any for legacy us ecology was $40.4 million compared to $25.3 million in the fourth quarter last year.
Increase was primarily due to $11.9 million in business development and integration expenses, primarily associated with the NRC acquisition.
The increase was also partially due to increased labor and incentive compensation costs.
Legacy US ecology, adjusted EBITDA was $37.8 million for the fourth quarter up 14% from the $33.1 million in the fourth quarter last year.
Continuing on with legacy Us ecology for full year 2019 results on slide 11.
Total revenue for legacy Us ecology was up 9% to $615.3 million compared to $565.9 million in 2018.
Revenue for the legacy US ecology, Environmental services segment was $440.6 million, which was up 10% compared to $400.7 million last year.
The legacy Us ecology field and industrial services segment delivered revenue of $174.7 million in 2019 up 6% compared to $165.3 million in 2018.
Gross profit was up 15% to $195.8 million in 2019 on increased revenue and margin expansion in both legacy us ecology operating segments.
Legacy Us ecology, SDMA was $118.1 million and reflects $18.6 million of business development in integration expenses, primarily related to yet RC acquisition, which was partially offset by $12.4 million and property insurance recoveries.
Legacy Us ecology delivered adjusted EBITDA of $140.9 million in 2019.
13% from 2018.
Shifting now to total company results for 2019 on Slide 12, we reported total revenues of $685.5 million and delivered adjusted EBITDA of $149.4 million for 2019.
This compares to revenue of $565.9 million and $125.1 million and adjusted EBITDA in 2018.
Net income for 2019 was $33.1 million or $1.40 cents per diluted share. This compares to net income of $49.6 million or $2.25 per diluted share for 2018.
Adjusted earnings per share was $1.96 cents for 2019 compared to $2.27 for 2018.
Cash earnings per diluted share, which excludes intangible asset amortization was $2.43 in 2019 compared to $2.59 for 2018.
Turning to slide 13, our balance sheet remains strong with net borrowings of $727.9 million at December 30, Onest 2019, resulting in a leverage LAE ratio of approximately three times based on the midpoint of our 2020 EBITDA guidance range.
We generated strong adjusted free cash flows of $47.5 million, which was 14% above the $41.8 million in 2018.
With that I'll turn the call back to Jeff. Thank you are.
As I turn to our outlook I'd like to provide additional insight into our 2020 expectations. We are providing enhanced level of transparency at this time in an attempt to bring clarity to our 2020 outlook and highlight the benefits that the combination with NRC will bring further we want to spend some additional time breaking down.
The components of the NRC business and our contribution from their service offerings as well as the market market exposure for various NRC business units.
Starting on slide 15.
We expect total company revenues to range between 1.05 billion and $1.15 billion.
This growth is coming from a 6% increase from the legacy us ecology business plus the addition of full year NRC.
Adjusted EBITDA is expected to range from 230 million to $250 million.
At the $240 million midpoint of this range the legacy us ecology businesses estimate estimated to deliver $149 million of adjusted EBITDA and NRC is expected to deliver $91 million of adjusted EBITDA.
Adjusted earnings per share is expected to range from $1.65 cents to $2.12 for 2020.
When excluding amortization expense on a tangible assets our cash earnings per share diluted per diluted share is expected to range from $2.45 to $2. A 92 cents and is 10% above 2019 levels at the midpoint of our guidance range.
Capital expenditures for 2020 are expected to range from 90 million to $95 million, we expect to spend approximately 17% of this figure on construction of additional landfill space, 43% on maintenance capital, 22% on high return on investment growth project capital.
8% on the rebuild of damaged Grandview treatment building, where insurance proceeds for collected in 2019 and 10% on integration related capital.
Depreciation and amortization expense for the full year. After 2000 for 2020 is expected to be a $115 million.
This amount includes our preliminary estimate of purchase accounting adjustments related to enter two NRC, which are significantly higher than our original estimates.
Our full year tax rate is expected to range between 27 and 28%.
Our adjusted free cash flow is expected to range from 81 million.
Q1 hundred $6 million at the midpoint of our adjusted free cash flow guidance. This represents a 97% growth over the $47.5 million of adjusted free cash flow delivered in 2019.
Moving to the next several slides and starting on slide 16, we have attempted to break down our 2020 guidance into legacy us ecology, and the components of the NRC business.
In an effort to provide more clarity we are using the midpoint of our adjusted EBITDA range of $240 million in this analysis as we believe this is the best point estimate of what we will deliver in 2020.
Starting with legacy US ecology Slide 17 shows a bridge from 2019 standalone levels to our estimated standalone levels for 2020.
