ELGIN, Ill., Oct. 19, 2011 (GLOBE NEWSWIRE) -- Heritage-Crystal Clean, Inc. (Nasdaq:HCCI), a leading provider of parts cleaning and hazardous and non-hazardous waste services to small and mid-sized customers, today announced results for the third quarter of fiscal year 2011, which ended September 10, 2011.
Third quarter highlights include:
- Sales increased 39.3%, to $37.2 million, compared to $26.7 million in the third quarter of fiscal 2010. For the first three quarters of fiscal 2011, sales increased 28.7% to $98.0 million, compared to $76.1 million in the first three quarters of fiscal 2010.
- Average sales per working day was approximately $640,000, compared to $460,000 in the third quarter of fiscal 2010 and compared to $540,000 in the second quarter of fiscal 2011.
- Basic EPS was $0.04 in the third quarter of fiscal 2011 compared to $0.05 in the third quarter of fiscal 2010.
- Our Environmental Services (ES) segment includes parts cleaning, containerized waste, and vacuum services. During the third quarter, ES sales increased $3.7 million, or 15.6% compared to the third quarter of 2010. During the first three quarters of fiscal 2011, ES sales increased $10.6 million, or 15.0% when compared to the first three quarters of fiscal 2010.
- Same-branch sales for our ES segment increased 13.7% for the quarter, measured for the 62 branches that were in operation throughout both the third quarters of 2011 and 2010. For the first three quarters of fiscal 2011, ES same-branch sales increased 13.9%, measured for the 62 branches that were in operation throughout the first three quarters of both 2011 and 2010.
- Our Oil Business (OB) segment includes used oil collection and our re-refining activities. During the third quarter, OB sales increased $6.8 million, or 239%, compared to the third quarter of fiscal 2010, reflecting initial sales of intermediate products and by-products from our used-oil re-refinery in Indianapolis. During the first three quarters of fiscal 2011, OB sales increased $11.3 million, or 213%.
Mr. Joseph Chalhoub, President and Chief Executive Officer of Heritage-Crystal Clean, Inc. commented, "We are pleased with our third quarter. We had a successful start-up of the front section of our re-refinery, which enabled us to begin testing and to produce some intermediate products which were sold during the quarter. This resulted in a significant increase in our revenue. Construction is continuing on the remainder of the plant, which is expected to be complete near the end of 2011. Upon completion, we will be able to produce significantly higher-value lubricating base oil."
Chalhoub added: "Our Oil Business was a major contributor to our quarterly results. Revenue from this segment more than tripled from the year-ago quarter, and the segment contributed to profit before corporate SG&A, versus a loss in the year-ago quarter. Our Environmental Services segment also showed good top-line growth, but margins declined as we continued to experience higher costs for energy-related materials such as solvent and vehicle fuel compared to the prior year - and we did not enjoy the benefit of inventory gains that we experienced during the first and second quarter of this year. We are currently investigating ways to restore our ES margins to more normal levels."
Mr. Greg Ray, Chief Financial Officer and Vice President of Business Management, stated, "During the quarter, we continued our rapid expansion of our used oil collection fleet, and by the end of the quarter we were operating 72 used oil collection trucks, compared to 30 trucks at the same time last year. Because we have made major investments over the past decade to develop our infrastructure of 67 branch locations, and have put in place an excellent team to run these branches, we feel that we can continue to leverage these assets to expand our presence in the used oil collection business. Our recent progress in this respect is encouraging."
Ray added: "During the third quarter, we made the second draw of $10.0 million on our bank credit facility to fund the re-refinery construction costs, and at the end of the third quarter we had approximately $12.7 million of cash on hand."
Safe Harbor Statement
All references to the "Company," "we," "our," and "us" refer to Heritage-Crystal Clean, Inc., and its subsidiary.
