US ECOLOGY, INC. The information contained in this section should be read in conjunction with our unaudited consolidated financial statements and related notes thereto appearing elsewhere in this quarterly report on Form 10-Q. In this report words such as "we," "us," "our," "US Ecology" and "the Company" refer toUS Ecology, Inc.
and its subsidiaries. OVERVIEWUS Ecology is a leading provider of environmental services to commercial and governmental entities. The Company addresses the complex waste management and response needs of its customers, offering treatment, disposal and recycling of hazardous, non-hazardous and radioactive waste, leading emergency response and standby services, and a wide range of complementary field and industrial services.US Ecology's focus on safety, environmental compliance and best-in-class customer service enables us to effectively meet the needs of our customers and to build long-lasting relationships. We have a network of fixed facilities and service centers operating primarily inthe United States ,Canada , theUnited Kingdom andMexico . Our fixed facilities include five RCRA subtitle C hazardous waste landfills, three landfills serving waste streams regulated by the RRC and one LLRW landfill. We also have various other treatment, storage and disposal facilities ("TSDF") located throughoutthe United States . These facilities generate revenue from fees charged to transport, recycle, treat and dispose of waste and to perform various field and industrial services for our customers. Effective in the fourth quarter of 2020, we made changes to the manner in which we manage our business, make operating decisions and assess our performance. The energy waste business that was acquired through the NRC Merger now comprises our Energy Waste segment. Prior to this change, the energy waste business was included in the Waste Solutions segment (formerly "Environmental Services"). Throughout this Quarterly Report on Form 10-Q, all periods presented have been recast to reflect these changes. Under our new structure our operations are managed in three reportable segments reflecting our internal management reporting structure and nature of services offered as follows: Waste Solutions (formerly "Environmental Services") - This segment provides safe and compliant specialty waste management services including treatment, disposal, beneficial re-use, and recycling of hazardous, non-hazardous, and other specialty waste at Company-owned treatment, storage, and disposal facilities, excluding the services within our Energy Waste segment. Field Services (formerly "Field & Industrial Services") - This segment provides safe and compliant logistics and response solutions focusing on "in-field' service offerings through our network of 10-day transfer facilities. Our logistics solutions include specialty waste packaging, collection, transportation, and total waste management. Our response solutions include land and marine based emergency response, OSRO standby compliance, remediation, and industrial services. The Field Services segment completes our vertically integrated model and serves to increase waste volumes into our Waste Solutions segment. Energy Waste - This segment provides safe and compliant energy waste management and critical support services to up-stream oil and gas customers in the Permian andEagle Ford basins primarily operating inTexas . Services include spill containment and site remediation, equipment cleaning and maintenance services, specialty equipment rental, including tanks, pumps and containment, safety monitoring and management and transportation and disposal. This segment includes all of the energy waste business of the legacy NRC operations and none of the legacyUS Ecology operations. The operations not managed through our three reportable segments are recorded as "Corporate." Corporate selling, general and administrative expenses include typical corporate items of a general nature such as certain labor, information technology, legal, accounting and other expenses not associated with a specific reportable segment. Income taxes are assigned to Corporate, but all other items are included in the segment where they originated. Inter-company transactions have been eliminated from the segment information and are not significant between segments. 31 Table of Contents
Effective in the first quarter of 2021, we changed our management structure
resulting in the reclassification of certain overhead expenses from our Waste
Solutions, Field Services and Energy Waste reportable segments to Corporate. As
a result, certain regional overhead costs historically presented within our
reportable segments as Direct operating costs were further reclassified to
Corporate as Selling, general and administrative expenses to conform to the
current period's presentation. Throughout this Quarterly Report on Form 10-Q,
all periods presented have been recast to reflect these changes.
In order to provide insight into the underlying drivers of our waste volumes and
related treatment and disposal ("T&D") revenues, we evaluate period-to-period
changes in our T&D revenue for our Waste Solutions segment based on the industry
of the waste generator, based on North American Industry Classification System
codes.
The composition of the Waste Solutions segment T&D revenues by waste generator
industry for the three and six months ended June 30, 2021 and 2020 were as
follows:
% of Treatment and Disposal Revenue (1) for the
Three Months Ended June 30,
Generator Industry 2021 2020
Chemical Manufacturing 17% 21%
Metal Manufacturing 17% 14%
Broker / TSDF 12% 12%
General Manufacturing 11% 10%
Government 9% 8%
Refining 5% 8%
Transportation 4% 3%Mining, Exploration and Production 4% 2% Utilities 3% 8% Waste Management & Remediation 3%
2%
Other (2) 15% 12%
% of Treatment and Disposal Revenue (1) for the
Six Months Ended June 30,
Generator Industry 2021 2020
Chemical Manufacturing 18% 21%
Metal Manufacturing 18% 15%
Broker / TSDF 12% 13%
General Manufacturing 11% 11%
Government 8% 7%
Refining 5% 7%
Utilities 4% 5%
Transportation 4% 5%Waste Management & Remediation 4% 2% Mining, Exploration and Production 3%
2%
Other (2) 13% 12%
(1) Excludes all transportation service revenue.
(2) Includes retail and wholesale trade, rate regulated, construction and other
industries.
We also categorize our Waste Solutions segment T&D revenue as either "Base Business" or "Event Business" based on the underlying nature of the revenue source.
Base Business consists of waste streams from ongoing industrial activities and
tends to be recurring in nature. We define Event Business as non-recurring
projects that are expected to equal or exceed 1,000 tons, with Base Business
defined as all other business not meeting the definition of Event Business. The
duration of Event Business projects can last from a several-week cleanup of a
contaminated site to a multiple year cleanup project.
32
Table of Contents
For the three months ended June 30, 2021 , Base Business revenue increased 7%
compared to the three months ended June 30, 2020 . For the three months ended
June 30, 2021 , approximately 76% of our total T&D revenue was derived from our
Base Business, up from 72% for the three months ended June 30, 2020 . For the six
months ended June 30, 2021 , Base Business revenue increased 2% compared to the
six months ended June 30, 2020 . For the six months ended June 30, 2021 ,
approximately 76% of our total T&D revenue was derived from our Base Business,
up from 74% for the six months ended June 30, 2020 . Our business is highly
competitive and no assurance can be given that we will maintain these revenue
levels or increase our market share.
