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US Ecology Inc (NASDAQ:ECOL)
Q4 2019 Earnings Call
Feb 27, 2020, 10:00 a.m. ET

Contents:

  • Prepared Remarks
  • Questions and Answers
  • Call Participants

Prepared Remarks:

Operator

Good day and welcome to the Fourth Quarter 2019 US Ecology Inc. Earnings Conference Call. [Operator Instructions]

I would now like to turn the conference over to Eric Gerratt. Please go ahead sir.

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

Good morning and thank you for joining us today. Joining me on the call this morning are Chairman and Chief Executive Officer Jeff Feeler; Executive Vice President and Chief Operating Officer Simon Bell; and Executive Vice President of Sales and Marketing Steve Welling. Before we begin please note that certain statements contained in this conference call that do not describe historical facts are forward-looking statements as defined in the Private Securities Litigation Reform Act of 1995. These forward-looking statements include risks and uncertainties. Actual results may differ materially from those expressed or implied by such statements. Factors that could cause results to differ materially from those expressed include but are not limited to those discussed in the company's filings with the Securities and Exchange Commission. Management cannot control or predict many factors that determine future results. Listeners should not place undue reliance on forward-looking statements which reflect management's views only on the date such statements are made. We undertake no obligation to revise or update any forward-looking statements or to make any other forward-looking statements whether as a result of new information future events or otherwise. For those joining by webcast you can follow along with today's presentation.

For those listening by phone you can access today's presentation on our website at www.usecology.com. Throughout yesterday's earnings release and our call and presentation today we refer to adjusted EBITDA adjusted earnings per diluted share cash earnings per diluted share and adjusted free cash flow. These metrics are not determined in accordance with generally accepted accounting principles and therefore are susceptible to varying calculations. A definition calculation and reconciliation to the financial statements of adjusted earnings per diluted share cash earnings per diluted share adjusted EBITDA and adjusted free cash flow can be found in Exhibit A of our earnings release or in the appendix included in today's slide presentation. We believe these non-GAAP metrics are useful in evaluating our reported results and our 2020 guidance. We also would like to point out that our 2019 results include two months of contribution from the NRC Group Holding's acquisition that closed on November 1 2019. Throughout this presentation we often refer to NRC Group Holdings as NRC. We have also provided data on a stand-alone basis for U.S. Ecology which is referred to as legacy US Ecology. Similarly for stand-alone NRC data we refer to that group as legacy NRC. This disaggregation is an attempt to provide increased transparency and understanding of the underlying business.

With that I'd like to turn the call over to Jeff.

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

Thank you Eric and good morning everyone. I'll start this morning's call with a few summary comments on our fourth quarter and full year results released yesterday before turning it back to Eric for additional details on our financials. I will then close out the call with an extended discussion on our 2020 financial outlook before opening up the call for questions. For those that are following the webcast presentation please direct your attention to slide five. Yesterday we reported a strong fourth quarter that delivered $231.3 million of revenue a 47% increase over the fourth quarter last year. Stripping out NRC legacy US Ecology revenues grew 2% over what was a very strong fourth quarter in 2018. We continue to see growth in our Environmental Services segment revenue driven by solid performance in our Base Business and double-digit Event Business growth. Gains in our Field and Industrial Services segment were driven by the two month contribution of NRC. Excluding NRC our Field and Industrial Services segment revenue was down slightly resulting from continuing headwinds in our Industrial Services Group that services steel mills and other industrial facilities and also declines in our total waste management transportation and logistics services. This softness was partially offset by strong double-digit growth in remediation small quantity generation and emergency response services.