This release contains forward-looking statements that are based upon current management expectations. Generally, the words "aim," "anticipate," "believe," "could," "estimate," "expect," "intend," "may," "plan," "project," "should," "will be," "will continue," "will likely result," "would" and similar expressions identify forward-looking statements. These forward-looking statements involve known and unknown risks, uncertainties and other important factors that could cause our actual results, performance or achievements or industry results to differ materially from any future results, performance or achievements expressed or implied by these forward-looking statements. These risks, uncertainties and other important factors include, among others: our ability to complete our used oil re-refinery as anticipated; the used oil re-refinery does not perform as anticipated; we are unable to generate sufficient funds to build and support our used oil re-refinery; we do not realize the anticipated benefits from our acquisition of the Warrior Group; our ability to comply with the extensive environmental, health and safety and employment laws and regulations that our Company is subject to; changes in environmental laws that affect our business model; competition; claims relating to our handling of hazardous substances; the limited demand for our used solvent; our dependency on key employees; our ability to effectively manage our extended network of branch locations; warranty expense and liability claims; personal injury litigation; dependency of suppliers; economic conditions including the recent recession and financial crisis, and downturns in the business cycles of automotive repair shops, industrial manufacturing business and small businesses in general; increased solvent, fuel and energy costs and volatility in the price of crude oil; the control of The Heritage Group over our Company; and the risks identified in our Annual Report on Form 10-K filed with the SEC on March 4, 2011 and subsequent filings with the SEC. Given these uncertainties, you are cautioned not to place undue reliance on these forward-looking statements. We assume no obligation to update or revise them or provide reasons why actual results may differ. The information in this release should be read in light of such risks and in conjunction with the consolidated financial statements and the notes thereto included elsewhere in this release.
About Heritage-Crystal Clean, Inc.
Heritage-Crystal Clean, Inc. provides parts cleaning and hazardous and non-hazardous waste services to small and mid-sized customers in both the manufacturing and automotive service sectors. Our service programs include parts cleaning, containerized waste management, used oil collection, and vacuum truck services. These services help our customers manage their used chemicals and liquid and solid wastes, while also helping to minimize their regulatory burdens. Our customers include businesses involved in vehicle maintenance operations, such as car dealerships, automotive repair shops, and trucking firms, as well as small manufacturers, such as metal product fabricators and printers. Heritage-Crystal Clean, Inc. is headquartered in Elgin, Illinois, and operates through 67 branches serving over 44,000 customer locations.
The Heritage-Crystal Clean, Inc. logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=4974
Conference Call
The Company will host a conference call on Thursday October 20, 2011 at 9:30 AM Central Time, during which management will make a brief presentation focusing on the Company's operations and financial results. Interested parties can listen to the audio webcast available through our company website, http://www.crystal-clean.com/investor/FinancialReleases.asp, and can participate in the call by dialing (720) 545-0014.
The Company uses its website to make available information to investors and the public at www.crystal-clean.com.
| Heritage-Crystal Clean, Inc. | ||
| Consolidated Balance Sheets | ||
| (In Thousands, Except Share and Par Value Amounts) | ||
| (Unaudited) | ||
|
September 10, 2011 |
January 1, 2011 | |
| ASSETS | ||
| Current Assets: | ||
| Cash and cash equivalents | $ 12,703 | $ 21,757 |
| Accounts receivable - net | 17,162 | 13,478 |
| Income tax receivables | 866 | 27 |
| Inventory - net | 18,167 | 11,647 |
| Deferred income taxes | 1,104 | 731 |
| Other current assets | 2,599 | 2,154 |
| Total Current Assets | 52,601 | 49,794 |
| Property, plant and equipment - net | 49,976 | 22,049 |
| Equipment at customers - net | 16,075 | 15,002 |
| Goodwill | 1,137 | — |
| Software and intangible assets - net | 3,530 | 2,727 |
| Total Assets | $ 123,319 | $ 89,572 |
| LIABILITIES AND STOCKHOLDERS' EQUITY | ||
| Current Liabilities: | ||
| Current maturities of long-term debt | $ 668 | $ — |