A significant portion of our disposal revenue is attributable to discrete Event
Business projects which vary widely in size, duration and unit pricing. For the
three months ended June 30, 2021 , approximately 24% of our total T&D revenue was
derived from Event Business projects, down from 28% for the three months ended
June 30, 2020 . For the three months ended June 30, 2021 , Event Business revenue
decreased 13% compared to the three months ended June 30, 2020 . For the six
months ended June 30, 2021 , approximately 24% of our total T&D revenue was
derived from Event Business projects, down from 26% for the six months ended
June 30, 2020 . For the six months ended June 30, 2021 , Event Business revenue
decreased 10% compared to the six months ended June 30, 2020 . The one-time
nature of Event Business, diverse spectrum of waste types received and widely
varying unit pricing necessarily creates variability in revenue and earnings.
This variability may be influenced by general and industry-specific economic
conditions, funding availability, changes in laws and regulations, government
enforcement actions or court orders, public controversy, litigation, weather,
commercial real estate, closed military bases and other project timing,
government appropriation and funding cycles and other factors. The types and
amounts of waste received from Base Business also vary from quarter to quarter.
This variability can also cause significant quarter-to-quarter and year-to-year
differences in revenue, gross profit, gross margin, operating income and net
income. While we pursue many projects months or years in advance of work
performance, cleanup project opportunities routinely arise with little or no
prior notice. These market dynamics are inherent to the waste disposal business
and are factored into our projections and externally communicated business
outlook statements. Our projections combine historical experience with
identified sales pipeline opportunities, new or expanded service line
projections and prevailing market conditions.
We serve oil refineries, chemical production plants, steel mills, waste
brokers/aggregators serving small manufacturers and other industrial customers
that are generally affected by the prevailing economic conditions and credit
environment. Adverse conditions may cause our customers as well as those they
serve to curtail operations, resulting in lower waste production and/or delayed
spending on off-site waste shipments, maintenance, waste cleanup projects and
other work. Factors that can impact general economic conditions and the level of
spending by customers include, but are not limited to, consumer and industrial
spending, increases in fuel and energy costs, conditions in the real estate and
mortgage markets, labor and healthcare costs, access to credit, consumer
confidence and other global economic factors affecting spending behavior. Market
forces may also induce customers to reduce or cease operations, declare
bankruptcy, liquidate or relocate to other countries, any of which could
adversely affect our business. To the extent business is either government
funded or driven by government regulations or enforcement actions, we believe it
is less susceptible to general economic conditions. Spending by government
agencies may be reduced due to declining tax revenues resulting from a weak
economy or changes in policy. Disbursement of funds appropriated by Congress may
also be delayed for various reasons.
COVID-19 PANDEMIC UPDATE
The COVID-19 pandemic continued to affect our business through the second
quarter of 2021. The impact of temporary closures and staff reductions by
industrial facilities has resulted in delays in mobilization and in regulatory
approvals at our customers' sites. Although we have seen evidence of volume
recovery in the first six months of 2021 as the economy continues to rebound and
industrial facilities return to pre-pandemic levels of production, we have
experienced cost and inflationary pressures in areas such as labor and supplies.
We have also experienced, and expect to continue to experience, delays and
deferments of some of our field services as our customers continue to limit
on-site visitation and delay noncritical services based on business conditions.
While uncertainty caused by the COVID-19 pandemic remains, including the spread
of new variants of the virus and government and private sector responses to
prevent and manage the disease, we expect to continue to see improvements in our
business as vaccines become more widely available and vaccination rates
increase.
33
Table of Contents
We expect that the COVID-19 pandemic will continue to affect our results of
operations for the foreseeable future. See "Item 1A - Risk Factors" of the
Company's Annual Report on Form 10-K for the fiscal year ended
34
Table of Contents
RESULTS OF OPERATIONS
THREE MONTHS ENDED
Operating results and percentage of revenues were as follows:
Three Months Ended June 30, 2021 vs. 2020
$s in thousands 2021 % 2020 % $ Change % Change
Revenue
Waste Solutions $ 108,364 45 % $ 103,043 48 % $ 5,321 5 %
Field Services 124,660 52 % 103,509 48 % 21,151 20 %
Energy Waste 7,749 3 % 7,366 4 % 383 5 %
Total $ 240,773 100 % $ 213,918 100 % $ 26,855 13 %
Gross Profit
Waste Solutions $ 35,666 33 % $ 42,216 41 % $ (6,550) (16) %
Field Services 18,080 15 % 14,760 14 % 3,320 22 %
Energy Waste 807 10 % (1,956) (27) % 2,763 (141) %
Total $ 54,553 23 % $ 55,020 26 % $ (467) (1) %
Selling, General & Administrative Expenses
Waste Solutions $ 6,770 6 % $ 6,546 6 % $ 224 3 %
Field Services 12,333 10 % 11,379 11 % 954 8 %
Energy Waste 3,331 43 % 4,893 66 % (1,562) (32) %
Corporate 28,735 n/m 26,878 n/m 1,857 7 %
Total $ 51,169 21 % $ 49,696 23 % $ 1,473 3 %
Adjusted EBITDA
Waste Solutions $ 39,951 37 % $ 46,064 45 % $ (6,113) (13) %
Field Services 17,167 14 % 16,041 15 % 1,126 7 %
Energy Waste 2,309 30 % (1,132) (15) % 3,441 (304) %
Corporate (25,217) n/m (22,274) n/m (2,943) 13 %
Total $ 34,210 14 % $ 38,699 18 % $ (4,489) (12) %
Adjusted Earnings Before Interest, Taxes, Depreciation and Amortization ("Adjusted EBITDA")
Management uses Adjusted EBITDA as a financial measure to assess segment
performance. Adjusted EBITDA is defined as net income before interest expense,
interest income, income tax expense, depreciation, amortization, share-based
compensation, accretion of closure and post-closure liabilities, foreign
currency gain/loss, business development and integration expenses and other
income/expense. The reconciliation of Net loss to Adjusted EBITDA is as follows:
Three Months Ended June 30, 2021 vs. 2020
$s in thousands 2021 2020 $ Change % Change
Net loss $ (4,163) $ (5,183) $ 1,020 (20) %
Income tax expense 257 2,261 (2,004) (89) %
Interest expense 7,521 7,853 (332) (4) %
Interest income (390) (153) (237) 155 %
Foreign currency loss 355 671 (316) (47) %
Other income (196) (125) (71) 57 %
Depreciation and amortization of plant and
equipment 17,963 18,418 (455) (2) %
Amortization of intangible assets 8,780 9,193 (413) (4) %
Share-based compensation 2,107 1,524 583 38 %
Accretion and non-cash adjustment of closure
& post-closure liabilities 1,191 1,267 (76) (6) %
Business development and integration expenses 785 2,973 (2,188) (74) % Adjusted EBITDA$ 34,210 $ 38,699 $ (4,489) (12) %
Adjusted EBITDA is a complement to results provided in accordance with GAAP and
we believe that such information provides additional useful information to
analysts, stockholders and other users to understand the Company's operating
performance. Since Adjusted EBITDA is not a measurement determined in accordance
with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as
presented may not be comparable to other similarly titled measures of other
companies. Items excluded from Adjusted EBITDA are significant components in
understanding and assessing our financial performance. Adjusted EBITDA should
not be considered in isolation or as an alternative to, or substitute for, net
income, cash flows generated by operations, investing or financing activities,
or other financial statement data presented in the consolidated financial
statements as indicators of financial performance or liquidity.
