Q1 2021 US Ecology Inc Earnings Call
Good morning, and welcome to the U S ecology first quarter 2021 earnings conference call. All participants will be in listen only mode should you need assistance. Please signal a conference specialist by pressing Star then zero on your telephone keypad.
After todays presentation, there will be an opportunity to ask questions to ask a question you May Press Star then one on your telephone keypad to withdraw your question. Please press Star then two 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 <unk>.
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 1095.
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 on 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 ongoing COVID-19 pandemic 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 date 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 Yesterdays 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.
With that I'd like to turn the call over to Jeff.
Thank you, Eric and good morning to everyone joining the call today before I dive into some prepared remarks on the quarter I I'd like to personally. Thank all of my colleagues within U S ecology.
For their dedication to health safety and operational excellence. Despite the disruptions from the ongoing global pandemic weather events and other constraints for those that are following our webcast presentation. Please direct your attention to slide five.
The positive momentum we saw in our business in the second half of 2020 has continued into the first quarter of 2021 with improving trends and overall business conditions across a substantial portion of our business overall, our first quarter results were slightly ahead of our expectations. These solid results for achieved on the effort.
Of our broad based team that navigated to continue pendant continued pandemic challenges and new challenges such as the extreme weather events impacting our Texas based operations and customers.
And supply chain disruptions that are proving to be headwinds for many of our industrial based customers delaying them from returning to pre COVID-19 levels total company revenue was $228 $6 million for the first quarter of 2021 and was down just 5% year over year, when compared to a strong pre pandemic for.
First quarter last year, our field services segment was a bright spot with organic revenue growth of 4%.
Our emergency response business was strong on the backs of continued COVID-19, decontamination work, we completed just under 2700 projects and generated approximately $12 $5 million of revenue during the quarter. This was a 13% sequential improvement over the fourth quarter last year and was the strongest quarter since the <unk>.
Pandemic began.
In our waste solutions segment base business revenue, while down just.
Just 3% year over year is beginning to benefit from the improved economic conditions looking sequentially at our base business. It was down 1% compared to over the fourth quarter of 2020, much less than the sequential decline of 5% we experienced in the same period last year dissecting our base business.
By month March 2021 was the strongest month of the quarter recording both sequential and year over year growth. We anticipate based business will build on the on the results in March and record year over year growth in the second quarter, putting us on track to achieve our 5% to 7% growth target for the full year of 2021.
Event business revenue was down 9% in the first quarter compared to the prior year and was up 2% sequentially from the from the fourth quarter of 2020.
We continue to see positive developments in our pipeline with increased bidding activities with market reopening and an expectations for more normalized business conditions as we approach the summer construction season.
Our energy waste business has now reported its third quarter of sequential EBITDA improvement with increased treatment disposal and disposal volumes on improved rig count and related business activity.
This allowed us to return to a positive.
EBITDA contribution during the quarter generating approximately $1 $3 million of EBITDA.
Although revenues were down 64% in the first quarter compared to last year.
They were up 29% from the fourth quarter of 2020.
And we are encouraged by the trends we are seeing.
While we are nowhere near pre pandemic levels. The positive developments are what are welcome sight and are better than we had expected to see last year.
Overall, we reported total company adjusted EBITDA of $33 $2 million down 23% from the prior prior year, which was ahead of our internal plan. We continued to generate strong free cash flow of $13 $7 million during the quarter before I turn the call over to Eric.
To provide an update on some of our latest sustainability initiatives, which we are working on in 2021 on.
On the governance front in February we had announced the appointment of Matt Hogan to our board Mac brings extensive experience in leadership strategy M&A governance and ESG programs. This addition, along with others made in 2020 demonstrate our ongoing focus on board refreshment and our commitment to board diversity.
Not only with regard to gender and race.
But also experience and expertise as well these ongoing steps.
We are taking to improve diversity, both within our board and our employee base have strengthened us as a company.
