Q4 2020 US Ecology Inc Earnings Call
Good morning, and welcome to the fourth quarter 2020, you US Ecology, Inc earnings conference call on.
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Please note. This event is being recorded I would now like to turn the conference over to Eric Jarrett Chief Financial Officer. Please go ahead.
Good morning, and thank you for joining us today.
Joining me on the call. This morning are chairman, President 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 describe historical facts are forward looking statements as defined in the private Securities Litigation Reform Act of 1995.
Since 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. These.
These risks and uncertainties also include but are not limited to statements regarding the continued impact of the COVID-19 pandemic on our business the macroeconomic impact of specific end markets in which we operate and our expectations for financial results for 2021.
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 day 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 dotcom.
Throughout yesterday's earnings release on our call and presentation today, we refer to adjusted EBITDA adjusted earnings per diluted share cash earnings per diluted share and adjusted free cash flow. These metrics are not determined in accordance with generally accepted accounting principles and therefore are 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 a of our earnings release.
We believe these non-GAAP metrics are useful in evaluating our reported results.
We would also like to point out that our fourth quarter results include contribution from the NRC Group Holdings acquisition that closed on November one of 2019 throughout this presentation, we often refer to NRC group holdings as NRC. We have also provided information on a standalone U S ecology basis, which is referred to as legacy us ecology.
Similarly for stand alone NRC data, we refer to that group as legacy NRC.
This disaggregation is an attempt to provide increased transparency and understanding of the underlying business.
Before I turn the call over to Jeff I would also like to point your attention to slide five as noted in our earnings release yesterday in connection with our year end 2020 reporting we have redefined our reporting segments to better align with our strategy into increased clarity on.
Our new reporting segments include waste solutions field services, and energy waste, which are defined in detail in yesterday's earnings release.
Throughout our presentation today, we will be referring to these new reporting segments.
All financial information presented has been recast to reflect these changes.
The waste solutions segment was formerly known as the environmental services segment with the only difference being that it now excludes the energy waste business, which is now a separate segment. The field services segment remains unchanged from what was formerly known as the field and industrial services segment and the energy waste segment represents the energy waste disposal.
Total services business acquired through the NRC acquisition.
With that I'll turn the call over to Jeff. Thank you, Eric and good morning, everyone. It is with gratitude for the tireless work of our U S ecology team members and their flexibility across our organization that I share the results of a solid quarter for the company. Despite the challenges faced for those that are following the webcast presentation.
On a direct your attention to slide six.
Our business continued on its path to recovery as evidenced by strong trends in the fourth quarter that have continued into early 'twenty 2021.
Total company revenue for the fourth quarter of 2020 was up 4% year over year and up 1% sequentially from the third quarter of 2020, our field services segment led the way with double digit growth in revenue, which drove a 57% improvement in segment EBITDA.
The growth was particularly strong in our legacy us ecology field service this segment.
<unk> grew revenue by 16% in the fourth quarter and drove adjusted EBITDA up by 46%.
Our base business revenue in our waste solutions segment saw a 7% sequential improvement compared to the third quarter of 2020 looking more specifically at trends in our base business. The month of December was the strongest month on the quarter and resulted in a return to positive year over year growth.
Growth compared to December 2019.
The overall resiliency of our business augmented by the capital preservation and cost saving initiatives implemented earlier in the year resulted in a 31% improvement in year over year adjusted free cash flow during the quarter.
Overall, the company delivered adjusted EBITDA of $42 $8 million in the fourth quarter of 2020 and would've been in the top half of our guidance range when factoring in the $2 7 million dollar incentive plan adjustment, we gave to our frontline workers and non executive team members.
Looking at the full year for 2020, the company achieved $934 million of revenue adjusted EBITDA of $172 million and adjusted free cash flow from $68 $8 million up 45% from 2019 levels.
Considering the difficult operating conditions that the pandemic created our legacy us ecology business had a solid year with 2020 revenue flat with that of 2019 levels, which was a record year for the company.
Base business was down 7% on the lower industrial activity.
It was substantially made up by a 20% increase on our event business adjusted EBITDA was down approximately 4%.
Reflecting higher revenues in our field services segment compared to our waste solutions segment.
Legacy NRC.
