US Ecology's (ECOL) CEO Jeff Feeler on Q2 2018 Results - Earnings Call Transcript
US Ecology Inc. (ECOL) Q2 2018 Earnings Conference Call August 3, 2018 10:00 AM ET
Executives
Eric Gerratt – Chief Financial Officer
Jeff Feeler – Chairman and Chief Executive Officer
Steve Welling – Executive Vice President of Sales and Marketing
Simon Bell – Executive Vice President and Chief Operating Officer
Analysts
Michael Hoffman – Stifel
Henry Chien – BMO Capital Markets
Tyson Bauer – Oppenheimer
Tyler Brown – Raymond James
Operator
Good morning, and welcome to the US Ecology, Incorporated Second Quarter 2018 Earnings Conference Call. All participants will be in listen-only mode. [Operator Instructions] After today’s presentation, there will be an opportunity to ask questions. [Operator Instructions] Please note, this event is being recorded.
I would now like to turn the conference over to Eric Gerratt, Chief Financial Officer. Please go ahead.
Eric Gerratt
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 of Sales and Marketing, Steve Welling; and Executive Vice President and Chief Operating Officer, Simon Bell.
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. Since 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, pro forma adjusted EBITDA and adjusted earnings per share. These metrics are not determined in accordance with Generally Accepted Accounting Principles and are, therefore, susceptible to varying calculations.
A definition, calculation and reconciliation to the financial statements of adjusted earnings per share, adjusted EBITDA and pro forma adjusted EBITDA can be found in Exhibit A of our earnings release. We believe these non-GAAP metrics are useful in evaluating our reported results and our 2018 guidance.
With that, I’d like to turn the call over to Jeff.
Jeff Feeler
Thank you, Eric, and good morning, everyone. I’ll start the – this morning’s call with a few summary comments on our second quarter results released yesterday before turning the call back to Eric for additional details on our financials. I’ll then close out the call with an update on our 2018 business outlook before opening up the call for questions and comments.
For those that are following our webcast presentation, please direct your attention to Slide 5. Yesterday, we reported solid second quarter 2018 financial results that were in line with our expectations. Revenues were up 9% to $136.9 million and adjusted EBITDA was $31.7 million, up 15% over the quarter last year. Our adjusted earnings per share was $0.61, up 61% for the same period last year, on a 28% increase in operating income and lower overall taxes.
Even after adjusting for the impact from a key treatment facility idled in the second quarter of last year, we estimate that our total revenues for the second quarter of 2018 grew by approximately 6%, operating income grew about 23% and adjusted EBITDA grew approximately 2%, all healthy improvements over the prior year results. In our Environmental Services segment, we saw revenue growth of 10%, led by strong strength in our Base Business, which increased 13% during the quarter.
Even when excluding the impact from our idled treatment facility in last year’s results, Base Business grew 9% during the quarter, reflecting an improving industrial economy. The Base Business gains helped offset Event Business lumpiness. Specifically, we had further timing delays on a multiyear project that was expected to begin as early as January of this year, but did not commence until last month in July, contributing to the 8% decline in our Event Business from the same quarter last year.
Absent this singular project, our Event Business would have been flat with the same period last year. Our Field and Industrial Services business saw revenue growth of 4% over the same quarter last year, led by a 5% increase in our Field Services business, reflecting growth in our small quantity generation and remediation service lines. This offset a decline in our total Waste Management business line during the quarter. Revenues for our Industrial Services segment business dipped 2% during the second quarter of 2018 compared to the same quarter last year on continued softer business conditions. Overall, I’m very pleased with the progress we continue to make. We continued to see strengthening indicators of business activity that should support our growth expectations for the year.
With that, I’ll turn it back to Eric.
Eric Gerratt
Thanks, Jeff. As shown on Slide 7, revenue for the second quarter of 2018 was $136.9 million, up 9% from $126.1 million in the second quarter of 2017. Revenue for the Environmental Services segment for the second quarter was $99 million compared to $89.6 million in the second quarter last year. This increase was driven by a 9% increase in treatment and disposal revenue and a 13% increase in transportation service revenue. Base Business for the Environmental Services segment was up 13% compared to the second quarter last year and represented 81% of treatment and disposal revenue.