Overall we delivered adjusted EBITDA of $46.2 million. Excluding NRC legacy US Ecology delivered $37.8 million representing growth of 14% over the $33.1 million in the fourth quarter last year. We did recognize $2.1 million of business interruption proceeds related to the Grand View operations in the fourth quarter of 2019 which helped to offset the impact of certain projects slipping into 2020. NRC contributed $8.5 million of adjusted EBITDA during the quarter lower than our $13 million guidance estimate provided the day before closing. This shortfall was primarily in our domestic environmental services business and was partially seasonally seasonal in nature. We also experienced an earlier than expected completion of a large marine emergency response project and saw some increase in our corporate cost to support the post merged company. Shifting to full year results on slide six. Total company revenues were $685.5 million. Excluding NRC legacy US Ecology's revenue grew 9% to a record $615.3 million.

This growth is even more impressive when you consider revenue at our Grand View facility was down 31% in 2019 as we worked to regain operational capabilities throughout the year. Legacy US Ecology revenue was driven by a 10% growth in our Environmental Services segment and a 6% growth in our Field and Industrial Services segment. Legacy US Ecology delivered a record $140.9 million of adjusted EBITDA for 2019 representing 13% growth over 2018 results. Overall I'm extremely pleased with our fourth quarter and full year results. The trends in our business remain healthy and the team is executing at a high level across the organization. As you'll see when we review our business outlook a little later in the presentation the combination of the strong legacy US Ecology growth profile and the addition of NRC is expected to drive solid performance in 2020.

With that I'll turn it back to Eric.

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

Thank you Jeff. As I cover the detailed financial review I'll be discussing consolidated results that include NRC before spending more time on legacy US Ecology stand-alone results for the quarter and the full year. Starting with consolidated results on slide nine. Revenue for the fourth quarter of 2019 was $231.3 million up 47% from the same quarter last year and included $70.2 million for our two months of ownership of NRC. Revenue for the Environmental Services segment increased 16% to $125.7 million including $12.5 million from NRC which compares to $108.1 million in the fourth quarter last year. The Field and Industrial Services segment delivered revenue of $105.5 million in the fourth quarter of 2019 which included $57.7 million from NRC. This was up 113% from $49.5 million in the fourth quarter of 2018. Adjusted diluted earnings per share was $0.38 in the fourth quarter of 2019 compared to $0.60 in the same quarter last year. Our fourth quarter 2019 adjusted earnings per share was impacted by approximately $0.15 per diluted share for the new shares issued in connection with the NRC acquisition. Consolidated adjusted EBITDA was $46.2 million in the fourth quarter of 2019 up 20% from the same period last year reflecting strong growth in the legacy US Ecology business and the addition of NRC for our two months of ownership.

Shifting to stand-alone legacy US Ecology results on slide nine. Revenues were $161 million in the fourth quarter of 2019 up 2% from $157.5 million in the fourth quarter last year. Our Environmental Services revenues were up 5% to $113.2 million on an 8% increase in treatment and disposal revenue partially offset by 5% lower transportation revenues. Our Base Business grew 5% and our Event Business was up 12% in the fourth quarter of 2019 compared to the same quarter last year. Legacy US Ecology Field and Industrial Services revenues were $47.9 million in the fourth quarter of 2019 down 3% on headwinds in our Industrial Services Total Waste Management and Transportation and Logistics service lines. As Jeff noted earlier these declines were partially offset by double-digit revenue increases in our remediation small quantity generation and emergency response service lines. Turning to slide 10. Gross profit for the legacy US Ecology business was $54.5 million in the fourth quarter of 2019 up 19% from $45.7 million in the same quarter last year. Our Environmental Services segment contributed gross profit of $47 million in the fourth quarter compared to $39.2 million in the fourth quarter last year.