Was significantly impacted by the operating conditions. The pandemic created in 2020. This was most most felt in our energy exposed businesses, where revenue was 50% below our initial 2020 plan and down 40% from the prior year under NRC or Nrc's ownership.
Our energy waste segment, which operates in the Permian and Eagle Ford basins delivered $1 million and adjusted EBITDA for 2020 down from our original plan of $40 million.
We have seen sequential improvement in this segment and expect us to continue as we see continued stability and recovery in oil prices.
Legacy NRC was also impacted by lower overall industrial activity, which resulted in fewer land and marine industrial related spills and cleanings and there were limited large cleanups from industrial accidents or weather events like we have experienced in the past we did experience increased business from.
COVID-19, decontamination work, where we generated $29 million of revenue and on over 5100 events for all of 2020.
We have now cycled our first year of ownership and continue to realize many benefits of this combination in 2020, we realized net annualized synergies of approximately $13 million, which was ahead of our $7 2 million dollar estimate coming into 2020 cost savings came in ahead of plan.
<unk> and revenue trends continued to improve for 2021, we expect another incremental $5 million to $7 million of annualized net synergies and we are well on track to achieve our $20 million of net synergies by the end of 2022.
Before I turn the call over to Eric I want to provide a brief update on slide eight on our environmental social and governance initiatives that are designed to strengthen our business performance increased reporting and develop goals to make a lasting impact on our environment. Our people in our community in January we launched our new <unk>.
S G reporting portal on our website and published our second annual.
Sustainability and citizenship report, which reflects 2019 data.
Our core purpose is to provide environmental solutions that protect human health and the environment. The data shows the positive impact our business has on accomplishing this through managing over 3 billion pounds of waste and nearly 70 million gallons of wastewater that our customers have entrusted to us for safe treatment.
Recycling and ultimate distribute disposition or disposal.
We're aggressively pursuing sustainable waste solutions, including technologies to recover oil solvents metals and other products through distillation and other technologies, including our aerosol recovery system that we launched in 2020, we remain focused on growing our beneficial reuse and recovery programs, which not only some.
Port long term sustainability of sustainable business practices, but also align with our customers to ESG goals.
We continue to upgrade our infrastructure to be more energy efficient and deploy capital investing investments into sustainable technologies and solutions. This effort will continue in 2021 with new investments. We also recently announced that we are participating in a pilot study to evaluate the potential migration to elect.
Trick vehicles.
For our over 1100 vehicle fleet.
As to social responsibility, taking care of our team members remains top priority. It all starts with our continued investment and focus in our safety 360 program designed to protect our team in Peru promotes safety first.
I am pleased with our 2020 results showing year over year improvement.
And and are at levels that are significantly below industry averages.
Our focus on our people goes well beyond these great health and safety priorities. We have created a special culture that is built on inclusion respect protecting the environment and continuous improvement in everything that we do we invest in our team members with a total rewards program that includes incentive plans top tier medal.
Benefits learning and development programs and in 2020, and 2021 includes incremental COVID-19 paid time off to deal with these uncertain times to this and as I mentioned in the earlier comments today and in yesterday's press release, our 2020 results includes a discretionary.
Increase of $2 $7 million to our non executive incentive plans to recognize our team for the tremendous work they accomplished through out 2020 in these most trying of times, we continue to see success in these programs, helping us lower our overall turnover levels and allowing us to recruit great talent.
These programs have allowed us to improve our year over year diversity across the organization.
Finally, we are not sitting idly by when it comes to governance, we constantly evaluate best in class governance practices and adopting knows that makes sense with our strategy. Most recently, we further expanded our already diverse and experienced board, adding additional talent experience and diversity and I welcome Mac Hogan.
It's valued contributions as we work together building upon this great company I look forward to updating all of you as we continue to make significant progress on this area throughout 2021 with that I'll turn it back to Eric.
Thanks, Jeff.
Starting with consolidated results on slide 10 revenue for the fourth quarter of 2020 was $241 $1 million.
Revenue for the waste solutions segment was $105 7 million for the fourth quarter of 2020 down 7% compared to $113 2 million in the fourth quarter of 2019.
The decrease was due to a 13% decline in transportation revenue and a five per cent decrease in treatment and disposal revenue the.
The decline on our treatment and disposal revenue was due to an 8% decrease in base business and a 3% decline in event business in the fourth quarter of 2020 compared to the fourth quarter last year.
