Radioactive waste management provider US Ecology said Tuesday it would cut tens of millions of dollars in costs this year to offset the economic uncertainty created by the COVID-19 pandemic.
The Boise, Idaho-based company said in a press release that unspecified “cost control initiatives” should save $15 million to $20 million annually. A 30% cut to 2020 capital expenditures should save as much as $30 million, while the temporary suspension of cash dividends is expected to help the company retain another $6 million each quarter.
Management also withdrew its earnings guidance for 2020. US Ecology had previously anticipated $1.05 billion to $1.15 billion in annual revenue, which would have generated $1.65 to $2.12 in adjusted diluted earnings per share. Updated guidance is planned for the company’s first-quarter earnings call.
“We are in an unprecedented time in our history, with limited clarity on the duration or impact of the COVID-19 virus to the industrial sector,” Chairman and CEO Jeff Feeler said in the release. “We are taking proactive and prudent actions to enhance our already strong liquidity until there is more clarity. Cost control actions, capital deferment and the dividend suspension will generate significant cash savings, providing us flexibility to preserve our talented workforce and take advantage of opportunities as the market rebounds.”
At market close Tuesday, US Ecology’s stock price was $30.40 per share. At deadline Wednesday, it had dipped to $28.69.
US Ecology operates one of four licensed commercial facilities for disposal of low-level radioactive waste, on the Department of Energy’s Hanford Site near Richland, Wash. It offers a long list of additional waste management, landfill, and environmental remediation services. That now includes decontamination and disposal to combat the spread of novel coronavirus 2019.
Feeler said the company’s key environmental services business has not yet sustained hardship from the outbreak “and is showing strong volumes and service revenue.” That could change as the year proceeds and industrial plants suspend operations and lay off workers, he cautioned. The services business should stay steady or even grow, but energy waste disposal activities could take a hit as clients cut capital spending as oil prices plummet.