Event Business for the Environmental Services segment decreased 8% from the second quarter last year and represented 19% of treatment and disposal revenue. The decline in Event Business was due primarily to a large – to the large multiyear project that did not ship as anticipated in the second quarter of 2018, which recommenced shipments in July. The Field and Industrial Services segment delivered revenue of $38 million in the second quarter, which was up 4% from $36.5 million in the second quarter last year.
Slide 8 breaks down our Environmental Services treatment and disposal revenue for both Base and Event Business by industry vertical. Base Business increased primarily in the broker/TSDF, chemical manufacturing and refining verticals. The decrease in Event Business was primarily driven by decreases in other chemical manufacturing and utilities. This was partially offset by increases in the metals manufacturing vertical.
Turning to Slide 6. Gross profit was $41.4 million in the second quarter of 2018, up 15% from $35.9 million in the same quarter last year. Our Environmental Services segment contributed gross profit of $35.9 million in the second quarter of 2018 compared to $30.7 million in the second quarter of 2017. Treatment and disposal margins were 42% in the second quarter compared to 38% in the second quarter of last year, which reflected the March 2017 shutdown of our treatment facility due to severe wind damage.
When excluding the impact of our idled treatment facility, T&D gross margin improved by approximately 100 basis points in the second quarter of 2018 compared to the same period of 2017 on a more favorable service mix. Gross profit for the Field and Industrial Services segment was $5.5 million, up slightly from the second quarter of 2017. Gross margin was 15% in the second quarter, up from 14% in the second quarter last year.
Field Services margin improved over the second quarter of 2017 on higher revenues despite facing headwinds from investments as we rolled out our new retail contracts in the West and recent total waste management contract wins. Gross margin for our Industrial Services business was in line with the second quarter of 2017. Selling, general and administrative spending, or SG&A, was $21.2 million in the second quarter of 2018. This was up 6% from $20 million in the second quarter last year. The increase was primarily due to higher labor and incentive compensation.
Operating income was $20.3 million in the second quarter of 2018, up 28% from operating income of $15.9 million in the same quarter last year. Net interest expense for the quarter decreased to $2.9 million compared to $8.5 million in the same quarter last year. The decrease is primarily the result of a non-cash charge of $5.5 million associated with the write-off of deferred financing fees related to the refinancing of our former credit facility in the second quarter of 2017.
The company’s effective income tax rate for the quarter was 24.4%, down from 35% in the second quarter last year. The decrease was primarily due to tax reform passed in the fourth quarter of 2017, which reduced the U.S. corporate tax rate from 35% to 21%. We anticipate our full year effective tax rate will be between 26% and 27%, excluding any discrete items. We reported net income of $13.2 million and diluted earnings per share of $0.60 in the second quarter of 2018, compared to net income of $5 million and diluted earnings per share of $0.23 in the second quarter last year.
Adjusted earnings per share was $0.61 in the second quarter compared to $0.38 in the second quarter of 2017. Adjusted EBITDA for the second quarter was $31.7 million, up 15% from $27.6 million in the second quarter last year.
Turning to results for the first six months of 2018 on Slide 10. Total revenue was $257 million compared to $236.3 million in the first six months of 2017. Revenue for the Environmental Services segment for the first six months of 2018 was $185.4 million, up 9% compared to $170.9 million in the first six months of 2017. The Field and Industrial Services segment delivered revenue of $71.5 million in the first six months of this year, up 9% compared to $65.4 million in the first six months of last year.
Net income for the first six months of 2018 was $22.5 million or $1.02 per diluted share compared to $10.2 million or $0.47 per diluted share last year. Adjusted earnings per share, which excludes the gain related to the issuance of a property easement on a portion of unutilized land of one of our operating facilities as well as excluding the noncash write-off of deferred financing costs, foreign currency translation gains and losses and business development expenses, was $0.97 for the first six months of 2018 compared to $0.61 for the same period of 2017. Adjusted EBITDA was $56.2 million for the first six months of 2018 compared to $51.1 million for the first six months of 2017.
Turning to Slide 11. We generated $48 million of cash from operations in the first six months of 2018. We also invested $15 million in capital projects and paid out $7.9 million in dividends to our stockholders. Our balance sheet continues to improve with net borrowings of $223.7 million at June 30, 2018.
With that, I’d like to turn the call back to Jeff.