Legacy US Ecology Environmental Services gross profit benefited from $2.1 million in business interruption insurance recoveries related to the Idaho facility that we recognized in the fourth quarter of 2019. Treatment and disposal margins were 47% for the fourth quarter of 2019 compared to 43% for the fourth quarter of 2018. Gross profit for the legacy US Ecology Field and Industrial Services segment was $7.5 million up from $6.5 million in the fourth quarter last year. Gross margin was 16% in the fourth quarter of 2019 compared to 13% in the fourth quarter of 2018. Selling general and administrative spending or SG&A for legacy US Ecology was $40.4 million compared to $25.3 million in the fourth quarter last year. The increase was primarily due to $11.9 million in business development and integration expenses primarily associated with the NRC acquisition. The increase was also partially due to increased labor and incentive compensation costs. Legacy US Ecology adjusted EBITDA was $37.8 million for the fourth quarter up 14% from the $33.1 million in the fourth quarter last year.

Continuing on with legacy US Ecology for full year 2019 results on slide 11. Total revenue for legacy US Ecology was up 9% to $615.3 million compared to $565.9 million in 2018. Revenue for the legacy US Ecology Environmental Services segment was $440.6 million which was up 10% compared to $400.7 million last year. The legacy US Ecology Field and Industrial Services segment delivered revenue of $174.7 million in 2019 up 6% compared to $165.3 million in 2018. Gross profit was up 15% to $195.8 million in 2019 on increased revenue and margin expansion in both legacy US Ecology operating segments. Legacy US Ecology SG&A was $118.1 million and reflects $18.6 million of business development and integration expenses primarily related to the NRC acquisition which was partially offset by $12.4 million in property insurance recoveries. Legacy US Ecology delivered adjusted EBITDA of $140.9 million in 2019 up 13% from 2018. Shifting now to total company results for 2019 on slide 12.

We reported total revenues of $685.5 million and delivered adjusted EBITDA of $149.4 million for 2019. This compares to revenue of $565.9 million and $125.1 million in adjusted EBITDA in 2018. Net income for 2019 was $33.1 million or $1.40 per diluted share. This compares to net income of $49.6 million or $2.25 per diluted share for 2018. Adjusted earnings per share was $1.96 for 2019 compared to $2.27 for 2018. Cash earnings per diluted share which excludes intangible asset amortization was $2.43 in 2019 compared to $2.59 for 2018. Turning to slide 13. Our balance sheet remains strong with net borrowings of $727.9 million at December 31 2019 resulting in a leverage ratio of approximately 3 times based on the midpoint of our 2020 EBITDA guidance range. We generated strong adjusted free cash flows of $47.5 million which is 14% above the $41.8 million in 2018.

With that I'll turn the call back to Jeff.

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

Thank you Eric. As I turn to our outlook I'd like to provide additional insight into our 2020 expectations. We are providing an enhanced level of transparency at this time in an attempt to bring clarity to our 2020 outlook and highlight the benefits that the combination with NRC will bring. Further we want to spend some additional time breaking down the components of the NRC business and their contribution from their service offerings as well as the market exposure for various NRC business units. Starting on slide 15. We expect total company revenues to range between $1.05 billion and $1.15 billion. This growth is coming from a 6% increase from the legacy US Ecology business plus the addition of full year NRC. Adjusted EBITDA is expected to range from $230 million to $250 million. At the $240 million midpoint of this range the legacy US Ecology business is estimated to deliver $149 million of adjusted EBITDA and NRC is expected to deliver $91 million of adjusted EBITDA.

Adjusted earnings per share is expected to range from $1.65 to $2.12 for 2020. When excluding amortization expense on intangible assets our cash earnings per share per diluted share is expected to range from $2.45 to $2.92 and is 10% above 2019 levels at the midpoint of our guidance range. Our capital expenditures for 2020 are expected to range from $90 million to $95 million. We expect to spend approximately 17% of this figure on construction of additional landfill space 43% on maintenance capital 22% on high-return on investment growth project capital 8% on the rebuild of the damaged Grand View treatment building where insurance proceeds were collected in 2019 and 10% on integration-related capital. Our depreciation and amortization expense for the full year for 2020 is expected to be $115 million. This amount includes our preliminary estimate of purchase accounting adjustments related to NRC which are significantly higher than our original estimates. Our full year tax rate is expected to range between 27% and 28%. Our adjusted free cash flow is expected to range from $81 million to $106 million. At the midpoint of our adjusted free cash flow guidance this represents a 97% growth over the $47.5 million of adjusted free cash flow delivered in 2019. Moving to the next several slides and starting on slide 16.