On the environmental front, we have substantially completed gathering of our vehicle fleet emissions data and its impact on greenhouse gas emissions. Our vehicle fleet represents the most significant impact to the environment and given that our landfills have minimal greenhouse gas emissions, particularly when compared to solid waste landfills of our peers.
With our baseline data in hand, we are working with our capital planning group and advisors to develop emission reduction targets.
Below our baseline levels, despite expanding our.
Our fleet to support our growing field services business.
We are also advancing sustainable waste sustainable waste solution services, we offer to our customers, including investing in beneficial reuse technologies like aerosol recycling container container recycling and distillation recovery systems, which we believe are responsive to demands in the marketplace.
Are not only good for the environment, but also good for business.
Finally on the social front, we know that it's essential in any sophisticated in a competitive market sector like ours to have a leading human capital practices. The starting point for us. Therefore is to look as widely inclusively and creatively as possible to identify attract and retain per.
Note and protect our top talent anything we do debt needlessly limits, our talent pool or this diminishes the effectiveness of our team members and their career prospects can adversely affect our employment value proposition as well as our overall culture.
This means that our diversity equity and inclusion on.
Our are core to our value creation and sustainability efforts and this is evident in the strength of our programs to give a couple of examples we offer a wide variety of industry, leading programs to meet our employees individual needs wherever possible.
We have created regular and robust feedback loops. So that we can gain insights from all of our people, including our fresher size and.
And we continue to evolve our training mentoring promotion and retention programs to increase diversity respecting and inclusive ways of working throughout our company. We are proud of the special culture. We have created that is built on inclusion respect protecting the environment and continuous improvement in everything we do with that I'll turn it over.
Eric.
Thank you, Jeff starting with consolidated results on slide eight revenue for the first quarter of 2021 was $228 6 million revenue for the waste solutions segment was $104 $1 million for the first quarter of 2021 down 5% compared to $109 4 million.
In the first quarter of 2020.
The decrease was due to a 17% decline in transportation revenue and a 3% decrease in treatment and disposal revenue.
The decline in our treatment and disposal revenue was driven by a 3% decline in base business and a 9% decrease in event business in the first quarter of 2021 compared to the first quarter last year.
Field services segment delivered revenue of $118 $2 million in the first quarter up 4% compared to $114 million on the first quarter of 2020.
This increase was driven by increases in our emergency response small quantity generation and total waste management service lines.
Total gross margin contracted approximately 280 basis points to 23% in the first quarter of 2021 compared to the same period last year.
This was primarily a result of lower waste volumes in both our waste solutions and our energy waste segments.
Selling general and administrative spending or SG&A was $51 $4 million in the first quarter of 2021 and included $1 $2 million of business development and integration expenses this compared to $52 $4 million on the first quarter of 2020, which included $2 $9 million in business development and integration expenses.
Adjusted loss per diluted share was <unk> <unk> in the first quarter of 2021 compared to adjusted earnings per diluted share of <unk> 12 on the same quarter last year, adding.
Adding back the impact of intangible asset amortization cash earnings per diluted share was <unk> 14 in the first quarter of 2021 compared to 33 per share in the first quarter of 2020.
Adjusted EBITDA was $33 2 million in the first quarter down 23% from the first quarter of 2020.
Turning to slide nine we exited the quarter with a solid balance sheet and strong liquidity. Despite the lower operating results compared to the prior year, we were able to generate strong adjusted free cash flow of $13 $7 million in the first quarter of 2021, we.
We had cash of $82 $4 million and over $140 million of available capacity on our revolving line of credit at the end of the first quarter net.
Net borrowings were $702 9 million at March 31, 2021, which was an improvement over our net borrowings at December 31 2020.
Our bank Covenant leverage ratio was four five times at March 31, 2021, well under the five five times covenant level for the quarter.
We expect the first quarter of 2021 to be the high point in terms of leverage and that will be below four times at the end of 2021.
With that I'll turn the call back to Jeff. Thank you. Eric we are encouraged by the positive trends, we are seeing with quarter over quarter improvement across most if not all our business lines.
