ECOL US Ecology Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

 

 

FORM 8-K

 

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934

 

Date of Report (Date of earliest event reported): November 1, 2015

 

 

 

US ECOLOGY, INC.

(Exact name of registrant as specified in its charter)

 

DELAWARE	0-11688	95-3889638
(State or other jurisdiction of incorporation or organization)	(Commission File Number)	(I.R.S. Employer Identification Number)
251 E. Front St., Suite 400 Boise, Idaho (Address of principal executive offices)		83702 (Zip Code)

(208) 331-8400

(Registrant’s telephone number, including area code)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

 

o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

 

 

Item 2.01     Completion of Acquisition or Disposition of Assets.

 

On November 1, 2015, US Ecology, Inc. (the “Company” or “US Ecology”) completed its previously announced sale of its subsidiary, Allstate Power Vac, Inc., an industrial services business (“Allstate”), to ASPV Holdings, Inc., a private investor group (the “Buyer”), in exchange for a total purchase price, including fees and expenses, of approximately $58.8 million cash, subject to certain post-closing adjustments for working capital. The sale of Allstate was consummated pursuant to a Stock Purchase Agreement, dated as of August 4, 2015, by and between Buyer and EQ Industrial Services, Inc., a subsidiary of the Company (the “Seller”), which is attached as Exhibit 10.1 to the Form 10-Q filed by the Company with the Securities and Exchange Commission on November 4, 2015.

 

Item 9.01     Financial Statements and Exhibits.

 

(b) Pro Forma Financial Information

 

Our unaudited pro forma consolidated balance sheet as of September 30, 2015 and our unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2015 and the year ended December 31, 2014 have been derived by the application of pro forma adjustments to our historical consolidated financial statements. These unaudited pro forma consolidated financial statements reflect the sale of Allstate as if it had occurred on June 17, 2014, the date of US Ecology, Inc.’s acquisition of EQ Holdings, Inc. As the purpose of the pro forma information provided below is to illustrate the results of operations of the Company without the disposed Allstate operations, the effects of the transaction, including the estimated gain on sale, disposal costs and related tax effects, were excluded from our pro forma statement of operations. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable. Our unaudited pro forma consolidated financial information should not be construed to be indicative of future results of operations or financial position.

 

(d) Exhibits

  

Exhibit Number	Description
99.1	Unaudited pro forma consolidated balance sheet as of September 30, 2015 and unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2015 and the year ended December 31, 2014 of US Ecology, Inc.

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

 

 

	US ECOLOGY, INC.
Date: November 4, 2015	By: /s/ Eric L. Gerratt
	Eric L. Gerratt
	Executive Vice President & Chief Financial Officer

 

 

Exhibit 99.1

 

UNAUDITED PRO FORMA CONSOLIDATED FINANCIAL STATEMENTS

 

On November 1, 2015, US Ecology, Inc.’s (the “Company” or “US Ecology”) subsidiary, EQ Industrial Services, Inc. (the “Seller”) completed its previously announced sale of its subsidiary, Allstate Power Vac, Inc. (“Allstate”), an industrial services business, to ASPV Holdings, Inc., a private investor group (the “Buyer”), in exchange for a total purchase price, including fees and expenses, of approximately $58.8 million cash, subject to certain post-closing adjustments for working capital.

 

The accompanying unaudited pro forma consolidated balance sheet as of September 30, 2015 and the unaudited pro forma consolidated statements of operations for the nine months ended September 30, 2015 and the year ended December 31, 2014 have been derived by the application of pro forma adjustments to our historical consolidated financial statements. These unaudited pro forma consolidated financial statements reflect the sale of Allstate as if it had occurred on June 17, 2014, the date of acquisition of EQ Holdings, Inc. As the purpose of the pro forma information provided below is to illustrate the results of operations of the Company without the disposed Allstate operations, the effects of the transaction, including the estimated gain on sale, disposal costs and related tax effects, were excluded from the pro forma statement of operations. The pro forma adjustments are based upon available information and assumptions that management believes are reasonable.

 

You should read this information together with the following:

 

·

the accompanying notes to the unaudited pro forma consolidated financial statements;

 

·

the separate historical unaudited consolidated financial statements of US Ecology as of and for the three and nine months ended September 30, 2015 included in US Ecology’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015, filed November 4, 2015;

 

·

the separate historical consolidated audited financial statements of US Ecology as of and for the year ended December 31, 2014, included in US Ecology’s Annual Report on Form 10-K for the year ended December 31, 2014, filed March 2, 2015.

 

The unaudited pro forma consolidated financial statements are presented for informational purposes only. The following unaudited pro forma consolidated financial data is not necessarily indicative of our financial position or results of operations that actually would have been attained had the sale of Allstate occurred at the dates indicated and is not necessarily indicative of our financial position or results of operations that will be achieved in the future.