We have attempted to break down our 2020 guidance into legacy US Ecology and the components of the NRC business. In an effort to provide more clarity we are using the midpoint of our adjusted EBITDA range of $240 million in this analysis as we believe this is the best point estimate of what we will deliver in 2020. Starting with legacy US Ecology. slide 17 shows a bridge from 2019 stand-alone levels to our estimated stand-alone levels for 2020. As you can see on this bridge we expect growth in both of our operating segments delivering a projected $149 million of adjusted EBITDA in 2020. This represents a 6% growth over legacy 2019 adjusted EBITDA levels. Our Environmental Services segment adjusted EBITDA is expected to increase 3% with growth in our Base Business ranging from 3% to 5% and solid single-digit growth in our Event Business. Our Event Business pipeline continues to be strong with several larger projects that shipped in 2019 expected to continue in 2020 as well as new projects that expect to commence in 2020. The backlog of opportunities continue to build providing us confidence that we'll be able to replace completed 2019 projects and show growth. Our Field and Industrial Services segment is expected to see significant growth in 2020 in excess of 30% over 2019 levels. This growth is driven by the strength in our small quantity generation services specifically retail and lab pack services.

Our teams are executing at very high levels landing new contracts and customers that will be implemented in 2020. Growing our market position has been a multiyear focus and we continue to see accelerated traction with these service offerings. Our corporate expenditures are also growing in 2020 as we continue to make investments to support our people and position the organization for growth. Much of these increases are in people investments primarily in headcount wages and benefits as we strive to attract and retain industry-leading talent. These investments are centered around supporting our focus on the customers' experience driving operational excellence and developing our development of our IT platforms. We are also facing cost increases especially in our insurance programs which is part market-driven and another part post Grand View incident-driven.

As much as we tried to separate those costs to illustrate the stand-alone US Ecology there remain corporate cost increases. It's related to the new scale of the combined organizations within our C&E stand-alone numbers. All in we are expecting a strong year for legacy US Ecology in 2020 building upon our record 2019. Shifting to NRC. slide 18 presents a buildup of adjusted EBITDA by legacy NRC segment to arrive at the $91 million of midpoint adjusted EBITDA contribution for 2020. In this buildup we also map the legacy NRC segments to our ongoing operating segments. Starting with US Ecology's Field and Industrial Services segment domestic NRC Environmental Services is expected to contribute $38 million of adjusted EBITDA growing 17% over stand-alone NRC 2019 levels. The NRC domestic Environmental Services segment most closely resembles the legacy US Ecology Field and Industrial Services segment and provides emergency response services Industrial Services and Waste Management Services. The legacy NRC International segment is expected to contribute $7 million of adjusted EBITDA in 2020 representing 20% growth over the stand-alone 2019 results on the strength of their drainage business.

The standby legacy NRC segment is expected to contribute $14 million of adjusted EBITDA contribution a decrease over 2019 stand-alone levels on more normalized emergency response performance. Aggregating these legacy segments NRC is expected to contribute $58 million of midpoint adjusted EBITDA to our Field and Industrial Services segment in 2020. NRC's legacy Sprint Energy segment now called US Ecology Energy Waste Disposal Services is expected to deliver $41 million of adjusted EBITDA in 2020 representing 30% growth over stand-alone 2019 results. This growth is due to continued ramp of two new landfills and two new wastewater treatment facilities that came online in 2019 and had little to no contribution to the 2019 results. These assets are offsetting some of the market softness that we're seeing in the overall energy markets. I will dive into this in more detail later. Corporate costs for legacy NRC are expected to be flat in 2020 from stand-alone 2019 levels. We are estimating $7.2 million of net synergies to be realized in 2020. This comprises of $6 million in adjusted EBITDA from revenue initiatives primarily focused on our national emergency response programs and waste management cross-selling and $8 million in cost savings partially offset by $7 million on recurring incremental costs to align our people programs and IT systems.

