-----BEGIN PRIVACY-ENHANCED MESSAGE----- Proc-Type: 2001,MIC-CLEAR Originator-Name: webmaster@www.sec.gov Originator-Key-Asymmetric: MFgwCgYEVQgBAQICAf8DSgAwRwJAW2sNKK9AVtBzYZmr6aGjlWyK3XmZv3dTINen TWSM7vrzLADbmYQaionwg5sDW3P6oaM5D3tdezXMm7z1T+B+twIDAQAB MIC-Info: RSA-MD5,RSA, SSJ2qcfR4vCDaZ/QYsiFr6seGpHDhVDx2KgmWwMx0iTIuJXPiuOMvKDs7r10mUH9 yucj5JFHjH1u1opiwo18jg== 0001171843-10-000881.txt : 20100511 0001171843-10-000881.hdr.sgml : 20100511 20100511170038 ACCESSION NUMBER: 0001171843-10-000881 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 3 CONFORMED PERIOD OF REPORT: 20100327 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20100511 DATE AS OF CHANGE: 20100511 FILER: COMPANY DATA: COMPANY CONFORMED NAME: Heritage-Crystal Clean, Inc. CENTRAL INDEX KEY: 0001403431 STANDARD INDUSTRIAL CLASSIFICATION: SANITARY SERVICES [4950] IRS NUMBER: 260351454 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-33987 FILM NUMBER: 10821716 BUSINESS ADDRESS: STREET 1: 2175 POINT BOULEVARD STREET 2: SUITE 375 CITY: ELGIN STATE: IL ZIP: 60123 BUSINESS PHONE: 847-836-5670 MAIL ADDRESS: STREET 1: 2175 POINT BOULEVARD STREET 2: SUITE 375 CITY: ELGIN STATE: IL ZIP: 60123 8-K 1 f8k_051110.htm FORM 8-K

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549


FORM 8-K


CURRENT REPORT

Pursuant to Section 13 OR 15(d) of
The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported) May 4, 2010  


Heritage-Crystal Clean, Inc.
(Exact name of registrant as specified in its charter)


DELAWARE
 
001-33987
 
26-0351454
(State or other jurisdiction
of incorporation)
  (Commission File Number)   (IRS Employer Identification No.)


 
2175 Point Boulevard, Suite 375, Elgin, IL
 
60123
 
  (Address of principal executive offices)   (Zip Code)  

Registrant's telephone number, including area code:   (847) 836-5670



________________________________________________________________________________
(Former name or former address, if changed since last report)



Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
    [    ] Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
    [    ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
    [    ] Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
    [    ] Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 2.02. Results of Operations and Financial Condition.

On May 4, 2010 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference. On May 5, 2010, the Registrant conducted a conference call related to the earnings release. A copy of the script for the conference call is attached hereto as Exhibit 99.2 and is incorporated herein by reference.

Item 9.01. Financial Statements and Exhibits.

    Exhibit 99.1.       Press release dated May 4, 2010

    Exhibit 99.2.       Conference Call Script for 5/5/2010


SIGNATURE

    Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

    Heritage-Crystal Clean, Inc.
(Registrant)

May 11, 2010
(Date)
  /s/   GREGORY RAY
Gregory Ray
Chief Financial Officer, Vice President, Business Management and Secretary


  Exhibit Index
  99.1 Press release dated May 4, 2010
99.2 Conference Call Script for 5/5/2010






EX-99 2 exh_991.htm EXHIBIT 99.1

EXHIBIT 99.1

Heritage-Crystal Clean, Inc. Announces 2010 First Quarter Financial Results

ELGIN, Ill., May 4, 2010 (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 first fiscal quarter of 2010, which ended March 27, 2010.

First quarter highlights include:                                              

  • Sales increased 1% to $24.0 million, compared to $23.8 million in the first quarter of fiscal 2009.
  • Total branch count increased by 4 during the quarter, bringing the total to 62 branches, compared to 58 at the end of 2009.
  • Average sales per working day was approximately $400,000, compared to $395,000 in the first quarter of fiscal 2009.
  • Same-branch sales were basically flat, measured for the 58 branches that were in operation throughout both the first fiscal quarters of 2010 and 2009. 
  • Operating income rose to $1.1 million, compared to $0.2 million in the first quarter of fiscal 2009.
  • EPS (basic and diluted) increased to $0.06 compared to $0.01 in the first quarter of fiscal 2009.