Jeff Feeler
Thank you, Eric. With solid execution in the first half of 2018, strength in the overall macro industrial sector and strong trends across multiple business lines, our confidence that we’ll deliver upon our growth outlook for 2018 continues to increase. Our Base Business continues to show increasing strength and is now expected to grow 6% to 9% for the full year, up from earlier guidance of 3% to 5%.
We now expect our Event Business to be slightly lower than previously anticipated, growing in the low single digits or even flat with that of the prior year. The primary driver reflects our decision to reduce waste receipts in our Canadian landfill while what we sought a capacity expansion at the facility. This self-imposed reduction in waste receipts was to protect our ongoing Base Business volumes and committed volumes under our multiyear Event Business contracts. We received this capacity increase in June.
However, due to timing delays, we do not believe we’ll be able to make up the difference in volumes in the balance of the year despite healthy and strong market conditions. Growth in our Field Services line is expected to accelerate over the balance of the year as we execute on the contracts won in 2017. This growth will be partially offset by our Industrial Services business, which is now expected to be flat with that of 2017.
Turning to Slide 13. Taking into account our first half results and current conditions, we are reaffirming our guidance issued this past February. We still expect adjusted EBITDA will range from $122 million to $128 million for 018. We are also reaffirming our adjusted earnings per share guidance of $2.15 to $2.34 per share. As it stands right now, we are trending towards the midpoint of our adjusted EBITDA guidance range. We also are reaffirming our 2018 capital expenditure guidance of $39 million to $42 million.
However, we are trending towards the upper end of that range as we continue to find more growth opportunities to deploy our capital. Finally, as we look out for the next two quarters, we expect that we will see sequential growth in both the third and fourth quarters, as some of the delayed Event work should benefit our fourth quarter.
With that, operator, would you please open up the call for questions and comments?
Question-and-Answer Session
Operator
We will now begin the question-and-answer session. [Operator Instructions] The first question comes from Michael Hoffman with Stifel. Please go ahead.
Michael Hoffman
Hi Jeff, Eric, Steve, thanks for taking the questions. So it sounds like we have the sort of tale of two worlds, great underlying recurring activity and the long and hope for acceleration of Event, it’s still going to be slowing gradually at best. And then I’m trying to sort of understand the – your – the strategy within Field and Industrial Services. It seems like you’ll take the less revenues because you’re improving the quality of what you’re getting. So smaller revenues with better margin is a good trade-off. That’s a lot there, but I’m trying to understand if that’s what I’m hearing is the messaging?
Jeff Feeler
So Michael, I’ll take the latter question and let Steve talk about, kind of, I think you’re getting into the health of the Event Business market. So the latter question with regard to the Field and Industrial Services. What we’re seeing there is we’re actually seeing top line growth, we’re seeing margin expansion, executing on our strategy all along. And so this quarter’s growth on the top line was not as strong as we anticipated.
We had some headwinds in our total waste management group. Part of that business has kind of an Event nature to it to where we may do special projects for our customers and things like that. And those are things that didn’t necessarily materialize when they materialized last year, but the health of that business continues to be extremely strong. We continue to be executing. We continue to win contracts. We get opportunities. And so we’re really pleased with the overall business. When you take the whole segment in totality, honestly, it really performed all-in pretty close to expectations. Maybe not on the top line, got a little bit more on the margin. But as we look out to the balance of year, it’s clicking on good cylinders going forward.
When you get to the Event Business, I’ll let Steve add his color to that, and I’ll add anything that I think is necessary.
Steve Welling
Yes. Hi, Michael.
Michael Hoffman
Hi Steve.
Steve Welling
The pipeline of Event is strong. I mean, we have a number of projects, many more than we had last year at this time. Part of the concern we have is, you’ve heard about the truck drivers shortage and rail issues. We’re struggling a bit just to handle all the waste streams that people want to ship. So there are some things we built in there. We’re not sure whether we’re going to get it all done by the end of the year.
Michael Hoffman
Okay. So just to be clear, the activity level then has started to accelerate, but the ability to execute on it is being constrained by transportation?
Steve Welling
In some cases, yes.
Jeff Feeler
And Michael, I think, you heard in the prepared comments about, we made a decision to restrict capacity into our Stablex facility. And at the end of the day, that’s a long-term decision that’s going to benefit the company going forward. But at this stage, because of the manufacturing-type process that goes to that facility, we’re not going to be able to make up some of the shortcomings on the timing delays. And so though it may impact a little bit on the Event Business this year, long term, this is going to be a win for the company going forward.
