Operating income for the first quarter of 2009 was $6.0 million, down from $9.5 million for the first quarter of 2008.

The decrease in revenues was primarily due to lower transportation related service on bundled transportation and disposal contracts. 213,000 tons of waste were disposed of in the first quarter of 2009, down from 343,000 tons in the first quarter of 2008. The company’s revenue from recurring base customers declined 5% in the first quarter of 2009 compared to the same year-ago quarter. Event remediation business declined 19% in the first quarter of 2009 over the same year-ago quarter on reduced private sector and government clean-up business. The revenue from the company’s thermal desorption services in Texas and Nevada increased $3.0 million during the first quarter of 2009 over the same year-ago quarter.

The gross profit was $9.5 million in the first quarter of 2009, down from gross profit of $13.4 million in the year-ago quarter. Gross margin as a percentage of total revenue was 27%, down from 29% in the first quarter last year. This reflected reduced operating leverage on lower waste disposal volumes.

Selling, general and administrative (SG&A) expenses for the first quarter of 2009 declined $346,000 to $3.6 million, or 10% of revenue, agaist to $3.9 million, or 9% of revenue in year-ago quarter. The decrease in SG&A reflects lower sales commissions, incentive compensation and business development costs.

Other income, primarily interest and royalty income, was $80,000 for the first quarter of 2009, down from $127,000 in the first quarter of 2008 reflecting lower interest rates.

The company’s effective tax rate for the first quarter 2009 was 39.8% compared to 39.2% in the year-ago quarter. This increase is primarily due to lower pre-tax earnings in the current year, which increases the impact of non-tax-deductible expenses on our effective tax rate.

As on March 31, 2009, we had $24.1 million of cash and cash equivalents. $11.0 million of our $15.0 million line of credit was available at quarter end. The $4.0 million unavailable balance covers a standby letter of credit providing collateral for financial assurance for future closure and post-closure obligations. The company remained debt free at the end of the quarter.

Challenging economic conditions affected both recurring and event business during the quarter, commented Steve Romano, chairman and chief executive officer. While our recurring Base business held up reasonably well, reduced waste shipments from both government and private industry clean-up sites drove lower than expected results. We are pleased, however, with continued growth of our thermal desorption recycling service in Texas and continued success winning new base business accounts, Romano concluded.

Outlook

American Ecology has issued 2009 earnings guidance of $1.14 to $1.22 per diluted share on February 11, 2009. Based on lower than projected first quarter results and continuing uncertainties regarding the future, we are revising our full year guidance range to $0.85 to $1.00 per diluted share.

We are experiencing a higher level of uncertainty across most customer categories in 2009 than in past years. Also, while funding under the American Recovery and Reinvestment Act of 2009 is expected to benefit the second half of 2009, project-specific funding decisions are still in process. Private sector business, especially clean-ups, remains hard to predict given its dependence on industrial production levels, brownfield redevelopment delays, use of cash in a tight credit environment and other factors, Romano noted.

Looking forward, we are optimistic about our thermal desorption service in Texas, which is providing a meaningful contribution to earnings. We continue to increase our market share and believe the long-term outlook for environmental clean-up work is strong based on both deferred private sector opportunities and a renewed commitment by the federal government to accelerating progress on a large backlog of contaminated sites. With expanded infrastructure at our three hazardous waste facilities, uniquely diversified service offerings and a growing customer base for essential services, American Ecology is poised to take advantage of an improved economy, Romano concluded.