US Ecology, Inc.

Good morning and welcome to the US 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 today's 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 2. 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 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.usecology.com. Throughout yesterday's earnings release and our call-in 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-gap 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'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 were achieved on the efforts of our broad-based team that navigated the 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 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 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 2,700 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 pandemic began. In our waste solutions segment, base business revenue, while down 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 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 base business will build 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 fourth quarter of 2020. We continue to see positive developments in our pipeline with increased bidding activities with market reopenings and 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 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. Though 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 our 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 year, which was ahead of our internal plan. We continue to generate strong free cash flow of $13.7 million during the quarter. Before I turn the call over to Eric, I want to provide an update on some of our latest sustainability initiatives, which we are working on in 2021. On the governance front, in February, we had announced the appointment of Mack Hogan to our board. Mack 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 our vehicle fleet and emissions data and its impact on greenhouse gas emissions. Our vehicle fleet represents the most significant impact to the environment 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 fleet to support our growing field services business. We are also advancing sustainable waste solution services we offer to our customers, including investing in beneficial reuse technologies like aerosol recycling, container recycling, and distillation recovery systems, which we believe are responsive to demands in the marketplace and are not only good for the environment but also good for business. Finally, on the social front, We know that it's essential in a sophisticated and competitive market sector like ours to have 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, promote, and protect our top talents. Anything we do that needlessly limits our talent pool or 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 are a core to our value creation and sustainability efforts, and this is evident in the strength of our programs. To give a couple 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 freshest eyes. And we continue to evolve our training, mentoring, promotion, and retention programs to increase diversity, respect, 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 to Eric.