Michael Hoffman
So if you characterize the business that you said we won’t do, what’s the dollar impact of that?
Jeff Feeler
It’s probably a couple million dollars of EBITDA.
Michael Hoffman
So what I’m really hearing then is, with all that walk back in if it had happened as planned, we’d be actually talking about being at the upper end of your guidance, if you’re not actually raising it. But that, I guess, that’s – what I’m trying to get out is the trends are all actually pushing you into the better end of your guidance, but you’ve made some structural decisions that have kept you at the middle of limit?
Eric Gerratt
Yes, Michael, that’s – this is Eric, that’s the way I would characterize it for sure. Also, if you look at Event Business in the second quarter and you strip out the large project that was delayed, that’s now shipping again. Event Business was actually up a couple percent quarter-over-quarter. So still some strength there, even despite the capacity constraints that we imposed at Stablex that have now been resolved. So yes, I think you’re right. If – excluding all those things, we would be trending towards the upper end of the range.
Michael Hoffman
And do you think the project activity over another two or three years gets you to a peak of what EQ and US Ecology will look like at the peak, the last cycle?
Jeff Feeler
Michael, it’s really dependent on what large projects come into market. And so there are a number of large projects that a number of people are tracking out there. I think we’re well positioned to be able to secure those projects or compete and win for those projects. But when you really look at our Event Business pipeline, at least, over the several quarters, and I bet you if we went back several years ago, it’s normally driven by a handful of projects every single year.
And so it’s really dependent on when – the timing of when they come to market. There is plenty of opportunities we’re tracking and seeing out there. And the reality is we’re better positioned today, especially as a combined company to seize those opportunities than we were in the past. So we feel real confident we’ll be able to compete for that.
Michael Hoffman
And how would you define the mix of recurring versus project today versus a year ago? Percent of company, are we 85%-15% or where?
Eric Gerratt
Yes, I think, for the quarter, we were about 81% Base Business. That’s actually down a little bit from last quarter. But I think it’s still in that 80%-20% range.
Michael Hoffman
Okay. Okay, great. Thank you.
Jeff Feeler
All right. Thanks, Michael.
Operator
[Operator Instructions] The next question comes from Jeff Silber with BMO Capital Markets. Please go ahead.
Henry Chien
Hey, guys. It’s Henry Chien calling for Jeff.
Jeff Feeler
Hey, Henry.
Henry Chien
Just wanted to follow up on Michael’s question so – or discussion. The changes in the Event Business, I was wondering if you could explain a little bit more what was the change in Canada? And sort of, what was the reason for doing that?
Simon Bell
Yes, Henry, this is Simon. So what we’ve done recently, it’s Stablex, is we’ve actually increased our annual capacity by 50,000 metric tons. Previously, the way the capacity allowance is calculated, it’s over a five-year period, and we were authorized to do 875,000 metric tons over that five-year period. We’ve now increased that to 1 point – 1,125,000 metric tons over a five-year period. So we were approaching that five-year – as we approached that five-year period, we’re trying to get that capacity extension in place, and we saw – we became concerned about the timing, decided to be cautious to make sure we could protect those core accounts. Moving forward, we’re now in a position that we should be able to take the full addressable market. And so we secured an additional 250,000 metric tons of capacity, and that really should allow us to prevent any sort of restrictions in the future. But we did have some restrictions in the first half.
Steve Welling
Also, this is Steve Welling. The large project that was delayed a few months. We’re really only able to load, transport and treat a certain number of tons per week. And it’s very difficult to increase upon that. So we’re up and running right now. But it’s at a pace that we can’t really catch up from what we did or didn’t do earlier in the year.
Simon Bell
On a positive note – again, this is Simon. We did just complete the construction of our expanded rail facility at the Stablex facilities. We’re certainly in a position to increase those production levels. But as Steve mentioned, we are starting to see some of the shortages in certain equipment and certain amount of containers. So there are challenges we’re working through, and there are certainly a lot of things we think we can do to increase production. But as Steve says, there are limits.
Eric Gerratt
And this is, Eric. Henry, the other thing, just to be clear, so these are not volumes that are lost. It’s just a question of timing of when they’ll come through. The volumes will still come on the project, it’s just a question of when.
