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Heritage-Crystal Clean, Inc. Announces 2008 Fourth Quarter and Fiscal Year Financial Results
Related Quotes
| Symbol | Price | Change |
|---|---|---|
| HCCI | 10.08 | 0.00 |
ELGIN, Ill., March 25, 2009 (GLOBE NEWSWIRE) -- Heritage-Crystal Clean, Inc. (NasdaqGM:HCCI - News), a leading provider of parts cleaning, hazardous and non-hazardous waste services to small and mid-sized customers, today announced results for the fourth quarter and fiscal year 2008, which ended January 3, 2009.
Fourth quarter highlights include:
* Sales increased 19%, to $34.7 million, compared to $29.2 million in
the fourth quarter of fiscal 2007. The fourth quarter 2008 had an
extra week of operations (as fiscal 2008 is a 53 week year) and
this accounted for 4.7% of the growth.
* Same-branch sales growth was 17%, measured for the 47 branches that
were in operation throughout both the fourth fiscal quarters of
2008 and 2007. At the end of the quarter we operated 54 branches,
compared to 48 at the end of the fourth quarter of 2007.
* Average sales per working day increased to approximately $430,000
compared to $380,000 in the fourth quarter of fiscal 2007.
* Pro forma EPS (basic and diluted) decreased to $(0.10) compared to
$0.02[1] in the fourth quarter of fiscal 2007.
-- The decrease in basic and diluted pro forma EPS in the fourth
quarter of fiscal 2008 compared to the fourth quarter of fiscal
2007 was due to an 88% increase in total cost of sales, from
$7.6 million in the fourth quarter of fiscal 2007 to $14.3
million in the fourth quarter of fiscal 2008. This increase was
primarily due to the sharp decrease in the cost of crude oil and
related commodities during the fourth quarter which caused a
decline in our solvent and oil inventory values. The total cost
of sales includes a $2.8 million non-cash inventory impairment
charge on that portion of the Company's solvent and oil
inventory that is held for sale, reflecting the lower market
value of such inventory. Total cost of sales also includes $1.7
million of expense to reflect the lower value of the solvent
inventory held for use in the Company's service programs.
Had we not incurred the above two expenses, our fourth quarter
2008 pro forma net income would have been $1.6 million and fourth
quarter basic and diluted pro forma EPS would have been $0.15.
Fiscal year 2008 highlights include:
* Sales for fiscal 2008 increased 21%, to $108.1 million, compared to
$89.7 million in fiscal 2007. The 53rd week of sales in 2008
represented 1.5% of the growth for the year.
* Same-branch sales growth was 18%, measured for the 47 branches
that were in operation throughout both fiscal 2008 and fiscal 2007.
At the end of the quarter we operated 54 branches, compared to 48
at the end of the fourth quarter of 2007.
* Average sales per working day increased to approximately $420,000,
compared to $360,000 in fiscal 2007.
* Pro forma EPS (basic and diluted) for fiscal 2008 decreased to
$(0.17) compared to $0.34[2] in fiscal 2007.
-- The decrease in basic and diluted pro forma EPS in fiscal 2008
compared to fiscal 2007 was in part due to higher energy costs
incurred during 2008, as rising crude oil prices led to higher
costs for energy-related materials such as solvent and vehicle
fuel. During the first three quarters of 2008, these higher
energy-related costs were somewhat offset by higher margins on
our sales of reuse solvent, as we sold this product at prices
that significantly exceeded the carried value of our inventory.
The sharp decline in crude oil prices towards the end of 2008
led us to book significant charges to revalue our solvent and
oil inventory at the lower of cost or market. One other factor
in our reduced pro forma EPS was the cost of stock options
issued at the time of our IPO.
Mr. Joseph Chalhoub, President and Chief Executive Officer of Heritage-Crystal Clean, Inc., commented, ``We were satisfied with the 19% year-over-year sales growth delivered in the latest quarter. Even after eliminating the positive impact of the 53rd week, revenue was still up 14% compared to the same quarter in 2007. However, because some of our services (such as containerized waste disposal) may lag trends in the general economy, we don't believe that these results yet reflect the complete impact of the U.S. recession on our business, and our sales growth will likely fall to the single digits in coming quarters. We are pleased that we were essentially debt free at the end of the year, and in the current economic environment, this provides HCCI with substantial flexibility for our business.''
Mr. Greg Ray, CFO and VP of Business Management, stated, ``For the fourth quarter of 2008, the sharp decline in crude oil and commodity prices accounted for the decrease in profits compared to the same quarter of 2007. During the latest quarter, our pre-tax loss was $1.7 million, and this included $4.5 million of inventory impairment and reduced solvent value; excluding these charges we would have recorded a pre-tax profit for the quarter of $2.8 million. This may be compared to the fourth quarter of 2007, when we had pre-tax income of $1.2 million after recording an expense of $0.9 million for an independent investigation. Due to time lags inherent in our supply chain, we may need to record further non-cash charges to adjust solvent inventory values in the first half of 2009. We expect that if crude oil prices remain at current levels, the reduced costs we are experiencing for solvent and fuel should eventually enable us to regain profit margins in our business.''
