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.
“Given this is a fluid situation, we are not providing additional detail beyond what was stated in the press release,” Joe Weissman, US Ecology vice president for radiological programs and integration management, told RadWaste Monitor by email Wednesday. “The Company will provide an update during its first quarter earnings call based on the information we have available at that time.”
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. That would have been a large step up from 2019 revenue of $685.5 million, on the back of its acquisition of waste management company NRC Group Holdings last fall.
The level of detail US Ecology provided regarding its forward planning sets it apart from other companies in the radioactive waste and nuclear cleanup spheres. Its peers have made clear they are paying close attention to the pandemic and taking steps to protect their employees, including by widespread use of telework and tight travel restrictions. However, only a handful are discussing specifics regarding how they intend to deal with the havoc COVID-19 is already playing on the U.S. and global economies.
In its annual report this week with the U.S. Securities and Exchange Commission, Idaho-based nuclear medicine specialist International Isotopes acknowledged the potential impact of COVID-19 on its manufacturing, supply chain, sales, marketing, and product development, translating to potential damage to its work, earnings, and cash flow. But it suggested it is too soon to say exactly how it might respond.
“The extent to which the coronavirus impacts our operations will depend on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak, new information which may emerge concerning the severity of the coronavirus and the actions to contain the coronavirus or treat its impact, among others,” according to the filing.
More than 1 million cases of COVID-19 have been confirmed globally, with over 55,000 deaths, according to Johns Hopkins University. In its latest update Friday, the Centers for Disease Control and Prevention confirmed nearly 240,000 cases in the United States and more than 5,443 deaths.
Some projections show the domestic economy shrinking by one-quarter in the just-started second quarter, with a loss of 14 million jobs, the Washington Post reported Monday. There were 6.6 million initial unemployment filings for the week ended March 28, according to the Department of Labor.
US Ecology employs more than 2,000 workers across roughly 150 locations. Nearly all are in the United States, with four in Canada and Mexico.
It 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. A long list of additional waste management, landfill, and environmental remediation services now includes decontamination and disposal to combat the spread of novel coronavirus 2019.
In the release, Chairman and CEO Jeff 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.
“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,” Feeler stated. “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.”
US Ecology is the sole public company among the three U.S. licensed low-level waste disposal providers. EnergySolutions, which owns facilities in Utah and South Carolina, and Waste Control Specialists, which operates in Texas, have said they remain fully operational. They have not publicly discussed potential spending cutbacks to address any looming economic challenges to their businesses. Representatives for both companies did not respond by deadline Friday to questions from RadWaste Monitor on the situation.
Other companies are also saying little about their strategies for weathering the current crisis.
“We’ve not made any SEC filings or issued any news releases explicitly referencing COVID-19,” according to Jud Simmons, a spokesman for Lynchburg, Va.-based BWX Technologies, one of the major players in environmental remediation and operations of Energy Department nuclear facilities. “The coronavirus is obviously having a significant impact throughout our nation and our world. Like every other company, we are working hard to adapt to the current environment, even as it evolves on practically a daily basis.”
There have been more than 10 confirmed cases of COVID-19 among the workforces at Huntington Ingalls shipyards. The company has openly addressed the measures it is taking to clean its facilities and protect its employees. However, a spokesperson said she did not believe any announcement had been made regarding its financial strategizing.
Also largely remaining mum this week following inquiries were Fluor, Amentum, Bechtel, Jacobs, and Leidos.
In a business update Friday, Los Angeles-based infrastructure multinational AECOM said it has enacted “several immediate actions designed to mitigate financial impacts and to ensure business resiliency” following an extensive analysis. The only specific measure identified was a short-term 20% cut in the salaries of its executive team, high-level managers, and Board of Directors members.
Paris-based waste management company Veolia on Wednesday issued a statement regarding its approach for managing the “economic consequences” of the pandemic. The two-page document made no direct references to U.S. branches Veolia Nuclear Solutions (VNS) and VNS Federal Services.
Company-wide, management held to its projection from February of a 1%, or 40-million-euro, hit to earnings before interest, taxes, depreciation, and amortization (EBITDA).
“Until 12 March, the Group’s activities outside Asia were not affected by the crisis,” according to the statement. “Since then, the introduction of public health measures as the epidemic spread to the Group’s other geographic regions has affected Veolia’s activities to varying degrees.”
As of late Thursday, there were more than 1 million confirmed cases of COVID-19 globally, with nearly 53,000 deaths.
Veolia sites are nearly all operating. Its business segments are being impacted to different degrees, with water sales dropping a bit but heating networks and municipal waste collection and processing stable. The industrial and commercial waste segment has dropped significantly due to closures by its clients.
To compensate, Veolia said it is taking steps including cost reductions and giving another look at planned capital expenditures for 2020. Like US Ecology, the company is suspending its earnings projections for the year.
Veolia Nuclear Solutions, headquartered in Westminster, Colo., offers a host of nuclear waste management services and technologies.
ExchangeMonitor reporter Wayne Barber contributed to this report.