Base business increased 7% and event business declined 23% sequentially when compared to the third quarter of 2020.
The field services segment delivered revenue of $135 million in the fourth quarter of 2020 compared to $105 $5 million in the fourth quarter of 2019.
And our see contributed $75 $2 million of segment revenue on the fourth quarter compared to $57 $7 million for our two months of ownership in the fourth quarter of 2019.
Excluding NRC field the field services segment revenue increased 16% in the fourth quarter of 2020 compared to the fourth quarter of 2019, driven by increases in our emergency response small quantity generation and transportation service lines.
Total gross margin contracted approximately 200 basis points to 28% in the fourth quarter of 2020 compared to the same period last year.
This was a result of lower waste volumes in both our waste solutions and energy waste segments and the impact of a business interruption insurance claim of $2 $1 million recognized in the fourth quarter of 2019, partially offset by a 470 basis point expansion in our field services segment margin.
Selling general and administrative spending or SG&A was $47 $5 million in the fourth quarter of 2020, when excluding $4 $1 million of business development and integration expenses. This compares to $46 $7 million in the fourth quarter last year, when excluding $19 $5 million of business development and integration.
Expenses and favorable property insurance recoveries recorded in the fourth quarter of 2019.
We recorded noncash goodwill and intangible asset impairment charges of $104 $6 million in the fourth quarter of 2020 related to our energy waste and field services segment.
Non cash charges were primarily related to the finalization of our purchase accounting for the NRC acquisition and an increase in the discount rate applied to some of the projected cash flows since our last assessment.
Adjusted earnings per diluted share was <unk> 19 in the fourth quarter of 2020 compared to adjusted earnings per diluted share of <unk> 38 on the same quarter last year.
Adding back the impact of intangible asset amortization cash earnings per diluted share was <unk> 41 per share in the fourth quarter of 2020 compared to 56 cents per share in the fourth quarter of 2019.
Adjusted EBITDA was $42 $8 million in the fourth quarter down 7% from the fourth quarter last year.
Looking at full year results for 2020 on Slide 11 revenue was $933 $9 million adjusted earnings per diluted share was <unk> 61 in 2020 compared to $1 96, and 2019 cash.
Cash earnings per diluted share, which add adds back the per share impact of amortization amortization of intangible assets was $1 48 for 2020 compared to $2 44 in 2019.
Adjusted EBITDA was $172 million for 2020 compared to $149 $4 million in 2019.
Turning to slide 12, we exited the quarter with a solid balance sheet and strong liquidity, we had cash of $73 $8 million on over $120 million of available capacity on our revolving line of credit at the end of 2020.
Net borrowings were $712 million at December 31, 2020, which was an improvement over our net borrowings at December 31 2019.
Our operating cash flow increased to $107 $1 million in 2020 up 35% from $79 $6 million in 2019, driving our adjusted free cash flow up 45% to $68 8 million compared to $47 $5 million in 2019.
Our bank Covenant coverage, our bank Covenant leverage ratio was four three times at December 31, 2020, well under the $5 two five times covenant level for the quarter.
Overall, our solid liquidity and strong balance sheet will allow us to continue to operate the business with a long term focus and position us for continued recovery in growth as we move beyond the pandemic and its related market pressures.
With that I'll turn the call back to Jeff Alright. Thank you Eric we're encouraged by the trends, we see and have seen in the fourth quarter and the continued momentum we're seeing in early 2021 with industrial production metrics continue to continuing to strengthen and early signs of increased business activity levels. We are optimistic from.
What lies ahead.
We are even more incur are encouraged by the fact that we are seeing these positive signs across most of our service offerings.
Moving to our outlook on slide 13 overall, we expect to see these positive trends drive growth in revenue adjusted EBITDA and adjusted earnings per share across all of our businesses.
We also expect to report.
Growth in our adjusted free cash flow, despite a 50% increase in our planned capital expenditures as we return to our regular capital deployment programs are expected to return to growth. In 2021 also assumes that certain of our capital preservation initiatives of last year are lifted and normal more.
Normal business activities and associated costs resume on.
All in we expect that our 2021 full year performance to produce total revenue between $940 million and $990 million adjusted EBITDA between $175 million and $185 million adjusted free cash flow between 60 million and $77 million.