As you can see on this bridge, we expect growth and both of our operating segments delivering a projected $149 million of adjusted EBITDA. In 2020. This represents a 6% growth over legacy 2019.
Adjusted EBITDA levels.
Our environmental services segment adjusted EBITDA is expected to increased 3% with growth in our base business, ranging from 3% to 5% and solid single digit growth in our event business. Our event business pipeline continues to be strong with several larger projects that shipped in 2019 expected to continue in 2000.
Morning.
As well as new projects.
Expect to commence in 2020, the backlog of opportunities continue to build providing us confidence that we'll be able to replace completed 2018 projects and show growth.
Our field and industrial services segment is expected to see significant growth in 2020.
In excess of 30% over 2019 levels. This growth is driven by the strengthen our small quantity generation services, specifically retail and lab services.
Our teams are executing at very high levels landing, new contracts and customers that will be implemented in 2020.
Growing our market position has been a multi year focus and we continue to see accelerated traction with these service offerings.
Our corporate expenditures are also growing in 2000 or in 2020, as we continue to make investments to support our people and position the organization for growth.
Much of these increases are and people investments primarily in headcount wages and benefits as we strive to attract and retain industry leading talent.
These investments are centered around supporting our focus on customer the customers experience driving operational excellence and developing our development of our IC platforms.
We're also facing cost increases, especially in our insurance programs, which is part market driven and another part post Grandview incident driven.
As much as we tried to separate those costs to illustrate the Standalone us ecology.
Remain corporate cost increases.
It's related to the new scale of the combined organizations with.
Within our CND Standalone numbers all in we are expecting a strong year for legacy us ecology in 2020 building upon our record 2019.
Shifting to NRC Slide 18 presents a buildup of adjusted EBITDA by legacy NRC segment to arrive at the $91 million of midpoint adjusted EBITDA contribution for 2020.
In this build up we also map the legacy NRC segments to our ongoing operating segments.
Starting with Us Ecologies.
Field and industrial services segment.
Domestic NRC environmental services is expected to contribute $38 million of adjusted EBITDA growing 17% over Standalone NRC 2019 levels.
The NRC domestic environmental services segment, most closely resembles the legacy us ecology field and industrial services segment and provides emergency response services.
Industrial services and waste management services.
The legacy NRC International segment is expected to contribute $7 million of adjusted EBITDA in 2020, representing 20% growth over the Standalone 2019 results on the strength of their drainage business.
Please standby legacy NRC segment is expected to contribute $14 million of adjusted EBITDA contribution a decrease over 2019 standalone levels on more normalized emergency response performance.
Aggregating these legacy segments NRC is expected to contribute $58 million of midpoint adjusted EBITDA to our field and industrial services segment in 2020.
And our Steve Legacy Sprint Energy segment, now called US ecology energy waste disposal surfaces is expected to deliver $41 million of adjusted EBITDA in 2020, representing 30% growth over Standalone 2019 results. This growth is due to continue.
You'd ramp of two new landfills and two new wastewater treatment facilities that came online in 2019 and had little to no contribution to the 2019 results.
These assets are offsetting some of the market softness that were seen in the overall energy markets I will dive into this in more detail later.
Corporate costs for legacy NRC are expected to be flat in 2020 from us from Standalone 2019 levels.
We are estimating $7.2 million of net synergies to be realized in 2020. This comprises of $6 million and adjusted EBITDA from revenue initiatives, primarily focused in our national Emergency response programs and waste management cross selling and $8 million in cost savings, partially offset by $7 million on.
Recurring incremental costs to align our people programs and it systems.
As a reminder, we estimated realizing $20 million of run rate synergies by the end of the third year and we still believe this to be a good estimate.
I want to pick back up on our energy waste disposal services business on slide 19.
This business unit serves the environmental needs of our upstream energy customers that are in the business of exploration activities, including drilling and extracting oil and natural gas.
We operate three landfills seven permitted wastewater treatment facilities and provide regular services such as transportation equipment equipment rental emergency response and remediation services.
As indicated earlier, we expect this business to grow approximately 30% from Standalone 2019 levels. This growth is solely due to the two new landfills and two and two new permitted wastewater facilities that commenced operations in late 2019.
The two new landfills opened up in June and July of 2019 and have ramped much slower than previously expected and contributed very little to 2019 results. The softer market conditions contributed to this slow Graham.
Since our ownership we have spent significant amount of time adjusting our go to market approach and realigning our sales teams to better address the markets and their drivers and drivers to position us for success.
Early indications appear to be positive.