35
Table of Contents
Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or a substitute for analyzing our results as reported under GAAP. Some of the limitations are:
? Adjusted EBITDA does not reflect changes in, or cash requirements for, our
working capital needs;
? Adjusted EBITDA does not reflect our interest expense, or the requirements
necessary to service interest or principal payments on our debt;
? Adjusted EBITDA does not reflect our income tax expenses or the cash
requirements to pay our taxes;
? Adjusted EBITDA does not reflect our cash expenditures or future requirements
for capital expenditures or contractual commitments;
Although depreciation and amortization charges are non-cash charges, the assets
? being depreciated and amortized will often have to be replaced in the future,
and Adjusted EBITDA does not reflect any cash requirements for such
replacements; and
? Adjusted EBITDA does not reflect our business development and integration
expenses, which may vary significantly from quarter to quarter.
Revenue
Total revenue increased 13% to
Waste Solutions Waste Solutions segment revenue increased 5% to$108.4 million for the second quarter of 2021, compared to$103.0 million for the second quarter of 2020. T&D revenue increased 4% compared to the second quarter of 2020, primarily as a result of a 7% increase in Base Business revenue, partially offset by a 13% decrease in project-based Event Business revenue. Transportation and logistics service revenue increased 13% compared to the second quarter of 2020, primarily reflecting Event Business projects utilizing more of the Company's transportation and logistics services. Total tons of waste disposed of or processed across all of our facilities for the second quarter of 2021 was consistent with the second quarter of 2020. Tons of waste disposed of or processed at our landfills increased 15% for the second quarter of 2021 compared to the second quarter of 2020. T&D revenue from recurring Base Business waste generators increased 7% for the second quarter of 2021 compared to the second quarter of 2020 and comprised 76% of total T&D revenue for the second quarter of 2021. Comparing the second quarter of 2021 to the second quarter of 2020, increases in Base Business T&D revenue from the metal manufacturing, mining, exploration & production, general manufacturing, and chemical manufacturing industry groups were partially offset by a decrease in Event Business T&D revenue from the refining industry group. T&D revenue from Event Business waste generators decreased 13% for the second quarter of 2021 compared to the second quarter of 2020 and comprised 24% of total T&D revenue for the second quarter of 2021. Comparing the second quarter of 2021 to the second quarter of 2020, decreases in Event Business T&D revenue from the chemical manufacturing and utilities industry groups were partially offset by increases in Event Business T&D revenue from the Other, waste management & remediation, metal manufacturing and transportation industry groups. 36 Table of Contents The following table summarizes combined Base Business and Event Business T&D revenue growth, within the Waste Solutions segment, by generator industry for the second quarter of 2021 as compared to the second quarter of 2020: Treatment and Disposal Revenue Growth Three Months EndedJune 30, 2021 vs. Three Months EndedJune 30, 2020 Waste Management & Remediation 119% Mining, Exploration & Production 106% Metal Manufacturing 26% Transportation 22% Government 14% General Manufacturing 14% Other 13% Broker / TSDF 4% Chemical Manufacturing -18% Refining -33% Utilities -61% Field Services Field Services segment revenue increased 20% to$124.7 million for the second quarter of 2021 compared with$103.5 million for the second quarter of 2020. The increase in Field Services segment revenue is primarily attributable to higher revenues from our Remediation, Industrial Services,Total Waste Management , Treatment & Disposal and Small Quantity Generation business lines, partially offset by lower revenues from our Other and Emergency Response business lines. Energy Waste Energy Waste segment revenue increased 5% to$7.7 million for the second quarter of 2021 compared with$7.4 million for the second quarter of 2020, primarily attributable to a partial recovery in energy markets and increases in energy-related exploration and production activities in the markets we serve. Gross Profit
Total gross profit decreased 1% to$54.6 million for the second quarter of 2021, down from$55.0 million for the second quarter of 2020. Total gross margin was 23% for the second quarter of 2021 compared with 26% for the second quarter
of 2020. Waste Solutions
Waste Solutions segment gross profit decreased 16% to$35.7 million for the second quarter of 2021, down from$42.2 million for the second quarter of 2020. Total segment gross margin for the second quarter of 2021 was 33% compared with 41% for the second quarter of 2020. The decrease in segment gross margin was primarily attributable to a less favorable service mix, partially offset by higher volumes, in the second quarter of 2021 compared with the second quarter of 2020. T&D gross margin was 38% for the second quarter of 2021 compared with 45% for the second quarter of 2020. Field Services
Field Services segment gross profit increased 22% to$18.1 million for the second quarter of 2021, up from$14.8 million for the second quarter of 2020. Total segment gross margin was 15% for the second quarter of 2021 compared with 14% for the second quarter of 2020. The increase in segment gross margin was primarily attributable to higher volumes and a more favorable service mix in the second quarter of 2021 compared with the second quarter of 2020. 37 Table of Contents Energy Waste Energy Waste segment gross profit was$807,000 for the second quarter of 2021 compared to a gross loss of$2.0 million for the second quarter of 2020. Total segment gross margin was 10% for the second quarter of 2021 compared with (27)% for the second quarter of 2020. The increase in segment gross margin was primarily attributable to lower costs in the second quarter of 2021 as a result of our restructuring activities undertaken in the second quarter of 2020 in response to reduced energy-related exploration and production investments in the markets we serve.