Adjusted EPS should be between 65 to 88 cents per diluted share cash EPS between $1 46 to $1 69 per share and capital spending between $85 million and $90 million.
With regard to capital spending we are expecting to return to more normalized levels with elevated capital spending levels in 2021 on landfill.
In addition, we are continuing to grow our company organically by investing in businesses and new technologies by and investing in up to $21 million into new and ongoing projects.
As we sit here today this guidance guidance reflects our expectations that we will return to growth in 2021 with increases of up to 6% and revenue and up to 9% and adjusted EBITDA for.
For the next several slides I'm going to have Eric walk us through our adjusted EBITDA Bridge getting you from 2020 actual results to 2021.
Thanks, Jeff on.
On Slide 14, you can see an adjusted EBITDA bridge for our 2020 results to the midpoint of our 2021 adjusted EBITDA guidance range, Inc.
Included in our actual results for 2020, we had a number of favorable one time benefits that are not expected to repeat in 'twenty 2021.
These favorable adjustments accounted for just over $9 million of adjusted EBITDA in 2020 that we will grow through operationally in 2021.
The favorable adjustments included a cash medical insurance settlement dating back to the mid Ninety's, a Canadian government Covid related grant and several favorable true ups related to earn outs on acquisitions made by the legacy NRC organization.
As shown on this bridge our growth starts with improving results on our waste solutions segment, where we expect growth in 2021 on the back of an improving industrial economy.
We expect base business to return to growth ranging from 5% to 7% in 2021.
With much of this recovery expected to occur starting in the second quarter of 2021 through the balance of the year as the first quarter of 2020 included strong pre pandemic trends.
We continue to see positive trends on our event business pipeline in extent that expect to help the year of activity given the strong comparative period in 2020 and with several larger projects. Completing we are currently expecting our event business to be flat to up slightly in 2021.
We also expect to see solid growth in our field services segment through a combination of improved industrial activity increased business investment in services implementation of contracts won in 2020, and our <unk> and total waste management service lines and further benefits from additional NRC integration activities.
Our energy waste segment is expecting moderate growth in dollar terms. Despite the positive recovery in oil prices and increased activity levels at levels. We are expecting limited contributions from this business unit with most of the recovery commencing in the back half of 2021 and accelerating in 2022.
Our corporate segment is increasing primarily as a result of a shift of support related costs from our operating segments to the corporate segment as a result of integration and regionalization activities.
To assist with your modeling we summarize these regional overhead costs.
Cost shifts by segment to the corporate segment in the appendix the appendix of today's presentation.
In addition, we are expecting cost to return to more normal levels and compensation incentive compensation plans and a higher level of business activity such as travel that did not occur in 2020.
As Jeff mentioned, we expect EBITDA growth of up to 9% in 2021 over 2020 levels and up to 15% growth when factoring out the favorable 2020 adjusted EBITDA benefits.
With that I'll turn it back to Jeff.
2020 was nothing short of a challenging year.
The trends that we saw towards the end of the year and continuing on early in 2021 compounded.
With the steady vaccine rollout and declining Covid cases, or cases gives us optimism on that.
A much better year than in 2020.
Especially in the second half of 2021 with solid momentum carrying us into 2022 I am so very proud of the entire U S ecology team and their ability to persevere and thrived. During these times as a result of the hard work of this past year, we are in excellent shape, both strategically and financially.
And are positioned to continue to capitalize on opportunities ahead as the industrial economy continues to recover and we move the pandemic to the rearview mirror.
This will allow us to.
To continue to build upon our sustainable future for U S ecology as team members and stockholders and with that operator, you can open up the call for questions or comments.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad.
Youre using a speakerphone please pick up your handset before pressing the keys.
To withdraw your question. Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
And our first question will come from Michael Hoffman of Stifel. Please go ahead.
Hey, gang hope everybody's doing well out there.
Thanks for taking the questions and by the way I Love This presentation.
A nice shift here, we've been very transparent so appreciate that.
Within the guidance can you help us frame 29 million of decontamination work.
As your assumption some of that rolls into the year.
But not all of it and so not only are you overcoming.
One timers in EBITDA, but you also overcoming that as well right.
Yeah, I'll, let Steve address how those markets there.
Hi, Michael.
We ended the fourth quarter very very strong and that also continued into January and the beginning of February.
Trend us.