| Accounts payable | 14,810 | 10,058 |
| Accrued salaries, wages, and benefits | 2,919 | 2,242 |
| Taxes payable | 2,852 | 913 |
| Other accrued expenses | 1,451 | 1,139 |
| Total Current Liabilities | 22,700 | 14,352 |
| Long-term debt, less current maturities | 1,463 | — |
| Note payable | 20,000 | — |
| Deferred income taxes | 2,177 | 1,676 |
| Total Liabilities | $ 46,340 | $ 16,028 |
| STOCKHOLDERS' EQUITY: | ||
|
Common stock - 18,000,000 shares authorized at $0.01 par value, 14,326,052 and 14,220,321 shares issued and outstanding at September 10, 2011 and January 1, 2011, respectively |
143 | 142 |
| Additional paid-in capital | 71,301 | 69,532 |
| Retained earnings | 5,535 | 3,870 |
| Total Stockholders' Equity | 76,979 | 73,544 |
| Total Liabilities and Stockholders' Equity | $ 123,319 | $ 89,572 |
| Heritage-Crystal Clean, Inc. | |||||
| Consolidated Statements of Income | |||||
| (In Thousands, Except per Share Amounts) | |||||
| (Unaudited) | |||||
| Third Quarter Ended, | First Three Quarters Ended, | ||||
|
September 10, 2011 |
September 11, 2010 |
September 10, 2011 |
September 11, 2010 |
||
| Sales | $ 37,244 | $ 26,736 | $ 97,951 | $ 76,079 | |
| Operating expenses -- | |||||
| Operating costs | 30,197 | 20,397 | 77,438 | 56,337 | |
| Selling, general and administrative | 4,886 | 4,000 | 14,242 | 12,502 | |
| expenses | |||||
| Depreciation and amortization | 1,208 | 1,076 | 3,533 | 3,160 | |
| Loss (gain) on the disposal of fixed assets | 1 | — | (11) | 39 | |
| Operating income | 952 | 1,263 | 2,749 | 4,041 | |
| Interest expense - net | 9 | — | 23 | — | |
| Income before income taxes | 943 | 1,263 | 2,726 | 4,041 | |
| Provision for income taxes | 335 | 536 | 1,061 | 1,719 | |
| Net income | $ 608 | $ 727 | $ 1,665 | $ 2,322 | |
| Net income per share: basic | $ 0.04 | * | $ 0.05 | $ 0.12 | $ 0.19 |
| Net income per share: diluted | $ 0.04 | $ 0.05 | $ 0.11 | $ 0.19 | |
| Number of weighted average shares outstanding: basic | 14,325 | 14,197 | 14,293 | 11,945 | |
| Number of weighted average shares outstanding: diluted | 14,822 | 14,245 | 14,674 | 11,998 | |
| *Includes impact of the correction of an error identified in the third quarter of 2011 that related to the second quarter of 2011, which increased third quarter net income by $109. Basic and diluted EPS without the adjustment would have been $0.03. | |||||
| Heritage-Crystal Clean, Inc. | ||||
| Reconciliation of Operating Segment Information | ||||
| (In Thousands) | ||||
| (Unaudited) | ||||
|
Third Quarter Ended, September 10, 2011 |
||||
| Environmental Services | Oil Business |
Corporate and Eliminations |
Consolidated | |
| Sales | $ 27,629 | $ 9,615 | $ — | $ 37,244 |
| Operating expenses -- | ||||
| Operating costs | 22,145^ | 8,052 | — | 30,197 |
| Operating depreciation and amortization | 977 | 90 | — | 1,067 |
|
Profit before corporate selling, general and administrative expenses |
4,507 | 1,473 | 5,980 | |
| Selling, general and administrative expenses | — | — | 4,886 | 4,886 |
|
Depreciation and amortization from selling, general and administrative expenses |
— | — | 141 | 141 |
|
Total selling, general and administrative expenses |
5,027 | 5,027 | ||
| Other expense (income) | — | — | 1 | 1 |
| Operating income | 952 | |||
| Interest expense - net | — | — | 9 | 9 |
| Income before income taxes | 943 | |||
| Provision for income taxes | — | — | 335 | 335 |
| Net income | $ 608 | |||
| ^Includes impact of the correction of an error identified in the third quarter of fiscal 2011 that related to the second quarter of fiscal 2011. | ||||
|
Third Quarter Ended, September 11, 2010 |
||||
|
Environmental Services |
Oil Business |
Corporate and Eliminations |
Consolidated | |
| Sales | $ 23,897 | $ 2,839 | $ — | $ 26,736 |
| Operating expenses -- | ||||
| Operating costs | 17,243 | 3,154 | — | 20,397 |
| Operating depreciation and amortization | 915 | 10 | — | 925 |
|
Profit (loss) before corporate selling, general and administrative expenses |
5,739 | (325) | 5,414 | |
| Selling, general and administrative expenses | — | — | 4,000 | 4,000 |
|
Depreciation and amortization from selling, general and administrative expenses |
— | — | 151 | 151 |
|
Total selling, general and administrative expenses |
4,151 | 4,151 | ||
| Other expense (income) | — | — | — | — |
| Operating income | 1,263 | |||
| Interest expense - net | — | — | — | — |
| Income before income taxes | 1,263 | |||
| Provision for income taxes | — | — | 536 | 536 |
| Net income | $ 727 | |||
|
First Three Quarters Ended, September 10, 2011 |
||||
|
Environmental Services |
Oil Business |
Corporate and Eliminations |
Consolidated | |
| Sales | $ 81,382 | $ 16,569 | $ — | $ 97,951 |
| Operating expenses -- | ||||
| Operating costs | 61,342 | 16,096 | — | 77,438 |
| Operating depreciation and amortization | 2,871 | 217 | — | 3,088 |