Selling, General and Administrative Expenses ("SG&A")
Total SG&A increased 3% to
Waste Solutions
Waste Solutions segment SG&A increased 3% to
Field Services Field Services segment SG&A increased 8% to$12.3 million , or 10% of segment revenue, for the second quarter of 2021 compared with$11.4 million , or 11% of segment revenue, for the second quarter of 2020. Field Services segment SG&A for the second quarter of 2020 includes a$2.2 million gain associated with the settlement of a contingent consideration liability. Excluding the impact of this gain, segment SG&A decreased 9% for the second quarter of 2021 compared with the second quarter of 2020, primarily attributable to lower employee labor and benefits costs. Energy Waste
Energy Waste segment SG&A decreased 32% to$3.3 million , or 43% of segment revenue, for the second quarter of 2021 compared with$4.9 million , or 66% of segment revenue, for the second quarter of 2020. The decrease in segment SG&A was primarily attributable to lower employee labor and benefits costs in the second quarter of 2021 as a result of our restructuring activities undertaken in the second quarter of 2020 in response to reduced energy-related exploration and production investments in the markets we serve. Corporate
Corporate SG&A increased 7% to$28.7 million , or 12% of total revenue, for the second quarter of 2021 compared with$26.9 million , or 13% of total revenue, for the second quarter of 2020. The increase in Corporate SG&A primarily reflects higher employee labor and benefits costs and higher consulting and professional services expenses, partially offset by lower business development and integration expenses in the second quarter of 2021 compared to the second quarter of 2020. Components of Adjusted EBITDA Income tax expense Income tax expense for the second quarter of 2021 was$257,000 , resulting in a consolidated effective income tax rate of (6.6)%. Income tax expense for the second quarter of 2020 was$2.3 million , resulting in a consolidated effective income tax rate of (77.4)%. We have used a discrete effective tax rate method to calculate taxes for the six months endedJune 30, 2021 . For additional information on our consolidated effective income tax rate, see Note 13 of the Notes to Consolidated Financial Statements in "Part I, Item 1. Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q. 38 Table of Contents Interest expense Interest expense was$7.5 million for the second quarter of 2021 compared with$7.9 million for the second quarter of 2020. The decrease is the result of the impact of lower interest rates on the variable portion of our outstanding debt as well as lower outstanding debt levels in the second quarter of 2021 compared to the second quarter of 2020. Foreign currency loss We recognized a$355,000 foreign currency loss for the second quarter of 2021 compared with a$671,000 foreign currency loss for the second quarter of 2020. Foreign currency gains and losses reflect changes in business activity conducted in a currency other than theU.S. dollar ("USD"), our functional currency. Additionally, we established intercompany loans with certain of our Canadian subsidiaries, whose functional currency is the Canadian dollar ("CAD") as part of a tax and treasury management strategy allowing for repayment of third-party bank debt. These intercompany loans are payable by our Canadian subsidiaries toUS Ecology in CAD requiring us to revalue the outstanding loan balance through our statements of operations based on USD/CAD currency movements from period to period. AtJune 30, 2021 , we had$33.2 million of intercompany loans subject to currency revaluation. Other income
Other income was
Depreciation and amortization of plant and equipment
Depreciation and amortization expense decreased 2% to
Amortization of intangible assets
Intangible assets amortization expense decreased 4% to
Share-based compensation
Share-based compensation expense increased 38% to
Accretion and non-cash adjustment of closure and post-closure liabilities
Accretion and non-cash adjustment of closure and post-closure liabilities
decreased 6% to
Business development and integration expenses
Business development and integration expenses decreased 74% to$785,000 in the second quarter of 2021, compared to$3.0 million in the second quarter of 2020, primarily attributable to lower NRC Merger integration expenses incurred in the second quarter of 2021 compared to the second quarter of 2020. 39 Table of Contents
SIX MONTHS ENDED
Operating results and percentage of revenues were as follows:
Six Months Ended June 30, 2021 vs. 2020
$s in thousands 2021 % 2020 % $ Change % Change
Revenue
Waste Solutions $ 212,507 45 % $ 212,434 47 % $ 73 0 %
Field Services 242,909 52 % 217,503 48 % 25,406 12 %
Energy Waste 13,976 3 % 24,701 5 % (10,725) (43) %
Total $ 469,392 100 % $ 454,638 100 % $ 14,754 3 %
Gross Profit
Waste Solutions $ 70,617 33 % $ 81,523 38 % $ (10,906) (13) %
Field Services 36,385 15 % 33,036 15 % 3,349 10 %
Energy Waste 424 3 % 2,900 12 % (2,476) (85) %
Total $ 107,426 23 % $ 117,459 26 % $ (10,033) (9) %
Selling, General & Administrative Expenses
Waste Solutions $ 13,071 6 % $ 13,434 6 % $ (363) (3) %
Field Services 25,058 10 % 24,232 11 % 826 3 %
Energy Waste 6,674 48 % 10,180 41 % (3,506) (34) %
Corporate 57,734 n/m 54,225 n/m 3,509 6 %
Total $ 102,537 22 % $ 102,071 22 % $ 466 0 %
Adjusted EBITDA
Waste Solutions $ 80,088 38 % $ 88,985 42 % $ (8,897) (10) %
Field Services 34,304 14 % 33,506 15 % 798 2 %
Energy Waste 3,566 26 % 4,073 16 % (507) (12) %
Corporate (50,544) n/m (44,645) n/m (5,899) 13 %
Total $ 67,414 14 % $ 81,919 18 % $ (14,505) (18) %
Adjusted EBITDA
Management uses Adjusted EBITDA as a financial measure to assess segment
performance. Adjusted EBITDA is defined as net income before interest expense,
interest income, income tax expense, depreciation, amortization, share-based
compensation, accretion of closure and post-closure liabilities, foreign
currency gain/loss, non-cash goodwill impairment charges, business development
and integration expenses and other income/expense. The reconciliation of Net
loss to Adjusted EBITDA is as follows:
Six Months Ended June 30, 2021 vs. 2020
$s in thousands 2021 2020 $ Change % Change
Net loss $ (4,959) $ (303,269) $ 298,310 (98) %
Income tax (benefit) expense (1,187) 1,998 (3,185) (159) % Interest expense 14,878 17,163 (2,285) (13) % Interest income (663) (242) (421) 174 %
Foreign currency loss (gain) 726 (266) 992 (373) % Other income (3,906) (296) (3,610) 1,220 % Goodwill impairment charges - 300,300 (300,300) (100) % Depreciation and amortization of plant and equipment 36,197 36,396 (199) (1) % Amortization of intangible assets 17,915 18,634 (719) (4) % Share-based compensation 4,035 3,088 947 31 % Accretion and non-cash adjustment of closure & post-closure liabilities 2,373 2,533 (160) (6) % Business development and integration expenses 2,005
5,880 (3,875) (66) % Adjusted EBITDA$ 67,414 $ 81,919 $ (14,505) (18) %
Adjusted EBITDA is a complement to results provided in accordance with GAAP and
we believe that such information provides additional useful information to
analysts, stockholders and other users to understand the Company's operating
performance. Since Adjusted EBITDA is not a measurement determined in accordance
with GAAP and is thus susceptible to varying calculations, Adjusted EBITDA as
presented may not be comparable to other similarly titled measures of other
companies. Items excluded from Adjusted EBITDA are significant components in
understanding and assessing our financial performance. Adjusted EBITDA should
not be considered in isolation or as an alternative to, or substitute for, net
income, cash flows generated by operations, investing or financing activities,
or other financial statement data presented in the consolidated financial
statements as indicators of financial performance or liquidity.