Now down orders are down, but we're still on pace to do as much as $10 million this year.
Covid work and what that does is it creates.
Somewhat of an EBITDA headwind, maybe $5 million to $6 million, but we're very confident we're going to offset that with just regular ER business Hazmat ER business recovering throughout the year. So give us give you some idea where.
We're a GAAP would be okay and then.
Jeff, whereas you.
Framed the pandemic hit to revenues.
And if I think of a reopening angle is in your guidance is there an assumption that we are fully reopened in the numbers relative to the things that got dislocated in 'twenty, how do I think about that.
Yeah. It's good question I mean, we really don't know what what reopening really looks like or how it's defined but the way. We're looking at 2021 is you know we're going to be facing some challenging conditions, probably through the first half of the year is kind of our assumption when.
When we get into the second quarter, we'll have a lot easier comparable and so we are expecting growth there on that go through the balance of the year from a reopening perspective, what we're kind of seeing right. Now is that we're going to have a lot more availability of vaccines towards mid year for more than just select population and demographic.
And so by then hopefully we will see much more normalized activities on the back half of the year.
Okay and art.
In your guidance have you just assume that the rate of of base recovery off of a lower number or you put back in the lost business and then the base recovery, that's what I'm trying to understand.
Yeah, it's going to be more growth off a lower number right now, but then continue to see improvement I think as we get towards the fourth quarter, we're gonna be seen some more more positive trends to maybe pre pandemic levels. Okay, and then lastly on free cash flow.
And the capital spending.
Can you give us a normalized way to think about us the percent of revenue capital spending beyond this.
Catch up year on the and the big landfill investment that's being done what's the what's the right sort of percent rebate, because youre approaching 10% this year and I don't think that's probably the sustained number.
Well when you include our growth investments in there that's probably is because we're going to vary those growth investments up and down depending on opportunities that we have so if you look at it this year is a high high landfill year.
38, $40 million of that which is a high percentage of our capital spend on some landfill and that that's going to continue for a couple of years as we've talked about previously our maintenance programs. There is a little bit of pent up.
You know maintenance activities in there from some of the capital preservation initiatives, we put in in 2020, but not much I mean, it's kind of more of a normal programs. You know I would say that without growth, we're somewhere in that 6% to 7% when you add growth and that's pushing us up to that probably 90% of what youre seeing seeing this year.
Okay, and then from a free cash flow target.
I would say a conversion ratio what do you think this business.
Should be doing versus where it is right now you know it was low thirties in 'twenty 'twenty, but it's going to be at the midpoint.
Upper thirties of EBITDA, but where can it be can it be 45 to 50 per cent of EBITDA.
Yeah, Michael this is Eric.
If you look at 2020 and based on how we define free cash flow, which is in the deck and there is a calculation in there based on that definition, where it's you know operating cash flows less capex with some add backs for some contingent consideration payments and things like that but based on that definition, we're at about 40%.
This year, we were just over 30% last year and if you go back to 2018, we were pre NRC. We were we're around we were in the low thirties.
We feel pretty good about where we ended this year I think on on on a longer term basis that that 40% range is about where I would like to see us but on a on a more consistent basis working capital is always the wildcard.
That can swing it a bit quarter to quarter, but but I think that that's 40% low forty's range is where we'd like to be on a consistent basis.
And then how do I translate that into sort of what what's the leverage look like.
You gave us a TTM leverage of 4.3, I guess one of the questions would be what is the EBITDA used to calculate that.
Based on the bank calculation.
And then what is the target for exiting this year, what's your thoughts about that yeah.
And there is some some additional items in the calculation, we do for the covenant under the credit agreement some of those relate to synergies and onetime costs on things like that the the good news is a lot of those start to fade away this year and come out of that calculation. So by the end of the year. It will be more of a you'll be able to get much.
Much closer straight off the financials.
That being said, we expect kind of based on the midpoint of our guidance range, we expect to be under four times at the end of this year and then obviously at the higher end of the range, we'd be even lower and then as we get into 2022.
See that really start to come down pretty quickly.
Alright, and then so the last question semi comment from me is the upside surprise on the model has to do with the scope and timing of any reopening.
Otherwise, there's a fairly conservative view about the decon replacement and incremental underlying growth and timing of project business.
That's supposed to question on the statement.