As a reminder we had estimated realizing $20 million of run rate synergies by the end of the third year and we still believe this to be a good estimate. I want to pick back up on our energy waste disposal services business on slide 19. This business unit serves the environmental needs of our upstream energy customers that are in the business of exploration activities including drilling and extracting oil and natural gas. We operate three landfills seven permitted wastewater treatment facilities and provide regular services such as transportation equipment rental emergency response and remediation services. As indicated earlier we expect this business to grow approximately 30% from stand-alone 2019 levels. This growth is solely due to the two new landfills and two new permitted wastewater facilities that commenced operations in late 2019. The two new landfills opened up in June and July of 2019 and have ramped much slower than previously expected and contributed very little to 2019 results.

The softer market conditions contributed to this slow ramp. Since our ownership we have spent significant amount of time adjusting our go-to-market approach and realigning our sales teams to better address the markets and their drivers and drivers to position us for success. Early indications appear to be positive. When looking at the business drivers for the landfill disposal services they primarily reside with waste volumes coming from drilling and completion activities remediation activities and cleanups of routine spills. It is a very high-margin business when at full ramp with EBITDA margins similar to our other landfill business. Given the expected challenge in challenging market conditions throughout 2020 we have modeled a 40% reduction in our EBITDA margin on reduced volumes. Our wastewater treatment facilities are permitted to treat bio waste from lodging facilities drill rigs production facilities and other operations. They tend to be high-margin with lower operating leverage than our landfills. Our services group provides needed services on a stand-alone basis and is bundled together with critical disposal services. As with most services this is a lower-margin business with low fixed cost and lower barriers.

Having the disposal assets creates a value-added proposition that we expect to further leverage which is not much different than our successful bundling strategy we have on the hazardous waste business side. When looking at our energy waste disposal services business as a whole its adjusted EBITDA contribution is distributed between our service evenly distributed between our service offerings diversifying our exposure to more than one just service type and business driver. Shifting gears. slide 20 provides an adjusted earnings per share bridge from 2019 actual results to 2020. You will notice on this slide we present both adjusted earnings per share as well as reported as well as cash earnings per diluted share. As we look to 2020 we now expect adjusted earnings per share to be dilutive compared to 2019 adjusted earnings per share at the midpoint of our guidance range. There are two factors driving this revised outlook. First is the lower-than-expected contribution from the energy waste disposal services business which we've already talked about. Secondly there is an approximate 34% share drag due to incremental noncash intangible asset amortization which is significantly higher than we had originally expected at the time of deal announcement.

Looking at cash earnings per diluted share which strips out the amortization of intangibles we expect 10% accretion in 2020 over 2019 results. On slide 21 we reconcile our expected range of adjusted free cash flow. At the midpoint of our range we expect cash free cash flow to approximate $93 million which represents 97% growth over our 2019 adjusted free cash flow. Turning to slide 22. When looking at the consolidated company and its revenue exposure we continue to be very diversified with no significant end market concentrations. This slide shows an estimate our estimate of end market exposure by customer type. As you can see the combined company remains heavily tied in the industrial markets. Our upstream energy exposure represents approximately 12% of our total revenue. And as discussed earlier it's further diversified due to the variety of service offerings that we provide. Finishing off our prepared remarks on slide 23. I continue to be very bullish on the combination with NRC. Taking two best-in-class companies with complementary service offerings and footprints is a formula for success.