40
Table of Contents
Adjusted EBITDA has limitations as an analytical tool and should not be considered in isolation or a substitute for analyzing our results as reported under GAAP. Some of the limitations are:
? Adjusted EBITDA does not reflect changes in, or cash requirements for, our
working capital needs;
? Adjusted EBITDA does not reflect our interest expense, or the requirements
necessary to service interest or principal payments on our debt;
? Adjusted EBITDA does not reflect our income tax expenses or the cash
requirements to pay our taxes;
? Adjusted EBITDA does not reflect our cash expenditures or future requirements
for capital expenditures or contractual commitments;
Although depreciation and amortization charges are non-cash charges, the assets
? being depreciated and amortized will often have to be replaced in the future,
and Adjusted EBITDA does not reflect any cash requirements for such
replacements; and
? Adjusted EBITDA does not reflect our business development and integration
expenses. Revenue
Total revenue increased 3% to
Waste Solutions
Waste Solutions segment revenue was$212.5 million for the first six months of 2021, compared to$212.4 million for the first six months of 2020. T&D revenue for the first six months of 2021 was consistent with the first six months of 2020, primarily as a result of a 2% increase in Base Business revenue, partially offset by a 10% decrease in project-based Event Business revenue. Transportation and logistics service revenue decreased 1% compared to the first six months of 2020, primarily reflecting Event Business projects utilizing less of the Company's transportation and logistics services. Total tons of waste disposed of or processed across all of our facilities decreased 14% for the first six months of 2021 compared to the first six months of 2020. Tons of waste disposed of or processed at our landfills during the first six months of 2021 was consistent with the first six months of 2020. T&D revenue from recurring Base Business waste generators increased 2% for the first six months of 2021 compared to the first six months of 2020 and comprised 76% of total T&D revenue for the first six months of 2021. Comparing the first six months of 2021 to the first six months of 2020, increases in Base Business T&D revenue from the mining, exploration & production, chemical manufacturing, and metal manufacturing industry groups were partially offset by decreases in Base Business T&D revenue from the refining and broker/TSDF industry groups. T&D revenue from Event Business waste generators decreased 10% for the first six months of 2021 compared to the first six months of 2020 and comprised 24% of total T&D revenue for the first six months of 2021. Comparing the first six months of 2021 to the first six months of 2020, decreases in Event Business T&D revenue from the chemical manufacturing, utilities and transportation industry groups were partially offset by increases in Event Business T&D revenue from the metal manufacturing, Other and waste management & remediation industry groups. 41 Table of Contents The following table summarizes combined Base Business and Event Business T&D revenue growth, within the Waste Solutions segment, by generator industry for the first six months of 2021 as compared to the first six months of 2020: Treatment and Disposal Revenue Growth Six Months EndedJune 30, 2021 vs. Six Months EndedJune 30, 2020 Mining, Exploration & Production 93% Waste Management & Remediation 54% Metal Manufacturing 14% Other 10% Government 6% General Manufacturing 0% Broker / TSDF -4% Chemical Manufacturing -15% Refining -23% Transportation -27% Utilities -34% Field Services Field Services segment revenue increased 12% to$242.9 million for the first six months of 2021 compared with$217.5 million for the first six months of 2020. The increase in Field Services segment revenue is primarily attributable to higher revenues from our Remediation,Total Waste Management , Small Quantity Generation and Treatment & Disposal business lines, partially offset by lower revenues from our Other business line. Energy Waste Energy Waste segment revenue decreased 43% to$14.0 million for the first six months of 2021 compared with$24.7 million for the first six months of 2020, primarily attributable to declines in the energy markets and impacts from the COVID-19 pandemic. Gross Profit
Total gross profit decreased 9% to$107.4 million for the first six months of 2021, down from$117.5 million for the first six months of 2020. Total gross margin was 23% for the first six months of 2021 compared with 26% for the first six months of 2020. Waste Solutions
Waste Solutions segment gross profit decreased 13% to$70.6 million for the first six months of 2021, down from$81.5 million for the first six months of 2020. Total segment gross margin for the first six months of 2021 was 33% compared with 38% for the first six months of 2020. The decrease in segment gross margin was primarily attributable to a less favorable service mix in the first six months of 2021 compared to the first six months of 2020. T&D gross margin was 37% for the first six months of 2021 compared with 43% for the first six months of 2020. Field Services
Field Services segment gross profit increased 10% to$36.4 million for the first six months of 2021, up from$33.0 million for the first six months of 2020. Total segment gross margin was 15% for both the first six months of 2021 and 2020. Energy Waste
Energy Waste segment gross profit decreased 85% to$424,000 for the first six months of 2021, down from$2.9 million for the first six months of 2020. Total segment gross margin was 3% for the first six months of 2021 compared with
12%
42
Table of Contents
for the first six months of 2020. The decrease in segment gross margin was primarily attributable to lower volumes and a less favorable service mix in the first six months of 2020 compared to the first six months of 2020.