Yeah, So I I think.
The potential upside or the big big areas to watch us what is the reopening how does that translate into industrial waste volumes coming through it through the network. We have been seeing very positive <unk> trends and we're continuing to expect to see those those coming through the network.
Like we did in the fourth quarter.
On there and then event business is going to be in the big wildcard is what the recovery is on the energy waste side, because we're not assuming much there it's pretty much almost flat. If you really look at on a couple of million dollars improvement so.
You know at the end of the day, we're seeing some real positive trends there, we don't know where it's in where it's going to it where it is going to translate to and we're being cautious on that market just because of the unknowns. Okay. Thank you very much.
I would also add that and you know this but Q1 historically is our seasonally lowest quarter.
However that will be even more prominent for the first quarter of 2021.
When we're comparing to Q1 of 2020 that was pre pandemic and it was actually a pretty strong quarter. So we expect Q1 to be down pretty significantly from Q1 last year and then and then we start to pick up steam in the second and third quarters.
For 2021.
Having introduced that would you care to give us a framing of at the midpoint EBITDA.
Is 180 kind of per proportioning at least the first half as you know are we in the.
Upper teens as a percentage of that number in the first quarter then it pops into Q and then the rest is sort of on the rest of the year, that's the way to think of it.
Yeah, I think that's fair I mean, if you look at Q1, 'twenty one compared to 20 I would expect in terms of EBITDA that we would probably we will probably be down from Q1 2020 and.
25% to 30 per cent range got it alright that helps.
Alright.
Thank you very much thanks, Michael Michael.
Okay.
Once again, if you would like to ask a question. Please press Star then one.
And our next question comes from Tyson Bauer of KC capital. Please go ahead.
Good morning, gentlemen, and a way to make it through 2020, and we'll leave that behind us hopefully.
Okay.
Touching a little bit on what Michael was talking about you've now gone through an entire year that you were focused in on the cost structure the incremental expenses.
Or would you view that contract contribution profile on the margin side as business picks up volume picks up or give us a.
Degree of magnitude that you think that you would improve the cost structure of the business that once we do get to normalized levels better volumes that we're going to see much better profitability as we go forward.
Yeah, Tyson I think if you look at it 2020 and in terms of margin and I'll I'll talk I'll speak more in terms of EBITDA margin.
We ended the year at about 18% total us as.
As you look at next year, which against Q Q1 will be rough comparison, and then will build throughout the year and so it won't be a full year of recovery in 2021.
That level in terms of EBITDA EBIT margin, we're still going to be in that high teens, possibly low 20% range.
As we continue to.
Build out of the pandemic as we continue down the integration path.
Which we've seen a lot of success on I think we really start to see traction in those margins going into 2022 and beyond.
That I would you know.
We've targeted for a long time to get back up into the 20, the at least the low twenty's and hopefully approaching mid twenty's in terms of our consolidated EBITDA margin over the long term.
A shift of the range of approximately 304 hundred basis points.
Not yet once we get into 2022 and beyond.
I'm going to if we looked at ecology on.
Once we get this stuff behind us and what you've done that's really what you view the company of being able to produce is on those low mid 20 range as we get more normalized operations.
Yes.
Correct.
And the year anticipating really the second half of 'twenty, one to have more or less the handle cups come off are you and then we get into more economic drivers as opposed to some of these ancillary.
Factors so.
Run rate of the second half of 'twenty, one would be a fairly good indication on what you think you'll be as you go into the out years.
Yeah, I think Thats fair, especially you know as you look at as you look at Q3 and beyond I think we'll see some really strong improvement in Q2, but that's going on as much a function of.
We are really low comp.
Is anything, but Q3 and beyond definitely are going to be more indicate indicative of kind of future performance.
Okay.
Do you know what ESG score you have been receiving by the reporting companies. It would seem a hazardous waste company involved with cleaning up recycling those kind of things would be viewed more favorably, but is that what you are finding out in the marketplace.
Actually Tyson, we're we're not finding that you would think that would be the case.
So you know the the ISS score that is out there I have at the top of my head US we're ranked us seven on the environmental on.
And for those that are not familiar with that one out of 10 is good.
Or excellent. So the areas that we are challenged by is theres a lot of measurement on greenhouse gases.
