Jeremy L. Dillon
RW Monitor
11/14/2014
A robust third quarter from Waste Control Specialists helped alleviate some of the operating loss experienced in the first half of the year, Valhi Inc., parent company of WCS, announced in its third quarter earnings report late last week. The company reported $6.9 million in operating income for the third quarter of this year, compared to an operating loss of $10.3 million in the same period of 2013. WCS had experienced an operating loss of $13.5 million for the first half of 2014, but the results of the third quarter have reduced the operating loss to $6.6 million for 2014 so far, as compared to an operating loss of $16.3 million during the same timeframe in 2013. Net sales for the third quarter were $24.5 million, compared to $4.9 million in 2013, and $43.3 million for 2014 so far, compared to $29.9 million during the same period of 2013.
Valhi attributed the success of the quarter to WCS’ improved transportation situation. “The Waste Management Segment’s sales increased in the third quarter of 2014 compared to the same period in 2013 due to increased disposal volumes in the third quarter and first nine months of 2014 compared to the same periods of 2013 offset somewhat by a more favorable disposal mix in the same periods of 2013,” Valhi said in a release. “Disposal volumes were favorably impacted by the availability of disposal shipping containers in the third quarter.”
Valhi believes WCS will continue its positive results in the fourth quarter of 2014, but it maintained it was open to strategic alternatives should that change. “We currently expect our Waste Management Segment to report improved operating results in the fourth quarter of 2014 as compared to the same period of 2013,” Valhi said. “With the receipt of our recent license amendments and new shipping containers now in service we believe we are positioned to take full advantage of our disposal facilities going forward.” The company added, “We believe WCS can become a viable, profitable operation; however, we do not know if we will be successful in improving WCS’ cash flows. We have in the past, and we may in the future, consider strategic alternatives with respect to WCS. We could report a loss in any such strategic transaction.”
TCEQ Approves WCS Rate Change
Meanwhile, the Texas Commission of Environmental Quality late last week approved the volume adjustments to reduce the disposal rates for WCS. The new rate would reduce the cost per cubic foot for Class A waste- shielded to $180 from a previous rate of $250. “After a review of WCS’ request, staff agrees that this change in rate is necessary in order to reflect material changes to the volume of waste expected to be received at the Compact Waste Disposal Facility,” TCEQ said in its Texas Register posting. “Accordingly, the executive director (ED) initiated a rate revision to lower the maximum disposal rate for Class A LLW – Shielded to $180 per cubic foot.”
According to TCEQ, 2013 volume disposal did not line up with projections, so this rate decrease will help solve the shortfall. “The reduction in the rate is necessary in order to reflect material changes to the volume of waste expected to be received at the compact waste disposal facility,” TCEQ said in its posting. “The volume received in 2013 was less than the estimated amount in the licensee’s rate application and the TCEQ rate schedules. In order to bring the revenue in line with the revenue target that formed the basis of the adopted rate, the ‘waste volume charge’ for shielded Class A waste would be reduced. A reduction of that rate will increase volume of shielded Class A waste from out-of-compact generators while still leaving more than adequate capacity for in-compact generators.”
According to WCS spokesman Chuck McDonald, the rate change is intended to encourage in-Compact generators to send Class A waste to WCS. “It establishes the maximum rate for generators in the compact, and it also by definition establishes the minimum for everyone else because the Compact wants to be certain that anybody who is not in the Compact pays a higher rate than those within the Compact,” McDonald said. “It’s being reduced to encourage in-Compact generators, if possible, to dispose of Class-A waste at the site.”