With this and the improving industrial trends combined with our ongoing success in our NRC integration activities. We have reaffirmed our 2021 business outlook. This includes a forecast of growth for revenue adjusted EBITDA and adjusted earnings per diluted share in 2021.
Diving into our integration activities in more detail, we continue to make terrific progress and we're seeing our revenue synergy has really gained momentum here in the second year.
We continue to see a path to meet to meet our three year target of $20 million of EBITDA synergies by the end of 2021, one year ahead of our original targets.
Slide 10 has a detailed breakdown of our 2021 guidance that was released in February of this year and that we are reaffirming today.
I am so proud of the entire U S ecology team and their ability to step up innovate and drive value. During these times as the industrial economies recover we have the right assets and services in the right places to capitalize on thrive we continue to be a trusted partner to our customers and together we are building a sustainable future for all and with <unk>.
That will open up the call for questions.
We will now begin the question and answer session to ask a question you May Press Star then one on your telephone keypad. If you are using a speakerphone. Please pick up your handset before pressing the keys if at any time. Your question has been addressed and you would like to withdraw.
Your question <unk>.
Please press Star then two.
At this time, we will pause momentarily to assemble our roster.
The first question comes from Michael Hoffman with Stifel. Please go ahead.
Hi, Jeff Eric Thanks for taking the questions hope, you're having a good Friday.
Yeah I appreciate that you've got you've opened the year a little bit ahead of plan, you're reaffirming the guidance and I don't think companies are supposed to be trying to chase their guidance up prematurely.
Could you reflect on that trend inside the guidance, though it does this have more momentum to the upside than not given what youre seeing.
Yeah, Michael It's good question I mean, we're one quarter into it and other months behind us after today.
With April on here and what I would say US is the year is looking.
The way we intended it to look maybe it's a little bit better I mean, there's a lot of green shoots that are out there.
Our first quarter results you have to they were strong results given the fact pattern, but you also put into context. Some of the continued start and stop activities that we've seen with the with the ongoing pandemic, but we also had some major weather events that disrupted everything so all in I'm really proud of what we delivered in the.
First quarter, and and I think it does set us up for a for a strong 2021, but there is still nine months to go and we're going to continue to execute our strategy and our plan and we have conviction in our in our guidance range that we released just on back in February and reaffirmed yesterday.
And when we think about cadence is there anything particular about what happened is exited <unk> on what you know since April so essentially done.
How to think about the cadence is this sort of you know.
Originally when we all had these conversations in February it was a kind of a steady almost ratable March through the year does it pick up a little bit at speed and <unk> or does it still stay pretty ratable as far as the top line.
Yeah, you know thinking about the cadence of top line you know normal seasonality will play in and we will drive it. So yes, we're expecting Q2 to be sequentially better than Q1 and Q3.
Sequentially better than Q2.
And Theyre talking about cadence from March to April I would say, we're seeing similar patterns and we you know when you get into the first quarter and look at it by month March was the strongest month that we had so all of that is pointing in the right direction. There is nothing that's given us a lot of pause there.
In there.
And you know I would say that we're on track to deliver that range in <unk> and.
Executing on our plan, Okay, and then you mentioned and it's not the first time I've heard this that some of the supply disruptions.
Slowing the recovery of some of the customer base.
You know that doesn't look like that's going to get any relief in this calendar year and as that that's all accounted for in the guidance as well as debt.
Got that.
But you Werent looking for a big hit.
Ooh lift on reopening per se other than.
More of us.
But on an overall improvement in the industrial economy broadly, yes. So all of that's factored in Michael and what we're seeing and I think that debt. When you think about the Choppiness we referred to.
Q1, we saw it with a lot of closures in kind of the high rates of infection that we saw on the pandemic we've seen that.
But on the supply chain stuff.
Information it is impacting our customers. If you go on in a read the detailed commentary on on what industrial customers are saying through ASM and things like that they claim.
They can't they can't meet their demand because of one supply chain disruption, but also labor shortages and those are some of the things our customers are challenged with two.
To regain and get back to I'll call pre COVID-19 levels and growth there upon and so those are things that are all factored in but we're seeing it in our customer base and it creates ongoing choppiness.