This is similar to our combination with EQ back in 2014 and our team is committed to repeat this performance. The combination further advances our vision of becoming the premier comprehensive environmental service provider. NRC builds upon our service offerings with leading emergency response and standby services and industrial cleaning and complements US Ecology's leading field services while providing more than 50 locations to grow and advance these services. Adding a new customer base in the energy field provides critical but necessary waste disposal solutions and services to protect human health and the environment our core mission. As you can see in our guidance this transaction is cash flow accretive in terms of both free cash flow and cash adjusted earnings per share. The integration is going well and we've made tremendous progress today much more than I had expected. There is work still ahead but the teams are energized and encouraged with the true mission of building upon an already world-class organization. I'm excited to support their drive and look forward to reporting on their accomplishments in 2020.

With that operator please open up the call for questions and comments.

Questions and Answers:

Operator

Thank you [Operator Instructions] Our first question comes from Michael Hoffman of Stifel.

Brian Butler -- Stifel -- Analyst

Hey, this is Brian Butler on for Michael. You guys there? So quick question. On the EBITDA bridge you provided for NRC can you give a little color I guess on what the the revenues are attached. I know you gave the full revenues of $445 million but how does that break down between the ES part and the FIS part?

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

Hey. So Brian. Yes and I'll talk to the midpoint. So in terms of the ES segment the NRC contribution on the ES segment at the midpoint is just a little over $100 million in terms of revenue. And then on the Field and Industrial Services segment the NRC contribution at the midpoint is about $345 million.

Brian Butler -- Stifel -- Analyst

$345 million. And is that going to be kind of when you think of contribution seasonality kind of even? Or how should we think about maybe the seasonality of those two going through 2020?

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

Yes we've looked quite a bit at that Brian. I will tell you the seasonality at NRC is similar to what we see at US Ecology although I'd say it might be a little pronounced especially in the domestic ES business. If you look at for example Alaska and some of the things that they do in the Northeast there's really about a four or five month time frame in the fourth and through the first quarter that there's not a lot of activity. So we still expect the first quarter to be our seasonally lowest quarter and then starting to ramp in the second third quarter being the highest and then fourth quarter being again a bit of a wildcard as it always is just based on what the weather does. But as we look at the trends that first quarter for the combined company it's probably somewhere around 20% 22% of the full year in terms of EBITDA and then it kind of ramps from there.

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

Brian I'll just add on this segments in particular on ES when we kind of look at ES and some of the energy-related seasonality what we normally see and what we've seen in the past is first quarter tends to be lighter. And then it grows in the second. A lot of that has to do with deployment of capital by the energy companies. And those end up happening in the first quarter and then it starts building into the second quarter.

Brian Butler -- Stifel -- Analyst

Okay. And when you think about you said I think on the call you said it was margins were 40% lower than peak. And I'm guessing that's mostly the ES part of the NRC. So is this kind of when you think about I guess the estimates that are out there I mean are you guys in the range of peak to trough where is this kind of $41 million on $100 million of revs for that landfill piece?

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

Yes. So the 40% reference was specifically on the Energy Disposal Services business. So and that was from peak to trough. So we're down toward the lower end of that range and what we're modeling and it's really on reduced volumes and the market conditions we're seeing down there.

Brian Butler -- Stifel -- Analyst

Okay. And then I guess the last one on that is just can you give some color maybe on sensitivity? When we look at from the outside looking in on crude prices or even activity in like the Permian and Eagle Ford. How should we think about what's built into this model if there's further weakness? Is this is it kind of one for 1?. If we see activities decline by another 10% should we expect this to be down? Or is this you feel more confident on being able to at least achieve this level?

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

At this stage we actually feel very confident to achieve this level. There's definitely always risk in any point estimate that we give with regard to that. But most of the energy companies look at more the long-term market that's out there and they don't necessarily adjust their plans on day-to-day changes in what we're seeing in the oil prices. And so the one thing that we've emphasized on is these are out of all of the oil and gas fields in the United States. And these are the areas we want to be in. They tend to be the lowest cost produced and they have the most opportunity for growth. And so we still feel very bullish on the assets we have we're in and we're kind of in a trough or a low point. And so we see upside as these new landfills and assets get ramped for those markets.