And we are being compared with solid waste that emits those gases and we are in the air inorganic facilities. So we're gathering that data right now and we don't have anything published and that is that as part of the initiatives for 2021 to get that published out there and I think that will dramatically improve our score in.
Two an acceptable range.
So to summarize you think you're being unfairly categorized with.
Bigger waste management.
Solid waste guys, that's not necessarily indicative of what your business is.
That is that is a fair assessment and it's the fact that we don't have data that the rating agencies are looking for because it's really not a need to have it in the past. So it's a matter of us getting our data together and putting it out there as far as what we're doing in on our ESG scores I think what how you introduce the question is right.
You know where were the recipients from industrial customers on our byproducts to make sure that they are properly treated recycled managed and making sure that they are not harming human health and the environment and that is what our is in our DNA and it's what we do and it's why we have the technologies and the.
<unk> is in place us to do that and so.
This will this will correct itself over time, once we get everything pulled together and us.
And I think youre going to see us continue to talk more and more about this.
Our story, because I do think to the earlier point, there's a lot of of misconceptions. If you will and some assumptions that kind of go into win again as you mentioned when you hear hazardous waste in treatment and disposal on things like that we really do view ourselves in many of the of some of our ESG investors that have spent time learning more about.
The company also understand we really are a key part of the solution and a sustainable solution as well as all of the things we do around recycling beneficial reuse, we're constantly looking at opportunities to do that as well, but we view ourselves as part of that sustainability solution and we will continue to talk more.
Or and provide more information about that.
I'm glad you brought up that word recycling.
Leads into my next question, we've seen a great focus of us as far as on the investment community on companies that have highlighted that capability and the benefits of doing that especially given where the metals markets are.
And such.
Is that something that has been kind of missed with U S. Ecology that you do do a great amount of recycling, whether its petroleum whether its metals, others and being an accumulator that just doesn't draw that focus from the investment community and the multiple.
Yeah Tyson this is Simon.
It's good question I mean, we're doing a lot really on the recycling side I mean recently launching what's a 100% recycling of aerosols, which is our largest stream that comes from our retail business. We already are very heavy in the oil recycling business with us thermal desorption facility in Texas.
Both recycles catalysts and recoveries the oil from that process previously that would've been disposed of in landfills and the like.
We're really focusing on expanding that thermal technology more doing thermal distillation, we do airport recycling we hit it on multiple fronts. We are wastewater treatment plants are diverting kind of the high metal content material, where we're recovering the metals out of that and these are really great businesses with good returns.
We're really focusing on we process over probably approximately a million drums of year and finding ways to recover and reuse those drums and so we see these at both of US really good businesses and we have a lot of other things in the works as we talked about on the on the growth the growth.
Investments were making us really heavy on the recycling and the sustainability side. So we really see a lot of good things happening on that front, whether we fully told the story of the markets I think thats, an evolving thing definitely something we're going to be focused on.
And Simon since you answered day here on the event business being flat for this year given the change in the EPA focus on what we've seen on previous administrations under this political regime.
Would you not anticipate greater activity as we.
Get into the back half of 'twenty, one and going into 'twenty two on through these next couple of years.
All major event cleanup business.
You know that's always a its always something we think can talk a lot about we certainly I think with the current administration would be more focused and probably we'd see enforcement activity, expanding which often translates into more cleanups.
Timing of that can be you know sometimes hard to predict but we're also seeing you know some some strong headwinds on the PFS side of the world wherever you have them.
Under the <unk> and <unk>.
2020, NDAA, where the EPA was tasked with putting out guidance on disposal P fast and certainly when you look at that they talk about some of the most proven technologies. If you will would be deep well permitted a subtitle C facilities.
All assets that we have so we certainly think can expect our customers to start getting more proactive on that side.
On a in advance of what the EPA is trying to do so short answer is yes, I think youre going to see some some headwinds there although it can be sometimes difficult to predict and sometimes it takes some time to change the regulations, but certainly we see that as a positive alright. Thank you gentlemen.
So it's on.
Yeah.
This concludes our question and answer session I would like to turn the conference back over to CEO, Jeff Feeler for any closing remarks, alright, I want to thank everybody for those joining our call today and look forward to updating you at coming conferences or with the first quarter results.
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The conference has now concluded. Thank you for attending today's presentation and you may now disconnect.
Okay.
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Okay.
Yes.
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