When looking at our visited the business drivers for the landfill disposal services, they primarily reside with waste volumes coming from drilling and completion activities remediation activities and cleanups of routine spills.
It is a very high margin business when at full ramp with EBITDA margins similar to our other landfill business given the expected challenge it challenging market conditions throughout 2020, we have modeled at 41% reduction in our EBITDA margin on reduced volumes.
Our wastewater treatment facilities are permitted to treat bio waste from lodging facilities drill rigs production facilities and other operations they tend to be high margin with lower operating leverage than our landfills are.
Our services group provides needed services on a standalone basis, and as bundled together with critical disposal services.
As with most services this is a lower margin business.
Low fixed costs and lower barriers.
Having the disposal assets creates a value added proposition that we expect to further leverage which is not much different than our successful bundren bundling strategy, we have on the hazardous waste business side.
When looking at our energy waste disposal services business as a whole its adjusted EBITDA contribution is distributed between our service evenly distributed between our service offerings offerings diversifying our exposure to more than one just service to try to type and business driver.
Shifting gears.
Slide 20 provides an adjusted earnings per share bridge from 2019 actual results to 2020.
You will notice on this slide we present, both adjusted earnings per share as well as reported as well as cash earnings per diluted share as we look to 2020, we now expect adjusted earnings per share to be dilutive compared to 2019 adjusted earnings per share at the midpoint of our guidance range. There are two fab.
Actors driving this revised outlook outlook first is the lower than expected contribution from the energy waste disposal services business, which we've already talked about.
Secondly, there's an approximate 34% share drag due to incremental noncash cash intangible asset amortization amortization, which is significantly higher than we had originally expected at the time of deal announcement.
Looking at cash earnings per diluted share, which strips out the amortization of intangibles, we expect 10% accretion in 2020 over 2019 results.
On slide 21 weeks, we reconcile our expected range of adjusted free cash flow at the midpoint of our range, we expect cash free cash flow to approximate $93 million, which represents 97% growth over our 2019 adjusted free cash flow.
Turning to slide 22, when looking at the consolidated company and its revenue exposure, we continue to be very diversified with no significant end market concentrations. This slide shows an estimate our estimate of end market exposure by customer type.
As you can see the combined company remains heavily tied to the industrial markets. Our upstream energy exposure represents approximately 12% of our total revenue and as discussed earlier, it's further diversified due to the variety of service offerings that we provide.
Finishing off our prepared remarks on slide 23.
I continue to be very bullish on the combination with NRC, taking to best in class companies with complimentary service offerings and footprint is a formula for success. This is similar to our combination with DQ back in 2014, and our team is committed to repeat this performance the combination further advances.
Our vision of becoming the Premier comprehensive environmental service provider.
NRC builds upon our service offerings with leading emergency response, and standby services and industrial cleaning and complements US ecology is leading field services, while providing more than 50 locations to grow and advance these services.
Adding a new customer base in the energy field provides critical but necessary waste disposal disposal solutions and services to protect human health and the environment Our core mission.
As you can see in our guidance. This transaction is cash flow accretive in terms of both free cash free cash flow and cash adjusted earnings per share.
The integration is going well and we've made tremendous progress to date much more than I'd expected.
There is work still ahead, but the teams are energized and encouraged with the true mission of Bill at building upon an already World class organization I'm excited to support their drive and look forward to reporting on their accomplishments in 2020 with that operator, please open up the call for questions.
Thank you at this time, we will open the floor for questions. If you would like to ask your question. Please press. This dark you followed by the one key that will start to asking audio question.
Our first question comes from Michael Hoffman of Stifel.
Hi, This is Brian Butler on for Michael you guys there.
Yes, Hi, Brian.
Okay.
So.
Quick question on the.
The EBITDA bridge you provided for NRC can you can you give a little color I guess on what the.
The revenues are attached I know you gave the full revenues of 445 million, but how does that breakdown between the he asked part and.
If I ask par.
So so Brian yes on and I'll talk to the mid point so in terms of of the EPS segment.
The NRC contribution on EPS segment at the mid points, just a little over 100 million for in terms of revenue and then on the field and industrial services segment. The NRC contribution at the mid points about 345 million.
Putting five and is that going to be kind of when you think a contribution.
Seasonality kind of even our how should we think about maybe the seasonality of those two going through 2020.
Yes, we've look we've looked quite a bit adopt brand I will tell you the seasonality at NRC is similar to what we see us ecology ALD, although I'd say it might be a little pronounced, especially in the domestic EPS business.
If you look at for example, Alaska and some of the things that they do in the northeast.