Selling, General and Administrative Expenses ("SG&A")
Total SG&A increased to$102.5 million , or 22% of total revenue, for the first six months of 2021, up from$102.1 million , or 22% of total revenue, for the first six months of 2020. Waste Solutions Waste Solutions segment SG&A decreased 3% to$13.1 million , or 6% of segment revenue, for the first six months of 2021 compared with$13.4 million , or 6% of segment revenue, for the first six months of 2020. Field Services Field Services segment SG&A increased 3% to$25.1 million , or 10% of segment revenue, for the first six months of 2021 compared with$24.2 million , or 11% of segment revenue, for the first six months of 2020. Field Services segment SG&A for the first six months of 2020 includes$3.3 million of gains associated with the settlement and changes in fair value of contingent consideration liabilities. Excluding the impact of these gains, segment SG&A decreased 9% for the first six months of 2021 compared with the first six months of 2020, primarily attributable to lower employee labor and benefits costs. Energy Waste
Energy Waste segment SG&A decreased 34% to$6.7 million , or 48% of segment revenue, for the first six months of 2021 compared with$10.2 million , or 41% of segment revenue, for the first six months of 2020. The decrease in segment SG&A was primarily attributable to lower employee labor and benefits costs in the first six months of 2021 as a result of our restructuring activities undertaken in the first six months of 2020 in response to reduced energy-related exploration and production investments in the markets we serve. Corporate
Corporate SG&A increased 6% to$57.7 million , or 12% of total revenue, for the first six months of 2021 compared with$54.2 million , or 12% of total revenue, for the first six months of 2020. The increase in Corporate SG&A primarily reflects higher employee labor and benefit costs, lower bad debt recoveries, higher consulting and professional services expenses and higher insurance costs, partially offset by lower business development and integration expenses in the first six months of 2021 compared to the first six months of 2020. Components of Adjusted EBITDA Income tax (benefit) expense Income tax benefit for the first six months of 2021 was$1.2 million , resulting in a consolidated effective income tax rate of 19.3%. Income tax expense for the first six months of 2020 was$2.0 million , resulting in a consolidated effective income tax rate of (0.7)%. The increase in our effective tax rate for the first six months of 2021 compared to the first six months of 2020 was primarily due to non-deductible goodwill impairment charges incurred during the first six months of 2020, and lower pre-tax earnings, excluding impairments, for the first six months of 2021 which resulted in a tax benefit from the year-to-date loss of our US operations, partially offset by foreign tax expense from the year-to-date earnings of our foreign operations. 43 Table of Contents Interest expense Interest expense was$14.9 million for the first six months of 2021 compared with$17.2 million for the first six months of 2020. The decrease is the result of the impact of lower interest rates on the variable portion of our outstanding debt as well as lower outstanding debt levels in the first six months of 2021 compared to the first six months of 2020. Foreign currency loss (gain)
We recognized a$726,000 foreign currency loss for the first six months of 2021 compared with a$266,000 foreign currency gain for the first six months of 2020. Foreign currency gains and losses reflect changes in business activity conducted in a currency other than the USD, our functional currency. Additionally, we established intercompany loans with certain of our Canadian subsidiaries, whose functional currency is the CAD as part of a tax and treasury management strategy allowing for repayment of third-party bank debt. These intercompany loans are payable by our Canadian subsidiaries toUS Ecology in CAD requiring us to revalue the outstanding loan balance through our statements of operations based on USD/CAD currency movements from period to period. AtJune 30, 2021 , we had$33.2 million of intercompany loans subject to currency revaluation. Other income Other income was$3.9 million for the first six months of 2021 compared with other income of$296,000 for the first six months of 2020. In the first quarter of 2021, the company recognized a gain of$3.5 million related to the change in the fair value of a minority interest investment.Goodwill impairment charges
We performed an interim assessment of the fair value of certain reporting units
as of
Depreciation and amortization of plant and equipment
Depreciation and amortization expense decreased 1% to
Amortization of intangible assets
Intangible assets amortization expense decreased 4% to$17.9 million for the first six months of 2021 compared with$18.6 million for the first six months of 2020. Share-based compensation
Share-based compensation expense increased 31% to
Accretion and non-cash adjustment of closure and post-closure liabilities
Accretion and non-cash adjustment of closure and post-closure liabilities
decreased 6% to
Business development and integration expenses
Business development and integration expenses decreased 66% to$2.0 million for the first six months of 2021, compared to$5.9 million for the first six months of 2020, primarily attributable to lower NRC Merger integration expenses incurred in the first six months of 2021 compared to the first six months of 2020. 44 Table of Contents CRITICAL ACCOUNTING POLICIES Financial statement preparation requires management to make estimates and judgments that affect reported assets, liabilities, revenue and expenses and disclosure of contingent assets and liabilities. The accompanying unaudited consolidated financial statements are prepared using the same critical accounting policies disclosed in our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2020 .
RECENTLY ISSUED ACCOUNTING STANDARDS
For information about recently issued accounting standards, see Note 1 of the Notes to Consolidated Financial Statements in "Part I, Item 1. Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q.
LIQUIDITY AND CAPITAL RESOURCES
We are continually evaluating the impact of the COVID-19 pandemic on our financial condition and liquidity. Although the situation remains uncertain, we believe that we have sufficient cash flow from operations and available borrowings under the Revolving Credit Facility to execute our business strategy in the short and longer term. While management continues to closely monitor the impact of the COVID-19 pandemic, including the spread of new variants of the virus and government and private sector responses to it in each of the locations and sectors in which the Company does business, we believe that the Company's strategy during the pandemic has increased the Company's resiliency and positioned the Company to take advantage of any post-pandemic recovery. Our primary sources of liquidity are cash and cash equivalents, cash generated from operations and borrowings under the Credit Agreement. AtJune 30, 2021 , we had$85.2 million in unrestricted cash and cash equivalents immediately available and$82.8 million of borrowing capacity, subject to our leverage covenant limitation, available under our Revolving Credit Facility. We assess our liquidity in terms of our ability to generate cash to fund our operating, investing and financing activities. Our primary ongoing cash requirements are funding operations, capital expenditures, paying principal and interest on our long-term debt, and paying declared dividends pursuant to our dividend policy. We believe future operating cash flows will be sufficient to meet our future operating, investing and dividend cash needs for the foreseeable future. Furthermore, existing cash balances and availability of additional borrowings under the Credit Agreement provide additional sources of liquidity should they be required. OnJune 29, 2021 , Predecessor US Ecology amended the Credit Agreement to extend the maturity date for the existing revolving credit facility toJune 29, 2026 . The Credit Agreement was also amended to extend the existing covenant relief period to end on the earlier ofDecember 31, 2022 and the date Predecessor US Ecology elects to