|
Profit before corporate selling, general and administrative expenses |
17,169 | 256 | 17,425 | |
| Selling, general and administrative expenses | — | — | 14,242 | 14,242 |
|
Depreciation and amortization from selling, general and administrative expenses |
— | — | 445 | 445 |
| Total selling, general and administrative expenses | 14,687 | 14,687 | ||
| Other expense (income) | — | — | (11) | (11) |
| Operating income | 2,749 | |||
| Interest expense - net | — | — | 23 | 23 |
| Income before income taxes | 2,726 | |||
| Provision for income taxes | — | — | 1,061 | 1,061 |
| Net income | $ 1,665 | |||
|
First Three Quarters Ended, September 11, 2010 |
||||
|
Environmental Services |
Oil Business |
Corporate and Eliminations |
Consolidated | |
| Sales | $ 70,793 | $ 5,286 | $ — | $ 76,079 |
| Operating expenses -- | ||||
| Operating costs | 49,973 | 6,364 | 56,337 | |
| Operating depreciation and amortization | 2,685 | 27 | 2,712 | |
|
Profit (loss) before corporate selling, general and administrative expenses |
18,135 | (1,105) | — | 17,030 |
| Selling, general and administrative expenses | 12,502 | 12,502 | ||
|
Depreciation and amortization from selling, general and administrative expenses |
448 | 448 | ||
|
Total selling, general and administrative expenses |
12,950 | 12,950 | ||
| Other expense (income) | 39 | 39 | ||
| Operating income | 4,041 | |||
| Interest expense - net | — | |||
| Income before income taxes | 4,041 | |||
| Provision for income taxes | 1,719 | 1,719 | ||
| Net income | $ 2,322 | |||
Total assets by segment as of September 10, 2011 and January 1, 2011 were as follows (in thousands):
|
September 10, 2011 |
January 1, 2011 | |
| Total Assets: | ||
| Environmental Services | $ 30,815 | $ 26,498 |
| Oil Business | 48,717 | 13,261 |
| Unallocated Corporate Assets | 43,787 | 49,813 |
| Total | $ 123,319 | $ 89,572 |
Segment assets for the Environmental Services and Oil Business segments consist of property, plant, and equipment, intangible assets, and inventories allocated to each segment. Oil Business assets include the preliminary fair values of assets acquired from the Warrior Group, including goodwill. Assets for the Corporate unallocated amounts consist of property, plant, and equipment used at the Corporate headquarters, as well as cash, accounts receivable, and tax assets.
| Heritage-Crystal Clean, Inc. | ||||||||
|
Reconciliation of our Net Income Determined in Accordance with U.S. GAAP to Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA) |
||||||||
| (Unaudited) | ||||||||
| Third Quarter Ended, | First Three Quarters Ended, | |||||||
| (Dollars in Thousands) | (Dollars in Thousands) | |||||||
|
September 10, 2011 |
September 11, 2010 |
September 10, 2011 |
September 11, 2010 |
|||||
| Net income | $ 608 | $ 727 | $ 1,665 | $ 2,322 | ||||
| Interest expense - net | 9 | — | 23 | — | ||||
| Provision for income taxes | 335 | 536 | 1,061 | 1,719 | ||||
| Depreciation and amortization | 1,208 | 1,076 | 3,533 | 3,160 | ||||
| EBITDA(a) | $ 2,160 | $ 2,339 | $ 6,282 | $ 7,201 | ||||
| (a) | ||||||||
| EBITDA represents net income before provision for income taxes, interest income, interest expense, depreciation and amortization. We have presented EBITDA because we consider it an important supplemental measure of our performance and believe it is frequently used by analysts, investors, our lenders and other interested parties in the evaluation of companies in our industry. Management uses EBITDA as a measurement tool for evaluating our actual operating performance compared to budget and prior periods. Other companies in our industry may calculate EBITDA differently than we do. EBITDA is not a measure of performance under U.S. GAAP and should not be considered as a substitute for net income prepared in accordance with U.S. GAAP. EBITDA has limitations as an analytical tool, and you should not consider it in isolation or as a substitute for analysis of our results as reported under U.S. GAAP. Some of these limitations are: | ||||||||
| EBITDA does not reflect our cash expenditures, or future requirements, for capital expenditures or contractual commitments; | ||||||||
| EBITDA does not reflect interest expense or the cash requirements necessary to service interest or principal payments on our debt; | ||||||||
| EBITDA does not reflect tax expense or the cash requirements necessary to pay for tax obligations; and | ||||||||
| Although depreciation and amortization are non-cash charges, the assets being depreciated and amortized will often have to be replaced in the future, and EBITDA does not reflect any cash requirements for such replacements. | ||||||||
| We compensate for these limitations by relying primarily on our U.S. GAAP results and using EBITDA only as a supplement. | ||||||||