By John Stang
US Ecology collected over $13 million in insurance recoveries in the first nine months of the year due to the fatal November 2018 explosion at its Grand View, Idaho, waste treatment and disposal facility.
That included $9.7 million in property insurance recoveries and $4.1 million in business interruption insurance, the Boise-based environmental services company said Wednesday in a press release. That is the current total in insurance recoveries, a US Ecology spokesman said Friday. The news release also said US Ecology does not expect to receive additional business interruption insurance payments until early 2020.
The Grand View site, in southwest Idaho, is one of 30 environmental services facilities US Ecology operates in the United States, Canada, and Mexico. It provides disposal and treatment of hazardous and nonhazardous wastes, including very low-activity radioactive waste, naturally occurring radioactive material (NORM), and technologically enhanced naturally occurring radioactive material (TENORM).
The Nov. 17, 2018, explosion killed one employee and injured eight others. US Ecology faces a potential $66,300 fine from the U.S. Occupational Safety and Health Administration for five “serious” safety-related violations. The company is contesting the fines.
OSHA concluded hydrogen and oxygen were generated during a process to convert magnesium into a more stable magnesium oxide — and the hydrogen ignited to create the explosion. However, US Ecology disagrees, concluding the explosion was caused by a reaction among water, magnesium, and a mixture of other chemicals that were not supposed to be in the wastes shipped by a customer.
The Idaho Department of Environmental Quality is still investigating the explosion’s cause, which includes reviewing the other investigations. An official with the state agency said last week it is not ready yet to public discuss the explosion’s cause, likely with a couple more months of work remaining.
The explosion severely damaged the primary waste-treatment building at Grand View, as well as nearby waste handling, waste storage, maintenance, and administrative support structures. US Ecology is receiving and treating radioactive wastes at a permitted stabilization facility at the same site. Design of the replacement stabilization building is nearly complete, according to the spokesman. US Ecology is working with the Idaho DEQ to modify its existing Resource Conservation and Recovery Act permit to rebuild the damaged stabilization building. Construction is scheduled to begin in 2020 to be completed by fourth quarter of 2020.
While briefly mentioned, the explosion was not discussed during US Ecology’s quarterly earnings call Thursday with financial analysts.
After market close on Wednesday, US Ecology reported revenue of $167.4 million and net income of $13.1 million, or $0.59 per diluted share, for the third quarter of 2019, which ended Sept 30. For the same period of 2018, the company brought in revenue of $151.4 million and net income of $13.4 million, or $0.61 per diluted share.
For the first nine months of 2019, company net income was $36.6 million, or $1.65 per diluted share, compared to $35.9 million, or $1.63 per diluted share, in the first nine months of 2018. Those figures are based on $452 million in revenue in the first nine months of 2019 and $408 million in 2018.
US Ecology’s Environmental Services division collected $122.2 million in revenue in the third quarter, compared to $107.2 million during the same period in 2018. The corporation’s Field and Industrial Services division earning $45.2 million in revenue in the third quarter of 2019, up from $44.2 million in the third quarter of 2018.
For the first nine months of 2019, the Environmental Services division posted $327.4 million in revenue, compared to $292.6 million for the same time in the previous year. Field and Industrial Services collected $126.9 million in revenue for the first nine months of this year, compared to $115.8 million for the same periodic 2018.
Meanwhile, following approval by both companies’ shareholders last week, US Ecology’s acquisition of NRC Group Holdings closed on Friday.
The Houston-based company is a worldwide supplier of environmental and waste management services, with a focus on energy industry customers. It was formed last year by the merger of National Response Corp. and Sprint Energy Services, which were both affiliated with private equity firm J.F. Lehman.
During the Thursday call, US Ecology President and CEO Jeff Feeler said the merger with NRCG is expected to increase revenue for 2019 to a range of $691 million to $713 million, compared to a previous US Ecology-only revenue estimate for 2019 of $583 million to $627 million.
Feeler cautioned that US Ecology had limited access to NRCG’s financial figures prior to the merger. “Following completion of the merger, we plan a deeper dive into the finances,” he said.