Henry Chien
Got it. Okay. And I guess, in terms of like the timing of the – sort of capacity changes, is that sort of mostly completed or is it, say, by the end of the year, where you get a little bit more capacity? And just kind of as a follow-up, does improving activity in the Base Business usually a good sign for the Events Business in terms of future projects, just based on your experience and your view?
Jeff Feeler
Well, maybe I’ll let Steve answer the first. But as far as the capacity, it is in place today. We have it. It’s formally approved. So moving forward, we can put more material in the lands on an annualized basis.
Steve Welling
So to try to tie increasing Base Business in economy to the Event, there’s some tie there. But a lot of Event work is regulatory-driven, court-ordered cleanup. So it’s not necessarily due to the strong economy.
Henry Chien
Yes, got it. Okay, great. That’s very helpful. Thanks, guys.
Jeff Feeler
Thank you.
Operator
Next question comes from Tyler Brown with Raymond James. One moment, please. I’m sorry, the next question comes from Tyson Bauer with Oppenheimer. Please go ahead.
Tyson Bauer
Good morning, gentlemen.
Jeff Feeler
Good morning.
Tyson Bauer
A couple quick questions. The Event Business, obviously, pipeline has been strong. That’s been in part because we continue to push to the right. So it’s always strong and as far as what could be awarded. Just wondering from your stance what you’re seeing within the industry, have you seen awards, maybe not to your yourself, but just, in general, that have taken place? And if that is breaking loose? Or is this something that is systemic throughout that side of your industry that we just can’t get the signatures and get these projects started?
Jeff Feeler
No. I don’t think it’s the latter. We’ve been winning a number of awards. Things are turning on now. What we’re saying is, we’re not making up for some shortfall in the first half of the year, but the second half of the year appears to be strong. And we’re not seeing deferrals or delays at this point or customers not willing to sign contracts.
Tyson Bauer
Okay. The – that would imply some improvement should we not expect that the Base Business is strong and the Event Business is picking up. What are you looking as your margin level, especially, in treatment and disposal as we go forward? And should we not be getting some competitive advantage with that rail situation utilizing that versus the more expensive trucking that’s going on right now?
Eric Gerratt
So yes, I think, from a margin perspective, I think that the Event Business, typically, when we take advantage, the leverage comes in at a higher margin profile. And so as that comes in, we would expect that improvement. But I think, from a margin perspective, if you look at just Environmental Services segment, the margin was actually pretty good and pretty strong this quarter. And so I think we expect for the bulk of the year for that to continue.
Tyson Bauer
Okay. And are you fully utilizing your rail fleet?
Simon Bell
Well, on the rail fleet, yes, I mean, we certainly initially mentioned about whether the trucking versus the rail, I mean, that equation really depends on a lot of factors, distance, how close the rail is to the customer, has multiple factors. And the rail companies are pretty smart. They’re looking to see what the transportation – differences between the transportation office and rail options. But I’d say this, we have a very strong rail infrastructure, I would say, most of the strongest in the industry, and certainly, something we believe is going to help us leverage and help us win future projects.
We refer to it as the surge capacity and, although stable at this one of our facilities that is limited in production, most of our facilities are going to ramp up to a higher level pretty quickly. And rail can, certainly, help you deliver those volumes. So certainly, we see it as a tool moving forward.
Steve Welling
To clarify one thing. The, yes, trucking rates are up in certain cases. But we’re able to pass the majority of that along to the customers on these event projects. We’re not absorbing increased transportation costs. It’s not being passed along directly.
Tyson Bauer
But It is not so much the rate as it is the availability and capacity of the trucking to get the volumes moved, correct?
Steve Welling
Correct.
Tyson Bauer
All right, thank you.
Steve Welling
Wait. I’ll just add, Tyson. I know you’re jumping off. But on that, that is going to be an industry-wide situation. And what I will say is, I think Simon was being a little humble with his responses. Our logistic and transportation network has actually given us a competitive advantage to be able to drive – keep volumes going to our facilities despite some of the trucking challenges that we’re having. So I think that puts us in a better position than most.
Operator
The next question comes from Tyler Brown with Raymond James. Please go ahead.
Tyler Brown
Good morning, guys.
Jeff Feeler
Hey, Tyler.