And then last two from me, Texas, Scott Snot beat out of it from a weather issues power shut down.
You're not hiding behind any weather commentary, but I'm just curious.
If you hadn't had a loss of power for a week or more what.
What the difference on the numbers might've been.
Yeah, we haven't even tried to attempt to quantify that Michael.
From our operational perspective, some of our business lines were down 10 in 10 days to two weeks.
Others reopened fairly rapidly, especially on our services arm and we had a little bit of a freeze damage from from the weather, but you know.
The reality is February was definitely impacted pretty hard in that region. We did see a nice uptick in March in that area, which probably is a little bit of a pickup on there, but when we look at the whole of the equation, yes, that's probably a step back because some of that business will never.
<unk>, because our customers were shut down but for the most part we still think debt.
Business conditions are robust enough down there that we'll be able to recover.
So closing the loop on that you had a good quarter better than your plan and you had to deal with all of that so if without it it would have been that much incrementally better absolutely okay.
Debt repayment are there any structural limits on any of the turns on the debt make whole agreements or anything like that that can allow you to keep walking these numbers down as you generate cash.
No. Michael this is Eric we're able to pay to pay the facility down as quickly as we'd like so there are no limitations on either obviously on the revolver, but even on on the term loan b. The only limitations. We had book for the first year. There were some limitations on that but that's it's now wide open and then we can pay down as quick.
As we want.
Right.
Thanks.
I saved one last one you opened the year, saying, we expect decontamination work to trend down.
It was actually better in <unk> than you thought is it trending down or is it holding up.
No it's actually trending down so we saw us surge in January and the first part of February and it's been trending down since then which is what we anticipated and it really follows the case loads that are out there and from the good side of things that for me humanity standpoint is we are seeing ourselves getting getting ahead of this pandemic.
At least here domestically and so if.
If we see a rising case load I would imagine that business line will benefit from it and otherwise there'll be replaced by hopefully resurgence of industrial based activities. Okay. Thanks.
Thanks, Michael.
The next question comes from Tyler Brown with Raymond James. Please go ahead, Hey.
Good morning, guys each other.
So just to be clear, there's not really much additional decon work in the guide for the rest of the year.
No I mean it.
No.
Got it.
Okay. Okay. That's helpful and then.
I mean, I know the reopening its difficult to discern carryall, but.
And you don't talk a lot about monthly trends, but you did kind of make some mentions about March is there any way you can kind of let us know what base did in March.
Or is it.
Not really.
Just any color on exactly how much base was up in March.
Well from.
From a year over year perspective, Directionally. It was up about 10% now the reality is if you go back to March of last year. You know, we probably we were starting to shut down in the second week.
Halfway through so.
March last year was a little bit lower when you looked at the monthly cycle on that so I think that's elevated.
When you look at our base business for the full year, we're still confident that we're going to be able to deliver growth for between 5% to 7% on that and that's with us being down 3% in the first quarter. So on <unk>.
Things trending the way we expected it.
It could be a little bit better than what we always said on that side of things, but overall when you you know you equal everything out we're still very confident in what we have for guidance out there. Okay. So Q2 implicitly us like plus double digit range on the base side.
Well I would expect I would expect a very healthy rebound in Q2 from a growth perspective.
Okay.
And then just just again I don't know if you can put a finer point on Q2, just to help us with our models.
You say it should improve sequentially I mean are we talking something like $5 million to $10 million of EBITDA sequentially.
Just to help us kind of get that because Q2 is just a really funny quarter.
Yeah, I think that's on the Zurich, Tyler I think that that's probably a reasonable range.
Look at our second quarter last year, we did we did EBITDA just under $39 million and so I would expect us to be.
Quite a bit better than that and that that would cause you to think that is probably reasonable. Okay. Okay. That's helpful. And then so Jeff you talked a little bit about investing in your people and about Youre kind of human capital and how you're you really focus there which is great.
First off I'm curious, how many how many drivers do you actually employee roughly.
Yeah, we're right around $2 50 to 300.