Safe Harbor Statement
All references to the ``Company,'' ``we,'' ``our,'' and ``us'' refer to Heritage-Crystal Clean, Inc., and its subsidiaries.
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 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 current 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 filings with the Securities and Exchange Commission, including our Registration Statement on Form S-1 and our other SEC filings. 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, 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 more than 50 branches serving over 36,000 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 March 26, 2009 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/, and can participate in the call by dialing (719) 325-4841.
[1] Pro forma EPS is calculated as if we had been a 'C' corporation and reflects a retroactive adjustment as of the beginning of 2007 of weighted average shares outstanding to reflect the reorganization of the company that occurred in connection with our initial public offering.
[2] Pro forma EPS is calculated as if we had been a 'C' corporation and reflects a retroactive adjustment as of the beginning of 2007 of weighted average shares outstanding to reflect the reorganization of the company that occurred in connection with our initial public offering.
Financial Statements
Heritage-Crystal Clean, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share and Par Value Amounts)
(Unaudited)
Jan. 3, Dec. 29,
2009 2007
-------- --------
ASSETS
Current Assets:
Cash and cash equivalents $ 327 $ 479
Receivables:
Trade, net of allowance for doubtful
accounts of $616 and $1,130 at
January 3, 2009 and December 29, 2007,
respectively 14,040 12,959
Trade - affiliates 331 200
Other 245 287
-------- --------
Total receivables 14,616 13,446
Income tax refund 1,381 --
Inventory, net 10,609 10,447
Deferred tax assets 942 --
Prepaid and other current assets 1,386 1,208
-------- --------
Total Current Assets 29,261 25,580
Property, plant and equipment:
Leasehold improvements 758 692
In-service equipment 24,634 21,218
Machinery, vehicles, and equipment 11,492 10,613
Construction in progress 427 66
-------- --------
37,311 32,589
Less: accumulated depreciation (16,433) (13,169)
-------- --------
Net property, plant and equipment 20,878 19,420
Deferred offering costs -- 1,276
Software and intangible assets, net of
accumulated amortization of $1,524 and
$1,071 at January 3, 2009 and
December 29, 2007, respectively 1,877 1,708
-------- --------
Total Assets $ 52,016 $ 47,984
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 5,227 $ 7,126
Accounts payable - affiliates 534 132
Accrued salaries, wages, and benefits 1,920 1,560
Taxes payable 978 983
Accrued workers compensation 526 416
Other accrued expenses 876 753
-------- --------
Total Current Liabilities 10,061 10,970
Note payable - bank 20 22,045
Deferred tax liabilities 379 --
-------- --------
Total Liabilities 10,460 33,015
Commitments and contingencies
Redeemable capital units -- 2,261
STOCKHOLDERS' EQUITY:
Preferred members' capital -- 14,704
Common members' capital -- 368
Common stock - 15,000,000 shares authorized
at $0.01 par value, 10,680,609 shares issued
and outstanding at January 3, 2009 107 --
Additional paid-in capital 42,643 --
Accumulated deficit (1,194) (2,364)
-------- --------
Total Stockholders' Equity $ 41,556 $ 12,708
-------- --------
Total Liabilities and Stockholders' Equity $ 52,016 $ 47,984
======== ========
Heritage-Crystal Clean, Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Fourth Quarter For the Fiscal
Ended, Years Ended,
Jan. 3, Dec. 29, Jan. 3, Dec. 29,
2009 2007 2009 2007
-------- -------- -------- --------
Sales $ 34,661 $ 29,193 $108,143 $ 89,734
Cost of sales 11,494 7,559 29,430 22,920
Cost of sales - inventory
impairment 2,778 -- 2,778 2,182
-------- -------- -------- --------
Gross profit 20,389 21,634 75,935 64,632
-------- -------- -------- --------
Operating costs 16,857 14,303 53,497 43,573
Selling, general, and
administrative expenses 5,179 5,702 20,220 15,583
Proceeds from contract
termination -- -- -- (3,000)
-------- -------- -------- --------
Operating income (loss) (1,647) 1,629 2,218 8,476
Interest expense - net 13 452 408 1,408
-------- -------- -------- --------
Income (loss) before income
taxes (1,660) 1,177 1,810 7,068
Provision (benefit) for income
taxes (588) -- 2,618 --
-------- -------- -------- --------
Net income (loss) (1,072) 1,177 (808) 7,068
Preferred return -- 520 339 1,691
-------- -------- -------- --------
Net income (loss) available to
common stockholders $ (1,072) $ 657 $ (1,147) $ 5,377
======== ======== ======== ========
Net income (loss) per share
available to common
stockholders: basic $ (0.10) $ 0.09 $ (0.11) $ 0.75
Net income (loss) per share
available to common
stockholders: diluted $ (0.10) $ 0.09 $ (0.11) $ 0.74
======== ======== ======== ========
Number of weighted average
common shares outstanding:
basic 10,679 7,182 9,985 7,178
Number of weighted average
common shares outstanding:
diluted 10,679 7,242 9,985 7,229
======== ======== ======== ========
Pro forma data:
Net income (loss) $ (1,072) $ 1,177 $ (808) $ 7,068
Pro forma provision for income
taxes -- 483 497 2,898
Return on preferred and
mandatorily redeemable
capital units -- 523 372 1,730
-------- -------- -------- --------
Pro forma net income (loss)
available to common
stockholders $ (1,072) $ 171 $ (1,677) $ 2,440
======== ======== ======== ========
Pro forma net income (loss)
per share: basic $ (0.10) $ 0.02 $ (0.17) $ 0.34
Pro forma net income (loss)
per share: diluted $ (0.10) $ 0.02 $ (0.17) $ 0.34
======== ======== ======== ========
Heritage-Crystal Clean, Inc.