Theres really about four or five month timeframe in the in the fourth and through the first quarter that that theres not a lot of activity. So we still expect the first quarter to be our seasonally lowest quarter.
And then starting to ramp in the second third quarter being the highest and then fourth quarter being again a bit of a wildcard is it always is just based on what the weather does but as we look at the trends.
First quarter for for the combined company is probably somewhere around 20, 22% of the full year in terms of EBITDA and then it kind of ramps from there.
Okay, and then ill.
I'll just I'll just add on those segments in particular on EPS, when we kind of look at CES than some of the energy related seasonality.
What we normally see and what we've seen in the past is first quarter tends to be lighter and then it grows in the second a lot of that has to do with deployment of capital by the energy companies.
Most of those end up happening in.
The first quarter, and then that starts building and into the second quarter.
Okay, and when you think that he said I think on the call. You said it was margins were 40% lower then then peak and I'm guessing that's mostly the EPS part of the NRC. So is this kind of when you think about how do I guess the the estimates that are out there I mean are you guys.
In the range of peak to trough, where is this kind of 41 million on a 100 million of revs for that that landfill piece.
Yes, so the 40% reference was specifically on the energy disposal services business.
So and that was from peak to trough, so work down towards the lower end to that range and what we're modeling and it's really on reduced volumes in the market conditions were seeing down there.
Okay, and then I guess last one on that is just.
Can you give some color maybe on sensitivity, we when we look at from the outside looking in on crude prices or even activity in like the Permian Eagle Ford.
How should how should we think about what's built into this model. If there is further weakness is it.
Is it kind of one for one if we see activity declined by another 10% should we expect this to be down or is this.
No more confident on on being able to.
At least achieved this level.
At this stage, we actually feel very confident touchy achieved this level. There is definitely always risk in any any point estimate that we give with regard to that but.
Most of the energy companies look at more of the long term market.
It's out there and they don't necessarily adjust their plans on day to day changes in and what we're seeing in the oil prices and so.
The one thing that we've we've emphasized on is these are out of all of the the oil and gas fields in the United States. On these are the areas, we want to be and they tend to be the lowest cost produce.
And they have the most opportunity for growth and so we still feel very bullish on the assets. We have we're in we're a kind of and a trough for a low point and so we see upside as these new landfills and assets get ramped for those markets.
Alright, great. Thanks for taking my questions.
Thank you.
Question, Tim Henry Chien SB oils.
Hey, good morning, guys.
Good morning to Henry.
Hey, guys, yes, so just kind of follow up question on.
He is broken out.
The bridge between 20 guidance.
I think engine.
Going forward, if you could talk about how how much will.
Well, the two businesses be more integrated and leave you.
Really.
And I'm just thinking like in terms of operation segment for the tubing.
Yes, so so in terms of reporting going forward the energy waste business will be will be included in our environmental services segment and than the rest of NRC will roll up in our field and industrial services segments.
That being said as we as we report 2020 since we won't have cycled the acquisition until we get into 2021 at the end of 2020.
You'll be able to see in what we report exactly how much the NRC contribution was to each of those segments. So when we talk in terms of F. Environmental services will be speaking to it in total which will include NRC and then we'll break out the component that NRC contributed which would be the energy waste disposal business and then on F is similarly.
We'll report kind of consolidated and then call out the portion that that's been contributed by the NRC filled industrial services businesses.
Got it okay that makes sense and as I understand it.
The assets are attractive and it does.
And you into two new.
Fine segments how.
Is there any opportunity or is part of the plant to integrated further and.
Whether in like the distribution.
Oh or other services.
Yeah, Henry our plan is to Integrys, the full business businesses that we acquired into us to call. These operations and processes procedures systems that type of thing as well as salesforce.
Got it okay.
There any I guess is beginning to think added any any opportunities for synergy either.
I mean and cost or revenue side.
Yes. So we've included a $7.2 million of net synergies.
For 2020.
Most of that is really in revenue initiatives, which is driving about 6 million of those we also have about $8 million of cost synergies that are embedded but we also had some incremental recurring costs that are being.
Being reinvested in so thats, how you get to the net 7.2.
Again going back to our looking at the three year run rate, we had estimated $20 million were still sticking from without estimate and we see opportunities there, especially on the revenue side that it could be better than that.
As we fully get better understanding and get the teams working together there is that a lot of lot of positive that's come out of the early days and we just see a lot of potential there.
So so yes, Henry just to just to be clear so that the $91 million of EBITDA coming from the NRC business in 2020 at the midpoint.
Includes that $7.2 million of net synergies Jeff referred to.
