Question-and-Answer Session
Operator
Yes, thank you. (Operator Instructions). Our first question will come from Rich Wesolowski with Sidoti.
Rich Wesolowski - Sidoti & Co.
Hey. Good morning, how are you guys?
Alan McKim
Good morning, Rich.
Rich Wesolowski - Sidoti & Co.
Jim could you just clarify the guidance, I guess I am having a tough time. If you look at 12% EBITDA growth from 2006 of $120 million, you get towards $134 million plus, and there's about $2 million to $3 million gap between, what that implies and what's implied by the $38 million to $39 million?
Jim Rutledge
No, I think Rich if you take it, it was a $119.9 million.
Rich Wesolowski - Sidoti & Co.
Right.
Jim Rutledge
Last year in 2006, so that's a little lower than what you have said. And then if you take our actual results for nine months and add the quarter guidance on the EBITDA, the low end and the high end, you come up with 11.6% rounded to 12%, and then you come up with almost 12.5%. So, we are right in that range of 12% to 13%. So, that's pretty much how it is calculated, is that what you come up with?
Rich Wesolowski - Sidoti & Co.
You know what, there is $2.2 million in the environmental liability in the first half is that included?
Jim Rutledge
I am sorry the $2.2 million environmental liability, yes, but also the $119.9 that you have for last year.
Rich Wesolowski - Sidoti & Co.
Includes those gains as well.
Jim Rutledge
Yes, it includes $9.6 million of the environmental credit so.
Rich Wesolowski - Sidoti & Co.
Okay.
Jim Rutledge
So, clearly we built on top of that.
Rich Wesolowski - Sidoti & Co.
Perfect, the incremental EBITDA margin in the 4Q guidance is about 60% versus what is a pretty strong run rate that I consider is about 30% that you posted in third quarter. Why would there be such a big jump there?
Jim Rutledge
Yeah, I think we were looking actually even in the third quarter, if you take the environmental out, I think it came out to about 35% incremental. And just looking at the strength of the business, what's coming through in the mix, we see a good potential for EBITDA on that revenue base. So, that's kind of where we see it coming out.
Rich Wesolowski - Sidoti & Co.
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