Tyler Brown
All right. You can hear me. Hey, I just wanted to go back to the rail commentary really quickly. So are the rails throttling you back or is it the cycle time issue, just poor rail service? I mean, we’ve already seen Union Pacific put in really big peak surcharges. They’re actually turning volume away. CSX has completely redesigned their network. I’m just basically trying to understand how much of a factor the rails are from a – again, from a capacity perspective and their willingness to take on that traffic?
Simon Bell
Yes, Tyler, this is Simon. It’s a good question. The issues we’re seeing are not necessarily with the rail companies themselves. It’s the acceptability of the equipment. It’s getting the gondolas, getting the intermodals. When you have certain projects delayed, there tends to be everything happens at once. You wish you could spread this business out over a largest, but because of the way the first half materialized, we’re having to ramp up, acquire more railcars, acquire more intermodals. And we’re competing with a lot of other people for that same equipment.
Tyler Brown
Right. So when I think about your traffic mix are you mostly gondola or do you – are you intermodal box? What’s the mix of that traffic? I know the intermodal boxes are extremely tight right now. So any thoughts on the mix would be helpful?
Simon Bell
I would answer it this way. I don’t have the specific percentages. But I can tell you that we own 234 – actually 233 gondolas. We maintain a large fleet. Intermodals are something we tend to rent. But as far as – but certainly, intermodals are very important part of our business as is the gondolas. So really – it really depends on the project, is it directly accessed by rail, do they have to move it at least in part by truck.
Steve Welling
That would vary from quarter-to-quarter depending on the events that we win.
Tyler Brown
Right. Okay. Okay. Very helpful. And then, Eric, just any guidance on SG&A. I think you had been talking about incentive comp up. I’m just curious, are you accruing 100% on incentive comp, are you over? Any thoughts there.
Eric Gerratt
Yes. So no, we’re not at 100% at this point. And we expect that we’re going to gain ground for the rest of the year. So I think our guidance for SG&A was around $90 million, $91 million for the year. We’re trending below that at this point. But I think in the third and the fourth quarter, we’ll pick up some steam on that. And I still think we’ll be in that high 80s to $90 million for the year.
Tyler Brown
High 80s to $90 million. Okay. Thoughts on free cash?
Eric Gerratt
So free cash, we were about a little over $30 million for the first six months. Our guidance was $56 million to $60 million. I think the guidance range is still about right. That being said, I think we’re going to, as we mentioned, trend towards the high end of our CapEx range. So as we trend up there, I think we’ll from a free cash flow perspective trend down closer to the lower end of that $56 million to $60 million range.
Tyler Brown
Okay. That’s helpful. And then maybe my last one here. So Jeff, I want to rewind the tape just a bit and go back to Q4 2014, so eons ago, but you kind of gave original 2015 guidance, if I recall, my notes are correct, $137 million to $143 million of EBITDA. Now I get it, I think Allstate was in there. Maybe that was a couple million dollars of EBITDA. But the guidance was predicated on, basically, the same SG&A profile. You have effectively the same assets, again, excluding Allstate. The industrial economy oil prices were high. Industrial production was printing roughly the same type of growth rates. Should we kind of be thinking about that type of number kind of going into next year? I know I don’t want to put kind of 2019 guidance around it, but is it crazy to kind of think about that as a framework?
Jeff Feeler
Yes. There’s been a lot of variables that have happened over the last three years. So it’s kind of hard to put that all into a singular answer. How I would characterize next year is, we’re seeing great business fundamentals right now. We’re seeing good trends in the market. We’re seeing – even though there’s been a lot of focus on the Event Business and focus on us lowering kind of our overall expectation, it still is healthy. Our teams are busy.
We’re seeing opportunities that are going to benefit out of years as well. Many of those have not even started shipping yet. So as I look to next year, I’m seeing a growth year on top of what we’re delivering this year. Well, I get up to $137 million, I’m not prepared to make comments on what 2019 is going to look like. So I am seeing an opportunity for growth.
Tyler Brown
Okay, all right. Well, I appreciate the time guys.
Jeff Feeler
All right. Thanks, Tyler.
Operator
[Operator Instructions] Showing no further questions. This concludes our question-and-answer session. I would like to turn the conference back over to Jeff Feeler for any closing remarks.
Jeff Feeler
I want to thank those participating in today’s conference call, and we look forward to updating you on our Q3 results in late October, early November.
Operator
The conference is now concluded. Thank you for attending today’s presentation. You may now disconnect.
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