Got it okay.
That's great. Okay. Thanks, so much.
Thank you.
Our next question comes from Liam Griffin CBS.
Hi, good morning. Thanks.
First question was just on topline for 2019, it actually looks like NRC G.
The 70 million revenue contribution was in line with the expectations you guys laid out last quarter.
Just.
But but perhaps the underlying business the legacy us ecology business. It looks like grew maybe a little bit more slowly than expected could you just talked through what the drivers where there.
So are you looking at you're looking at just the fourth quarter.
Okay.
Sort of backing it out yet relative to what.
The expectations were from the third quarter result presentation.
Yes, so let's talk about legacy us ecology. So yes, we grew just about 2% quarter over quarter on the topline on part of that is the headwinds.
She is not really head, but well not headwinds, but part of that was the fourth quarter 2018. If you go back and look at all of 2018, our fourth quarter was really had a really strong finish to it.
Just from from Pent up.
Deferral of projects and other things that kind of factored into that so we had we had a tough comp in there, but we still grew 2% on that when you break it down by segment on the legacy side.
We saw strong growth in our base business about 5% and we saw about 12%.
In our event business on the on the environmental services business. So.
Very strong growth very pleased with what we saw there on the field and industrial services. It actually declined a little bit, but theres a couple of things really a factoring this it's really masking.
Some of the successes the headwinds we're on our industrial services business, which is honestly.
They were servicing a lot of steel mills and in the areas that we were we were servicing their they've actually announced some closures and it's also partially self induced meaning that we chose not to do some of the business because the pricing pressures, we're not giving us the adequate margins that we needed to put our people at risk and so.
That's one of the headwinds that caused that number to go down as well as our total waste management.
Service line had year over year declines that business continues to do well on the base side. If you just was lacking some of the projects in the fourth quarter.
2019 compared to 18.
What is the masking is strong growth in our retail our small quantity generation our lab pack services, our LTL services areas that we we've really focused on growing that business, including IAR, which that's on a legacy basis. So really pleased all land from the revenue so the 2% growth is.
It is actually really good outcome when you look at adjusted EBITDA for the quarter.
We grew 14%.
From Q4, 19 to Q compared to the previous year, and so very pleased with that growth.
And really finished the year on a strong no finished better than we had anticipated and above our low end to the guidance range.
William has there exists a tag on I mean, if you look at at that by US in particular that that and I'm talking just legacy us ecology that 3% revenue decline.
If you Cascade down on look, though we actually were up in terms of of EBITDA about 9% quarter over quarter. So to Jeff's point, a much a much stronger margin profile, even on that lower revenue.
And that's that's a result of some of the traction we're seeing in some of those service lines small quantity generation emergency response.
That tend to be especially as we're getting more traction and route density better margin businesses.
Got it thank you.
Then next question I was just on the ramp at Grandview could you just update us on on how Thats going and what we kind of should be expecting in 2020.
This is Simon here from a from an infrastructure standpoint, you know we expect to have the vast majority of infrastructure in place by Q1.
So our permitted capabilities are back.
We will have some limitations on volumes not having the state indoor stabilization complete till Q4 that being said, we continue with plans to divert to Nevada is necessary. So.
Certainly think we have all the pieces in place to meet our customers demands.
Thank you and then last question just what is the right share count we should be using for 2020 here.
So share count, including all the all the new shares from NRC kind of on a fully diluted basis is about 31.7 million.
Okay.
All right thanks, everybody guidance.
Thank you.
As a reminder, if you would like to ask a question. Please press. The star can you followed by the one key happily star one asking audio question.
Next question comes from Peter Rabover of Artko capital.
Hey, guys.
Thanks for all the transparency.
Just curious that given the pretty low stock price and the warrant. So if you guys had considered cleaning up the dilution.
At this stage.
Yes, Peter so on the on the warrants, it's definitely something that we're evaluating on how best to.
Deal with the warrants going forward since the time of the.
Closing tell actually today, we've pretty much been in a lock down period and really couldn't do anything until we came out with 22000 guidance and transparency. So we're going to continue to look at that in our overall capital deployment and seeing what is the best best use of our capital.
With regard to warrant share price and other deployments.
Okay. Good just wanted to make sure you guys you're thinking about I think it's pretty opportunistic radio.
We ended up thank you I appreciate all.
Alright, thank you.
At this time, we have no further questions in queue I'd like to return it back to our speakers.
Well. Thank you so much for attending today's call looking forward to visiting with you and future meetings.
Ladies and gentlemen. This concludes today's teleconference. You may now disconnect.
Yeah.