end such covenant relief period pursuant to the terms therein and to permanently increase Predecessor US Ecology's consolidated total net leverage ratio requirement as of the end of each fiscal quarter ending on and afterDecember 31, 2022 to 4.50 to 1.00. See additional information on the Fourth Amendment under "Amendments to the Credit Agreement," below. Operating Activities For the six months endedJune 30, 2021 , net cash provided by operating activities was$44.1 million . This primarily reflects net loss of$5.0 million , non-cash depreciation, amortization and accretion of$56.5 million , an increase in deferred revenue of$4.5 million and share-based compensation expense of$4.0 million , partially offset by an increase in accounts receivable of$7.8 million , deferred incomes taxes of$4.3 million and a gain of$3.5 million related to a change in the fair value of a minority interest investment. Impacts on net income are due to the factors discussed above under "Results of Operations." The increase in deferred revenue is primarily attributable to cash payments that are received, or advance billings charged, prior to performance of services and waste that has been received but not yet treated or disposed at the end of the period. Changes in accounts receivable are attributable to the timing of customer payments. We calculate days sales outstanding ("DSO") as a rolling four quarter average of our net accounts receivable divided by our quarterly revenue. Our net accounts receivable balance for the DSO calculation includes trade accounts receivable, net of allowance for doubtful accounts, and unbilled accounts receivable, adjusted for changes in deferred revenue. DSO was 89 days as ofJune 30, 2021 , compared to 86 days as ofDecember 31, 2020 , and 85 days as ofJune 30, 2020 . 45 Table of Contents For the six months endedJune 30, 2020 , net cash provided by operating activities was$59.5 million . This primarily reflects net loss of$303.3 million , non-cash goodwill impairment charges of$300.3 million , non-cash depreciation, amortization and accretion of$57.6 million and a decrease in accounts receivable of$43.6 million , partially offset by a decrease in accounts payable and accrued liabilities of$32.2 million , a decrease in accrued salaries and benefits of$6.5 million and an increase in other assets of$5.2 million . Impacts on net income are due to the factors discussed above under "Results of Operations." Changes in accounts receivable and accounts payable and accrued liabilities are attributable to the timing of payments from customers and payments to vendors for products and services. The decrease in accrued salaries and benefits is primarily attributable to the payment of accrued employee-incentive compensation related to fiscal 2019 financial performance. Investing Activities For the six months endedJune 30, 2021 , net cash used in investing activities was$25.1 million , primarily related to capital expenditures of$26.4 million and a$712,000 investment in the preferred stock of a privately held company, partially offset by$2.0 million in proceeds from the sale of property and equipment. Capital projects consisted primarily of infrastructure upgrades at our operating facilities and landfill cell development. For the six months endedJune 30, 2020 , net cash used in investing activities was$38.6 million , primarily related to capital expenditures of$36.0 million and the acquisition ofImpact Environmental, Inc. for$3.3 million inJanuary 2020 . Capital projects consisted primarily of equipment purchases and infrastructure upgrades at our corporate and operating facilities. Financing Activities For the six months endedJune 30, 2021 , net cash used in financing activities was$8.9 million , consisting primarily of a$6.0 million payment on our revolving credit facility,$2.9 million in payments on our equipment financing obligations,$2.5 million in payments to settle acquired contingent consideration liabilities and$2.3 million in quarterly payments on our term loan, partially offset by net short-term borrowings under our sweep arrangement of$6.3 million . Quarterly cash dividends have been suspended and no dividends were paid in the first six months of 2021. For the six months endedJune 30, 2020 , net cash provided by financing activities was$61.6 million , consisting primarily of$90.0 million in borrowings on our revolving credit facility, partially offset by repurchases of our common stock of$18.3 million and dividend payments to our stockholders
of$5.7 million . Credit Agreement
OnApril 18, 2017 , Predecessor US Ecology, a wholly-owned subsidiary of the Company, entered into the Credit Agreement that provides for a$500.0 million , five-year revolving credit facility (the "Revolving Credit Facility"), including a$75.0 million sublimit for the issuance of standby letters of credit and a$40.0 million sublimit for the issuance of swingline loans used to fund short-term working capital requirements. The Credit Agreement also contains an accordion feature whereby Predecessor US Ecology may request up to$200.0 million of additional funds through an increase to the Revolving Credit Facility, through incremental term loans, or some combination thereof. As described herein, the Credit Agreement was amended in August andNovember 2019 in connection with the NRC Merger; and further amended onJune 26, 2020 andJune 29, 2021 pursuant to the Third Amendment and Fourth Amendment (each as defined herein), respectively. During the six months endedJune 30, 2021 , the effective interest rate on the Revolving Credit Facility, after giving effect to the impact of our interest rate swap and the amortization of the loan discount and debt issuance costs, was 4.13%. Interest only payments are due either quarterly or on the last day of any interest period, as applicable. InMarch 2020 , the Company entered into an interest rate swap agreement, effectively fixing the interest rate on$460.0 million , or approximately 58%, of the Revolving Credit Facility and term loan borrowings outstanding as ofJune 30, 2021 . As modified by the Fourth Amendment as described herein, Predecessor US Ecology is required to pay a commitment fee ranging from 0.175% to 0.40% on the average daily unused portion of the Revolving Credit Facility, with such 46
Table of Contents
commitment fee to be based upon Predecessor US Ecology's total net leverage ratio (as defined in the Credit Agreement). The maximum letter of credit capacity under the Revolving Credit Facility is$75.0 million and the Credit Agreement provides for a letter of credit fee equal to the applicable margin for LIBOR loans under the Revolving Credit Facility. AtJune 30, 2021 , there were$341.0 million of revolving credit loans outstanding on the Revolving Credit Facility. These revolving credit loans are due upon the earliest to occur of (i)June 29, 2026 (or, with respect to any lender, such later date as requested by us and accepted by such lender), (ii) the date of termination of the entire revolving credit commitment (as defined in the Credit Agreement) by us, and (iii) the date of termination of the revolving credit commitment and are presented as long-term debt in the consolidated balance sheets. PredecessorUS Ecology has entered into a sweep arrangement whereby day-to-day cash requirements in excess of available cash balances are advanced to the Company on an as-needed basis with repayments of these advances automatically made from subsequent deposits to our cash operating accounts (the "Sweep Arrangement"). Total advances outstanding under the Sweep Arrangement are subject to the$40.0 million swingline loan sublimit under the Revolving Credit Facility. PredecessorUS Ecology's revolving credit loans outstanding under the Revolving Credit Facility are not subject to repayment through the Sweep Arrangement. As ofJune 30, 2021 , there were$6.3 million in borrowings outstanding subject to the Sweep Arrangement, which are presented as Short-term borrowings in the consolidated balance sheet. As ofJune 30, 2021 , the availability under the Revolving Credit Facility was$82.8 million , subject to our leverage covenant limitation, with$14.7 million of the Revolving Credit Facility issued in the form of standby letters of credit utilized as collateral for closure and post-closure financial assurance and other assurance obligations.