Reconciliation of our Net Income (Loss) Determined in Accordance to GAAP
to Earnings Before Interest, Taxes, Depreciation & Amortization (EBITDA)
(Unaudited)
Fourth Quarter For the Fiscal Years
Ended, Ended,
(Dollars in thousands) (Dollars in thousands)
Jan. 3, Dec. 29, Jan. 3, Dec. 29,
2009 2007 2009 2007
-------- -------- -------- --------
Net income (loss) $ (1,072) $ 1,177(a) $ (808) $ 7,068(a)
Interest expense -
net 13 452 408 1,408
Provision (benefit)
for income taxes (588) -- 2,618 --
Depreciation and
amortization 1,189 956 3,630 2,874
-------- -------- -------- --------
EBITDA(b) $ (458) $ 2,585 $ 5,848 $ 11,350
======== ======== ======== ========
(a) During fiscal year 2007, as a limited liability company,
we were not subject to federal or state corporate income
taxes. Therefore, net income has not given effect to taxes.
(b) EBITDA represents net income before income tax expense,
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
GAAP and should not be considered as a substitute for net
income prepared in accordance with 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 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 GAAP results and using EBITDA only as a supplement.
Heritage-Crystal Clean, Inc.
Reconciliation of our Net Income (Loss) Determined in Accordance to
GAAP to Adjusted Net Income
(In Thousands, Except Per Share Amounts)
(Unaudited)
Fourth Quarter Ended,
Non-GAAP
Non-GAAP Adjusted -
Jan. 3, 2009 Adjustments Jan. 3, 2009
------------ ------------ ------------
Sales $ 34,661 $ -- $ 34,661
Cost of sales 11,494 (1,678) 9,816
Cost of sales - inventory
impairment 2,778 (2,778) --
------------ ------------ ------------
Gross profit 20,389 4,456 24,845
------------ ------------ ------------
Operating costs 16,857 -- 16,857
Selling, general, and
administrative expenses 5,179 -- 5,179
Proceeds from contract
termination -- -- --
------------ ------------ ------------
Operating income (loss) (1,647) 4,456 2,809
Interest expense - net 13 0 13
------------ ------------ ------------
Income (loss) before income
taxes (1,660) 4,456 2,796
Provision (benefit) for
income taxes (588) 1,776 1,188
------------ ------------ ------------
Net income (loss) (1,072) 2,680 1,608
Preferred return -- -- --
------------ ------------ ------------
Net income (loss) available
to common stockholders $ (1,072) $ 2,680 $ 1,608
============ ============ ============
Net income (loss) per share
available to common
stockholders: basic &
diluted $ (0.10) $ 0.25 $ 0.15
============ ============ ============
Number of weighted average
common shares outstanding:
basic 10,679 10,679 10,679
Number of weighted average
common shares outstanding:
diluted 10,679 10,820 10,820
============ ============ ============
Pro forma data:
Net income (loss) $ (1,072) $ 2,680 $ 1,608
Pro forma provision for
income taxes -- -- --
Return on preferred and
mandatorily redeemable
capital units -- -- --
------------ ------------ ------------
Pro forma net income (loss)
available to common
stockholders $ (1,072) $ 2,680 $ 1,608
============ ============ ============
Pro forma net income (loss)
per share: basic & diluted $ (0.10) $ 0.25 $ 0.15
============ ============ ============
Contact:
Heritage-Crystal Clean, Inc.
Greg Ray, Chief Financial Officer and VP Business Management
(847) 836-5670
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