Okay, and so how hard is that is that group to retain and recruit in.
In the current environment I mean, yeah, I mean, you know we.
We obviously cover the truckers I mean, theres a lot going on out there I know, it's a different business. It's more of a go home at night business book.
But curious.
Curious are you seeing like real substance of pressures on on hiring and retaining in that particular group.
We continued to see challenges in that group and you nailed it.
It's it's a demographic that is not growing.
And you know Theres a lot of competing pressure not only from our side of the world, but many other industries in there. So yes, we're continuing to see challenges.
And there are Simon maybe you can elaborate on some of the things that we're doing and yeah to us as Simon.
It's a challenge as Jeff says, what we're doing us, we're certainly launching programs to kind of provide retention.
We are launching programs to kind of pay for schooling and encourage our employees to get their cdls.
Really creating committees to better understand what is important to the driving community and what we can do to support them.
As you mentioned, we do have both long haul on short haul, but certainly we think we can differentiate ourselves on some of the short haul and.
And really just listening to their drivers' needs and so as Jeff says, it's something we're fiercely focused on but.
We will be for a while I suspect.
Yeah. So some of those jobs like I said are a little bit more <unk> in nature, where I guess, they're coming home, but there is a subset where youre actually land those guys down at night.
Long haul piece, it's probably a little bit tougher to recruit.
Absolutely I mean, you think about retail program in particular that those guys will be on the road for several days and there is definitely a more challenging group Inc.
Interesting, Okay, and then back to the NRC synergies. So correct me, if I'm wrong, because I'm going off top of my head here, Eric I think you of the 20 I think is the number you may be got 10 last year. I think you were guiding to something like three to five but then Jeff it sounded like there was more optimism there so I'm.
Curious are you are you basically tracking ahead of what you had originally thought on the synergies for this year or are we kind of right in line, you're just hoping that by the end of the year, you'll be fully run rated.
Yes, so we're tracking a little bit ahead of what we thought for 2021.
It's really driven on the on the revenue side of things and I talked I talked about the momentum that's definitely continuing and we're seeing a lot of opportunities emerge as we continue to really you know.
I'll get us more of a cohesive sales group across the organization and driving those results and we're seeing on and we're seeing opportunities. There. So we do believe that by the end of the year. We will have achieved that $20 million run rate and there is potentially upside to that next year.
As a reminder, Tyler that the $20 million number was one that we put out at the time of the acquisition that we thought we'd be at that run rate by the end of 2022. So we feel like we're a year ahead of schedule.
Perfect. Okay, and then just my last one maybe coming back to the energy business. So I think you talked a little bit about it Jeff for kind of talked about on the periphery, but obviously oil prices have moved I'm just curious if you're starting to see any green shoots out there on the oil patch or you're starting to see any are any building confidence.
And maybe that business could be a positive delta to what youre expecting for this year.
Well Tyler there's definitely green shoots him in there I mean, we definitely were ahead of plan on what we had anticipated on that business.
We've seen rig counts increased dramatically from the low point, but they increase or they increased sequentially as well.
And it's in both of the base on both the Permian and Eagle Ford that we're or.
On that we plan the reality, though in the sanity check is we're still at 50% levels of where we were pre pandemic. So all the trends are good.
The activities increasing were seeing a lot of green shoots out there, but we still have a ways to go.
To get back to that pre <unk> pre pandemic level.
Okay, and then just real quickly can you remind me what the mixes us at roughly half and half.
Permian versus the Eagle Ford or is it skewed one way.
From a revenue standpoint, it's about half on half.
On there so where our strength right now is in the Eagle Ford because we have two assets that were put in place just before the pandemic set in and the price in the Permian. Those are there they are trending and there are trending positive, but you know there is still you know.
Not to where we want them to be.
Okay and is the capex on that business roughly set US then you've kind of develop the.
The footprint of the landfills, probably built out the first cells are you kind of good on the Capex side and so that when we do see volumes come back in it there's not a tremendous amount of capital need.
