For the fourth quarter of 2008, the company reported revenue of $249.8 million compared with $257.7 million in the fourth quarter of 2007. Income from operations was $26.9 million compared with $25.1 million in the fourth quarter of 2007. Fourth quarter 2008 net income attributable to common shareholders was $17.9 million, or $0.75 per diluted share, compared with $16.6 million, or $0.81 per diluted share, in the fourth quarter of 2007. Weighted average diluted shares outstanding used to calculate the net income per share in the fourth quarter of 2008 were 23.9 million, versus 20.6 million in the fourth quarter of fiscal 2007.
EBITDA increased 10% to $41.3 million in the fourth quarter of 2008 from $37.6 million in the comparable period of 2007.
Comments on the Fourth Quarter:
“Our fourth-quarter performance benefited from strong sales growth at our core operations; however, a number of external factors affected our results, particularly our top-line, which came in below our guidance,” said Alan S. McKim, chairman and chief executive officer. “First, we saw unfavorable top-line currency effects as the Canadian dollar continued to decline during the quarter. Second, as fuel prices decreased in the quarter, we recorded lower-than-anticipated fuel surcharge revenue. Third, the rapid drop in commodities pricing during the quarter significantly affected our resale of recycled oil, copper and other metals. Fourth, we had an unscheduled 11-day shutdown at our El Dorado incinerator mid-quarter for emergency repairs. And finally, we saw many customers closing plants and shutting down operations during the holiday season in an effort to conserve cash and curtail spending.”
“Despite the revenue shortfall, we generated a healthy EBITDA margin of 16.5% for the quarter as some of the items that reduced our revenue had a related savings benefit on our bottom-line,” said McKim. “On the cost side, we benefited from lower fuel prices throughout our system, and the weaker Canadian dollar increases the value of the U.S. dollars we hold in Canada. The primary driver behind our solid EBITDA margin in the fourth quarter was the exceptional results generated by our incineration facilities and landfills within our Technical Services segment. Even including the additional capacity we rolled out in 2008, incineration utilization was a record 98% in the quarter. This is even more impressive in light of the unscheduled El Dorado shutdown. Our landfills also outperformed in the quarter, with total landfill volumes more than 20% higher than in the fourth quarter of 2007.”
“Within our Site Services segment, we achieved some incremental year-over-year growth in the fourth quarter as we experienced steady contributions from the service locations we acquired from Universal Environmental and the additional branches we opened throughout the year,” McKim said. “In the fourth quarter, we continued our geographic expansion with the opening of a service location in Roebuck, South Carolina, which brought our total of new service locations opened in 2008 to six – meeting our annual goal. Emergency response revenue totaled about $4 million in the quarter, with the bulk of that work related to the Gulf region due to the hurricanes that occurred in September.”
Full-Year 2008 Results:
Income from operations for full-year 2008 increased 26.6% to $108.0 million versus $85.3 million in the prior year. EBITDA (see description below) for 2008 increased 22.4% to $163.2 million from $133.3 million for 2007. The company achieved its goal of reaching 15.8% EBITDA margin in 2008.
The company generated net income attributable to common shareholders of $57.5 million, or $2.51 per diluted share, for the full-year 2008. This compares with 2007 net income attributable to common shareholders of $44.0 million, or $2.14 per diluted share.
The company concluded 2008 with cash and cash equivalents of $249.5 million, compared with $119.5 million at December 31, 2007. In addition, the company reduced its outstanding debt by $67.8 million during the year, from $120.7 million at year-end 2007 to $52.9 million at year-end 2008.
Comments on Full-Year 2008:
“In 2008, we achieved more than one billion dollars in annual revenue—a goal that we established three years ago,” said McKim. “This milestone is a testament to the quality of our team and the relationships we have developed with our customers. In addition to our full-year revenue growth, 2008 was characterized by achievements on many other fronts. We expanded our incineration capacity by 8%, broadened our geographic reach, successfully completed several tuck-in acquisitions, which expanded our recycling capabilities and Site Services footprint, and garnered recognition for our outstanding health and safety performance, including a fifth facility with VPP (Voluntary Protection Program) Status – OSHA’s official recognition for exemplary health and safety track records.”
“Our full-year results also once again demonstrate the tremendous leverage in our business model,” McKim said. “By coupling steady sales growth across our Technical and Site Services with strict cost control initiatives, we delivered 22% growth in annual EDITDA on a 9% revenue increase. We also significantly improved our cash position during the year. By pruning back our cost structure and managing our environmental liabilities and capital spending, we generated strong free cash flow, which along with the proceeds of our April 2008 follow-on offering resulted in a twofold increase in our cash position.”
