US Ecology has agreed to sell New Jersey-based Allstate Power-Vac, Inc. to a private investor group for $58 million, the company announced yesterday. AllState specializes in industrial cleaning and maintenance for utilities, refineries, chemical plants, paper mills and refinery services such as tank cleaning, centrifuge and temporary storage, but after a review, US Ecology determined AllState, which came over in The Environmental Quality Company acquisition, did not meet the company’s business strategy. “After careful evaluation we concluded that Allstate Power-Vac does not adequately complement our strategy given its lack of geographic proximity to our core environmental service offerings,” US Ecology Chairman and CEO Jeff Feeler said in a statement. “Divesting Allstate will allow us to concentrate on growing our core environmental services business while continuing to expand our complementary field services. We believe the Allstate transaction is an excellent outcome for all affected employees, customers and stockholders.” The deal is expected to be finalized in the fourth quarter of 2015.
As part of the transaction, US Ecology recorded a non-cash goodwill impairment charge of $6.7 million in the second quarter of 2015, which affected the quarter financial results. The company also announced its second quarter results yesterday, including a net income $2.1 million, compared with a net income of $6.9 million in the second quarter of 2014. Total revenue for the second quarter of 2015 was $139.7 million, up from $66.0 million in the same quarter last year, which only included EQ revenues for two weeks of that quarter. Feeler attributed some of the slow results in the second quarter to the industrial services business segment. “Our results, however, still fell short of our expectations primarily on the underperformance of our industrial services business,” Feeler said. “As expected, the legacy US Ecology business was down compared to a very strong second quarter of 2014 with a 23 percent decline in project-driven Event Business partially offset by a three percent increase in recurring Base Business. This decline was offset in part by the strong performance of the legacy EQ business, which delivered a 96 percent improvement over pro forma adjusted EBITDA for the second quarter of 2014.”