Yeah. Tyler this is Simon we are certainly planning and moving forward with our landfill construction. This year. So we're going to make sure we have capacity for whatever the demand is and we're also continuing with some refurbishment of equipment and certainly we are planning for a recovery and we're spending our capital accordingly.
And to just clarify that a little Tyler the landfill Simons referring to is the one on the Eagle Ford debt.
The first one that was built and so it's it's current sell us almost full its been operating for what for years and so it's just the next phase of the next cell at that facility.
Okay. Okay. Good deal our guys. Thanks, so much for the time alright, Thanks Tyler.
The next question comes from Jeff Silber with BMO capital markets. Please go ahead.
Thank you so much actually I just wanted to follow up from one of Tyler's first questions about.
Our hiring and wage inflation and retention.
Talking about truck drivers are you seeing issues anywhere else throughout the company I know, we've got a lot of other companies complaining that it's tough to find a good quality skilled workers out there.
Yeah, I think everybody is competing for the same talent I mean, the reality is not only us are we competing against other companies, but my personal opinion is I think that there there were competing against some of the government subsidy programs that are out there and that will hopefully will free up here this summer timeframe, but I <unk>.
The combination us too is creating a challenging condition to recruit.
Our frontline workers.
Okay. That's helpful and dimension that the government subsidy. So I wanted to ask you about the infrastructure plan I know, it's still early I know theres just some proposals.
Is there anything in there that you think might either health or for for your business.
Steve why don't you address.
Address that sure.
Steve Welling here.
What we've read so far is we look look to potentially increase superfund cleanup work.
Possibly a proposal to add back the <unk>.
Superfund tax on corporations, which will provide money for those types of cleanups.
Theres also when you do infrastructure improvement usually that means theres things that get torn down.
Leaned up first before you improve so like bridges can be lead paint and other waste streams that come from that are also seeing that there is some information about improvement at schools in urban areas, which they want to remove all the lead piping. So it looks like they would it would be a benefit to us for sure. It's just we don't have much detail yet.
Yeah sure Nobody does but that's actually goes from here.
And finally, I think you've alluded to this a little bit earlier, but you mentioned some of it starts and stops in terms of reopening or are there any specific areas to call out that are doing better than others.
Yeah.
Yes, so where we're seeing us the west.
It has seen some positivity in and really the Gulf.
They are the ones that are starting to have been reopened and are reopening more we saw that start and stop us we have a lot of operations in the Michigan corridor and they've been a hotspot and so that was a challenge in the first quarter, but theyre getting things under control and we anticipate that that to improve here overall and then internationally.
Canada continues to struggle, they're not they don't have the same vaccine vaccination rates that we do here and I think Ontario, just walk back down.
Are the province of Ontario, and so you know.
There have been struggling there, but the underlying business still seems to be gaining traction and positive momentum, even though theyre going through some starts and stops.
Okay. That's really helpful. Thanks, so much thanks.
Thanks, Jeff.
The next question comes from Tyson Bauer with KC capital. Please go ahead.
Morning, gentlemen.
On the whole theme of pricing in our inflation on the treatment cost, whether it would be freight or wage or other.
Some other companies on the coverage universe have other have benefited from the inflation effects others have have suffered because of it.
What is yes ecology stand as far as are you able to pass those through get a benefit and rising pricing environment or are you trying to absorb some of those treatment costs and that may put a little pressure on.
Steve Why don't you talk about the pricing and what we the strategy we've been doing this share and I'll have Eric.
Try them in on you know where were seeing some inflationary challenges.
So in prior years, we've done more across the board type price increasing.
This year has been totally different what we did us some selective price increase in certain markets on certain waste streams, and then some specific geographies, where the customer base wasn't as impacted as others. So we have taken price increases in the first quarter.
Most went into effect between January 15th on February 15th on.
Base business only event work, we bid case by case, but we have been doing a number of things and we're also looking.
What do we potentially.
What are the possibilities for maybe another increase in mid year, but we have been able to pass a number of things along in terms of the transportation generally we have a separate charge like on fuel surcharge that does when things go up or down there were covered but.