Brian Butler -- Stifel -- Analyst

Alright, great. Thanks for taking my question.

Operator

The next question comes from Henry Chien of BMO.

Henry Chien -- BMO -- Analyst

Hey, good morning, guys.

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

Morning.

Henry Chien -- BMO -- Analyst

Hey, guys. Yes. So just kind of follow-up question on NRC as you had broken out as a bridge for 2020 guidance but I'm thinking just going forward if you could talk about how much will the will the two businesses be more integrated? And will you be reporting them separately? And I'm just thinking like in terms of operations and segments for the two businesses?

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

Yes. So in terms of reporting going forward the energy waste business will be included in our Environmental Services segment and then the rest of NRC will roll up in our Field and Industrial Services segment. That being said as we report 2020 since we won't have cycled the acquisition until we get into 2020 or at the end of 2020 you'll be able to see in what we report exactly how much the NRC contribution was to each of those segments. So when we talk in terms of ES Environmental Services we'll be speaking to it in total which will include NRC and then we'll break out the component that NRC contributed which would be the energy waste disposal business. And then on FIS similarly we'll report kind of consolidated and then call out the portion that's been contributed by the NRC field and industrial services businesses.

Henry Chien -- BMO -- Analyst

Got it. Okay. That makes sense. And so I understand that it's the assets are attractive and it does and you into new client segments. How is there any opportunity? Or is this part of the plan to integrate it further? And whether in like the distribution or other services?

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

Yes Henry our plan is to integrate the full business businesses that we acquired into US Ecology's operations and processes procedures systems that type of thing as well as Salesforce.

Henry Chien -- BMO -- Analyst

Got it. Okay. Are there any I guess just kind of just thinking ahead if any opportunities for synergies either on cost or revenue side?

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

Yes. So we've included $7.2 million of net synergies for 2020. Most of that is really in revenue initiatives which is driving about $6 million of those. We also have about $8 million of cost synergies that are embedded but we also had some incremental recurring costs that are being reinvested in. So that's how you get to the net $7.2 million. Again going back to or looking at the three year run rate we had estimated $20 million. We're still sticking firm with that estimate and we see opportunities there especially on the revenue side that it could be better than that as we fully get better understanding and get the teams working together. There's been a lot of positive that's come out of the early days. And we just see a lot of potential there.

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

So yes Henry just to be clear so the $91 million of EBITDA coming from NRC business in 2020 at the midpoint includes that $7.2 million of net synergies Jeff referred to.

Henry Chien -- BMO -- Analyst

Got it. Okay. That's great. Okay. Thanks so much.

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

Thank you.

Operator

Our next question comes from William Grippin of UBS.

William Grippin -- UBS -- Analyst

Morning. Thanks. So first question was just on top line for 2019. It actually looks like NRCG the $70 million revenue contribution was in line with the expectations you guys had laid out last quarter. Just but perhaps the underlying business the legacy US Ecology business. So it looks like grew maybe a little bit more slowly than expected. Could you just talk through what the drivers were there?

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

So you're looking at just the fourth quarter?

William Grippin -- UBS -- Analyst

Sort of backing it out yes relative to what the expectations were from the third quarter result presentation.

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

Yes. So let's talk about legacy US Ecology. So yes we grew just about 2% quarter-over-quarter on the top line and part of that is the headwinds. I should not really had well not headwinds. But part of that was the fourth quarter of 2018. If you go back and look at all of 2018 our fourth quarter was really we had a really strong finish to it. Just from pent-up deferral of projects and other things that kind of factored into that. So we had a tough comp in there. But we still grew 2% on that. When you break it down by segment on the legacy side we saw strong growth in our base business about 5% and we saw about 12% in our Event business on the Environmental Services business. So very strong growth very pleased with what we saw there. On the Field and Industrial Services it actually declined a little bit but there's was a couple of things really factoring this. It's really masking some of the successes. The headwinds were on our Industrial Services business which is honestly they were servicing a lot of steel mills and the areas that we were servicing. They've actually announced some closures.