Amendments to the Credit Agreement
OnAugust 6, 2019 , Predecessor US Ecology entered into the First Amendment to the Credit Agreement, by and among Predecessor US Ecology, the subsidiaries of Predecessor US Ecology party thereto, the lenders referred to therein and Wells Fargo, as issuing lender, swingline lender and administrative agent. EffectiveNovember 1, 2019 , the First Amendment, among other things, extended the expiration of the Revolving Credit Facility toNovember 1, 2024 , permitted the issuance of a$400.0 million incremental term loan to be used to refinance the indebtedness of NRC and pay related transaction expenses in connection with the NRC Merger, modified the accordion feature allowing Predecessor US Ecology to request up to the greater of (x)$250.0 million and (y) 100% of consolidated EBITDA plus certain additional amounts, increased the sublimit for the issuance of swingline loans to$40.0 million and increased the maximum consolidated total net leverage ratio to 4.00 to 1.00. OnNovember 1, 2019 , Predecessor US Ecology entered into the lender joinder agreement and the Second Amendment to the Credit Agreement. EffectiveNovember 1, 2019 , the Second Amendment, among other things, amended the Credit Agreement to increase the capacity for incremental term loans by$50.0 million and provided for Wells Fargo lending$450.0 million in incremental term loans to Predecessor US Ecology to pay off the existing debt of NRC in connection with the NRC Merger, to pay certain fees, costs and expenses incurred in connection with the NRC Merger and to repay outstanding borrowings under the Revolving Credit Facility. The seven-year incremental term loan maturesNovember 1, 2026 , requires principal repayment of 1% annually, and bears interest at LIBOR plus 2.25% or a base rate plus 1.25% (with a step-up to LIBOR plus 2.50% or a base rate plus 1.50% in the event thatUS Ecology credit ratings are not BB (with a stable or better outlook) or better from S&P and Ba2 (with a stable or better outlook) or better from Moody's). During the six months endedJune 30, 2021 , the effective interest rate on the term loan, including the impact of the amortization of debt issuance costs, was 2.88%. OnJune 26, 2020 , Predecessor US Ecology entered into the Third Amendment to the Credit Agreement. Among other things, the Third Amendment amended the Credit Agreement to provide a covenant relief period through the earlier ofMarch 31, 2022 and the date Predecessor US Ecology elects to end such covenant relief period pursuant to the terms therein. During the covenant relief period, the Third Amendment increased Predecessor US Ecology's consolidated total net leverage ratio requirement as of the end of each fiscal quarter to certain ratios above the 4.00 to 1.00 ratio in effect immediately before giving effect to the Third Amendment, subject to compliance with certain restrictions on restricted payments and permitted acquisitions during such covenant relief period. Furthermore, during the covenant relief period, under the Revolving Credit Facility, revolving credit loans are available based on a base rate
(as
defined in the Credit
47
Table of Contents
Agreement) or LIBOR, at the Company's option, plus an applicable margin, which
is determined according to a pricing grid under which the interest rate
decreases or increases based on our ratio of funded debt to consolidated
earnings before interest, taxes, depreciation and amortization (as definedin the Credit Agreement).
OnJune 29, 2021 , Predecessor US Ecology entered into the Fourth Amendment to the Credit Agreement. Among other things, the Fourth Amendment amends the Credit Agreement to extend the maturity date for the existing revolving credit facility toJune 29, 2026 (or such earlier date as the revolving credit facility may otherwise terminate pursuant to the terms of the Credit Agreement). The Fourth Amendment also amends the Credit Agreement (i) to extend the existing covenant relief period to end on the earlier ofDecember 31, 2022 and the date Predecessor US Ecology elects to end such covenant relief period pursuant to the terms therein and (ii) to permanently increase Predecessor US Ecology's consolidated total net leverage ratio requirement as of the end of each fiscal quarter ending on and afterDecember 31, 2022 to 4.50 to 1.00. During the covenant relief period until the fiscal quarter endingDecember 31, 2022 , the Fourth Amendment increases Predecessor US Ecology's consolidated total net leverage ratio requirement as of the end of each fiscal quarter to certain ratios above the 4.50 to 1.00 ratio otherwise in effect after giving effect to the Fourth Amendment, subject to compliance with certain restrictions on restricted payments and permitted acquisitions during such covenant relief period. Furthermore, after giving effect to the Fourth Amendment and whether or not the covenant relief period is in effect, (i) if the Borrower's consolidated total net leverage ratio is equal to or greater than 4.00 to 1.00 but less than 4.50 to 1.00, the interest rate on all outstanding borrowings of revolving credit loans under the Credit Agreement will step-up to the LIBOR plus 2.25% or a base rate plus 1.25% and the commitment fee will step-up to 0.375% and (ii) if Predecessor US Ecology's consolidated total net leverage ratio is greater than 4.50 to 1.00, the interest rate on all outstanding borrowings of revolving credit loans under the Credit Agreement will step-up to LIBOR plus 2.50% or a base rate plus 1.50% and the commitment fee will step-up to 0.40%, in each case, pursuant to the terms of the Credit Agreement. The Fourth Amendment also reset any outstanding usage of certain negative covenant baskets, including baskets in connection with the indebtedness, liens, investments, asset dispositions, restricted payments and affiliate transactions negative covenants.
For additional information see Note 11 of the Notes to Consolidated Financial Statements in "Part I, Item 1. Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q.
CONTRACTUAL OBLIGATIONS AND GUARANTEES
InMarch 2020 , the Company entered into an interest rate swap agreement with Wells Fargo, effectively fixing the interest rate on$460.0 million , or approximately 58%, of the Revolving Credit Facility and term loan borrowings outstanding as ofJune 30, 2021 . In connection with our entry into theMarch 2020 interest rate swap, we terminated our existing interest rate swap prior to its scheduled maturity date ofJune 2021 . For more information, see Note 11 of the Notes to Consolidated Financial Statements in "Part I, Item 1. Financial Statements (Unaudited)" of this Quarterly Report on Form 10-Q. Except as set forth above, there were no material changes in the amounts of our contractual obligations and guarantees during the six months endedJune 30, 2021 . For further information on our contractual obligations and guarantees, refer to our Annual Report on Form 10-K for the fiscal year endedDecember 31, 2020 .
© Edgar Online, source