For the most part a lot of our pricing on the on the waste disposal side, we have the ability to adjust we do have some select service lines, where we're on a longer term contract, but that's not the majority of our business.
And Tyson just in terms of kind of the categories, where we're feeling the most pressure in terms of cost that we've talked a lot about labor that's.
That's probably one of the biggest.
Right there with it insurance insurance is one that debt everyone frankly, whether you're in our industry are not you know, we're seeing pretty significant increases in half for the last couple of years. This year is no exception.
Steve talked about transportation, we feel like we do have some opportunities there just based on where our contracts work to recapture a lot of the increases there. So.
On the reagents on commodities.
That's another area I would say is the company has grown and as we've kind of diversified a bit that's not us.
Significant portion as it used to be U S ecology, but it is still a meaningful cost debt that we're continuing to watch and monitor and there is some pressure there as well.
Well the piggyback the targeted price increases.
You only do that when you have the ability to do so what are you seeing as those the greater leverage opportunities for you as far as certain business segments or waste streams that you can take advantage of.
Okay.
Well like I said, what we did already was in the Midwest.
Looked at some select waste streams, and particularly non has on solidification, where there seem to be opportunities and we adjusted that much more than 3% to 5% and then.
West Coast, we were able to.
Look at our customer base and do some things across the board in the West that maybe we were not able to do in the Gulf.
Right now, we're seeing the Gulf recover which was not at all in the first quarter, we were struggling a bit in the beginning and then we had the freeze. So we may be looking to see if theres opportunities there in the future, but it's a case by case for review.
We're just trying to see how things evolve as the.
The world gets going back to normal here.
Do you anticipate even though they don't call. It the Green Act that we may see some materials or other things that have not previously been considered hazardous fall into that category going forward.
Yeah. This is Tyson this is simon.
Those long term, yes, I think there'll be some certainly you think a P fast, but I'll say, it's a that's a generally a fairly slow process in terms of changing the regulations, but certainly you know I would expect this administration to be more aggressive on that front, but I certainly can't point to specific things in the near term.
Okay.
Last question on the event pipeline.
Are we still looking at a lot more of the smaller jobs, maybe the 510 million or less as opposed to some of the larger discrete projects that are multiyear and.
Faster.
We still have a combination of both we have.
For multi year projects that are continuing this year.
Our multi year project that we had done work in prior years. It was off a bit last year is kicking back in in the next three weeks.
And then.
We have.
Another new long term project that will be kicking off in the third quarter. So I would.
I don't think anything is really different in terms of that.
The mix of all of the above.
Okay. Thank you gentlemen.
Thanks, Todd for you.
Again, if you have a question. Please press Star then one.
The next question comes from Peter Rab over with <unk> capital. Please go ahead.
Oh, Hey, guys. Thanks for taking my question and for being so thorough on the inflation talk.
Just.
Couple of questions one small one how much was it.
On the Texas freeze or the storms was that a beneficial or a negative impact for you guys in the quarter.
Yes, Peter.
We didn't quantify it but it would have been negative in the quarter.
Okay just to.
Thinking through next year, and then maybe like a longer term question. I mean, what are you guys thinking in terms of capital structure. I know you suspended the dividend last year and were in cash conservation mode.
I think you're back to being fairly free cash flow positive and growing and so just thinking like what's your ideal capital structure. What are your plans for capital allocation any you have some warrants out there. So just anything you guys can comment on that'd be appreciated yes. So our capital deployment plan is really <unk>.
On an organic capital investment.
Paying down debt doing small tuck in acquisitions, if they come available and then we'll be looking at.
Returning capital to shareholders likely in 2022.
Okay, great. Thanks, so much I appreciate it those are all my questions alright. Thank you.
This concludes our question and answer session I would like to turn the conference back over to Jeff Feeler for any closing remarks.
Just want to thank you for your interest today and looking forward to updating you in future conference for US here in the second quarter.
The conference has now concluded. Thank you for attending today's presentation you may now disconnect.
Okay.
Okay.
Yeah.
Okay.
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