And it's also partially self-induced meaning that we chose not to do some of the business because the pricing pressures were not given us the adequate margins that we needed to put our people at risk. And so that's one of the headwinds that caused that number to go down as well as our total waste management service line had year-over-year declines. That business continues to do well on the base side. It was just locking some of the projects in the fourth quarter of 2019 compared to 2018. What it's masking is strong growth in our retail our small quantity generation our lab pack services our LTL services areas that we've really focused on growing that business including ER which that's on a legacy basis. So really pleased all in from the revenue. So the 2% growth is actually a really good outcome. When you look at adjusted EBITDA for the quarter we grew 14% from Q4 2019 to compared to the previous year. And so very pleased with that growth. And really finished the year on a strong note finished better than we had anticipated and above our low-end of the guidance range?

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

Yes William this is Eric. Just to tag on. I mean if you look at FIS in particular that and I'm talking just legacy US Ecology that 3% revenue decline if you cascade down and look though we actually were up in terms of EBITDA about 9% quarter-over-quarter. So to Jeff's point a much stronger margin profile even on that lower revenue. And that's a result of some of the traction we're seeing in some of those service lines small quantity generation emergency response that tend to be especially as we're getting more traction in route density better margin businesses.

William Grippin -- UBS -- Analyst

Got it. And then next question was just on the ramp at Grand View. Could you just update us on how that's going? And what we kind of should be expecting in 2020?

Simon Bell -- Executive Vice President and Chief Operating Officer

This is Simon here. From an infrastructure standpoint we expect to have the vast majority of infrastructure in place by Q1. So our permitted capabilities are back. We will have some limitations on volumes not having the indoor stabilization complete until Q4. That being said we continue with the plans to divert to Nevada as necessary. So certainly think we have all the pieces in place to meet our customers' demands.

William Grippin -- UBS -- Analyst

And then last question just what is the right share count we should be using for 2020 here?

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

So share count including all the new shares from NRC kind of on a fully diluted basis is about 31.7 million. That's our guidance.

William Grippin -- UBS -- Analyst

Thanks, everybody.

Operator

Thank you. [Operator Instructions] Our next question comes from Peter Rabover of Artko Capital.

Peter Rabover -- Artko Capital -- Analyst

Hey, guys, thanks for all the transparency. I was just curious that given the pretty low stock price and the warrant price if you guys had considered cleaning up the dilution at this stage?

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

Yes Peter. So on the warrants it's definitely something that we're evaluating on how best to deal with the warrants going forward. And since the time of the closing until actually today we've pretty much been in a lockdown period and really couldn't do anything until we came out with 2020 guidance and transparency. So we're going to continue to look at that in our overall capital deployment and seeing what is the best use of our capital with regard to warrant share price and other deployments.

Peter Rabover -- Artko Capital -- Analyst

Okay good. Just wanted to make sure you guys are thinking about it. I think it's pretty opportunistic right here to clean it up. I appreciate it.

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

All right. Thank you.

Operator

At this time we have no further questions in queue. And I would like to turn it back to our speakers.

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

All right. Well thank you so much for attending at today's call. Looking forward to visiting with you at future meetings. [Operator Closing Remarks]

Duration: 45 minutes

Call participants:

Eric Gerratt -- Executive Vice President, Chief Financial Officer and Treasurer

Jeff Feeler -- Chairman of the Board, President and Chief Executive Officer

Simon Bell -- Executive Vice President and Chief Operating Officer

Brian Butler -- Stifel -- Analyst

Henry Chien -- BMO -- Analyst

William Grippin -- UBS -- Analyst

Peter Rabover -- Artko Capital -- Analyst

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