 

 

UNAUDITED CONSOLIDATED BALANCE SHEET

AS OF SEPTEMBER 30, 2015

(In thousands)

 

		Historical (1)				Allstate Disposition (2)				Pro Forma
Assets
Current Assets:
Cash and cash equivalents		$	9,350			$	58,774			$	68,124
Receivables, net			104,283								104,283
Prepaid expenses and other current assets			10,241								10,241
Income taxes receivable			332								332
Deferred income taxes			2,599								2,599
Assets held for sale			78,775				(78,775	)			–
Total current assets			205,580				(20,001	)			185,579
Property and equipment, net			204,387								204,387
Restricted cash and investments			5,773								5,773
Intangible assets, net			243,187								243,187
Goodwill			194,825								194,825
Other assets			9,624								9,624
Total assets		$	863,376			$	(20,001	)		$	843,375
Liabilities And Stockholders’ Equity
Current Liabilities:
Accounts payable		$	16,745							$	16,745
Deferred revenue			7,212								7,212
Accrued liabilities			28,119								28,119
Accrued salaries and benefits			10,624								10,624
Income taxes payable			1,730				91				1,821
Current portion of closure and post-closure obligations			4,402								4,402
Current portion of long-term debt			3,505								3,505
Liabilities associated with assets held for sale			20,240				(20,240	)			–
Total current liabilities			92,577				(20,149	)			72,428
Long-term closure and post-closure obligations			67,061								67,061
Long-term debt			356,410								356,410
Other long-term liabilities			7,351								7,351
Deferred income taxes			87,771								87,771
Total liabilities			611,170				(20,149	)			591,021
Commitments and contingencies
Stockholders’ Equity:
Common stock			217								217
Additional paid-in capital			168,978								168,978
Retained earnings			99,509				148				99,657
Treasury stock			(60	)							(60	)
Accumulated other comprehensive loss			(16,438	)							(16,438	)
Total stockholders’ equity			252,206				148				252,354
Total liabilities and stockholders’ equity		$	863,376			$	(20,001	)		$	843,375

 

See accompanying notes to pro forma consolidated financial statements.

 

 

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2015

(In thousands, except per share amounts)

 

		Historical (1)				Allstate Disposition				Pro Forma
Revenue		$	424,797			$	50,999			$	373,798
Direct operating costs			297,543				40,208				257,335
Gross profit			127,254				10,791				116,463
Selling, general and administrative expenses			71,075				9,910				61,165
Impairment charges			6,700	(3)			6,367	(3)			333
Operating income			49,479				(5,486	)			54,965
Other income (expense):
Interest income			64								64
Interest expense			(16,208	)			(27	)			(16,181	)
Foreign currency loss			(1,769	)							(1,769	)
Other			1,156				99				1,057
Total other income (expense)			(16,757	)			72				(16,829	)
Income before income taxes			32,722				(5,414	)			38,136
Income tax expense (benefit)			14,815				(2,057	)(4)			16,872
Net income		$	17,907	(3)		$	(3,357	)(3)		$	21,264
Earnings per share:
Basic		$	0.83							$	0.99
Diluted		$	0.82							$	0.99
Shares used in earnings per share calculation:
Basic			21,619								21,619
Diluted			21,723								21,723

 

See accompanying notes to pro forma consolidated financial statements.

 

 

UNAUDITED CONSOLIDATED STATEMENT OF OPERATIONS

YEAR ENDED DECEMBER 31, 2014

(In thousands, except per share amounts)

 

		Historical (5)				Allstate Disposition				Pro Forma
Revenue		$	447,411			$	37,023			$	410,388
Direct operating costs			301,625				28,798				272,827
Gross profit			145,786				8,225				137,561
Selling, general and administrative expenses			73,336				6,623				66,713
Operating income			72,450				1,602				70,848
Other income (expense):
Interest income			107								107
Interest expense			(10,677	)			(107	)			(10,570	)
Foreign currency loss			(1,499	)							(1,499	)
Other			669				(409	)			1,078
Total other income (expense)			(11,400	)			(516	)			(10,884	)
Income before income taxes			61,050				1,086				59,964
Income tax expense			22,814				413	(4)			22,401
Net income		$	38,236			$	673			$	37,563
Earnings per share:
Basic		$	1.78							$	1.74
Diluted		$	1.77							$	1.73
Shares used in earnings per share calculation:
Basic			21,537								21,537
Diluted			21,655								21,655

 

See accompanying notes to pro forma consolidated financial statements.

 

 

NOTES TO UNAUDITED CONSOLIDATED FINANCIAL STATEMENTS

 

 

(1)

Reflects the historical balance sheet and statements of operations of US Ecology as reported in our Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2015, filed November 4, 2015. As of September 30, 2015, the assets and liabilities of Allstate have been classified as held for sale. The sale of Allstate does not meet the requirements to be reported as a discontinued operation as defined in ASU 2014-08, Reporting Discontinued Operations and Disclosures of Disposals of Components of an Entity.

(2)

Reflects the sale of Allstate assets and associated liabilities for $58.8 million in cash, subject to post-closing adjustments for working capital, which were included in US Ecology’s third quarter consolidated financial statements as held for sale as of September 30, 2015. Also includes impact of the estimated gain on the sale of Allstate, net of estimated disposal costs and related tax effects.

a.

Gain on Allstate sale is estimated to be approximately $239,000 based on assets and liabilities classified as held for sale as of September 30, 2015. As the Allstate sale did not close until November 1, 2015, assets and liabilities ultimately disposed of and the resulting gain recognized on the Allstate sale could change.

b.

Tax effects of gain, net of disposal costs is based on US Ecology’s blended rate of 38.0%.

(3)

On August 4, 2015, we entered into a definitive agreement to sell Allstate to a private investor group for approximately $58.0 million cash, subject to post-closing adjustments for working capital and capital expenditures. As a result of this agreement and management’s strategic review, we evaluated the recoverability of the assets associated with our industrial services business. Based on this analysis, we recorded a non-cash goodwill impairment charge of $6.7 million ($6.4 million of the impairment charge related to Allstate) in the second quarter of 2015. We calculated the estimated fair value of the industrial services business using a combination of quoted market prices and discounted cash flows.

(4)

To record the tax effect of the pro forma adjustments using a blended effective rate of 38.0% related to Allstate.

(5)

Reflects the historical statement of operations of US Ecology as reported in our Annual Report on Form 10-K for the year ended December 31, 2014, filed March 2, 2015.