Mr. Joseph Chalhoub, President and Chief Executive Officer of Heritage-Crystal Clean, Inc., commented, "We are very pleased to have posted a sales increase compared to the year-ago quarter. We believe that the continuing improvement in our average sales per working day -- from $380,000 in Q3 09 to $390,000 in Q4 09 and now to $400,000 in Q1 10 -- illustrates that our customers are gradually resuming their business activity and volumes are recovering. Within the first fiscal quarter of 2010, the sales trend was positive, with sales increases for each successive four-week accounting period. We look forward to a continuation of this recovery and believe that later in 2010 we can see a return to double-digit sales growth compared to the year-ago quarter."

Mr. Greg Ray, Chief Financial Officer and Vice President of Business Management, stated, "Our financial performance for the first quarter of 2010 was aided by the cost control measures we have implemented during the recession, our latest price increase (implemented in Q4 09), and the positive impact of higher solvent prices on inventory valuation in the first quarter of 2010. We invested in opening four new branches -- including our first on the West Coast, in Los Angeles -- and we began the accelerated rollout of our used oil collection services in connection with our recently-announced strategy to develop a used oil re-refinery. We ended the quarter with a strong balance sheet, with no bank debt, and with a Company-wide sense of enthusiasm regarding our return to growth."

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 anti cipated; we are unable to generate sufficient funds to build and support our used oil re-refinery; 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 file d with the SEC on March 5, 2010. 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 62 branches serving over 41,000 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 May 5, 2010 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.

Financial Statements

       Heritage-Crystal Clean, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share and Par Value Amounts)
(Unaudited)
     
  March 27, 2010 January 2, 2010
ASSETS    
     
Current Assets:    
Cash and cash equivalents $1,403 $1,090
Accounts receivable - net 12,841 11,941
Income tax refund 16  380 
Inventory - net 10,494 9,845
Deferred income taxes 553 639
Other current assets 1,844   1,970  
Total Current Assets 27,151 25,865
Property, plant and equipment - net 25,631 25,101
Software and intangible assets - net  2,873 3,021
Total Assets $55,655 $53,987
     
LIABILITIES AND STOCKHOLDERS' EQUITY    
     
Current Liabilities:    
Accounts payable - net $5,864 $4,740
Accrued salaries, wages, and benefits 1,761 1,922
Taxes payable 1,002 911
Other accrued expenses 1,366 1,474
Total Current Liabilities 9,993 9,047
Deferred income taxes 931 1,015
Total Liabilities 10,924 10,062
     
Commitments and contingencies    
     
STOCKHOLDERS' EQUITY:    
     
Common stock - 15,000,000 shares authorized at $0.01 par value,
10,713,086 and 10,708,471 shares issued and outstanding at March 27, 2010 and
January 2, 2010, respectively
107 107
Additional paid-in capital 43,363 43,219
Retained earnings 1,261 599
Total Stockholders' Equity 44,731 43,925
Total Liabilities and Stockholders' Equity $55,655 $53,987
           
Heritage-Crystal Clean, Inc.
Consolidated Statements of Operations
(In Thousands, Except per Share Amounts)
(Unaudited)
     
  First Quarter Ended,
  March 27, 2010 March 28, 2009
     
Sales $24,005 $23,756
Cost of sales 6,006 7,497
Gross profit 17,999 16,259
Operating costs 12,495 12,239
Selling, general, and administrative expenses 4,364 3,852
Operating income 1,140 168
Interest expense – net ?
Income before income taxes 1,140 168
Provision for income taxes 478 68
Net income available to common stockholders $662 $100
     
Net income per share available to common stockholders: basic $0.06 $0.01
Net income per share available to common stockholders: diluted $0.06 $0.01
     
Number of weighted average common shares outstanding: basic 10,713 10,685
Number of weighted average common shares outstanding: diluted        10,793 10,754
  Heritage-Crystal Clean, Inc.
Reconciliation of our Net Income Determined in Accordance with GAAP to Earnings Before Interest,
Taxes,
Depreciation & Amortization (EBITDA)
(Unaudited)
     
  First Quarter Ended,
(Dollars in thousands)
  March 27, 2010 March 28, 2009
Net income $662 $100
     
Interest expense – net  &#x     —  
     
Provision for income taxes 478  68  
     
Depreciation and amortization 1,029 877
     
EBITDA(a) $2,169 $1,045
     
(a) 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: 
     
&#x EBITDA does not reflect our cash expenditures, or future requirements for capital expenditures or contractual commitments; 
     
&#x EBITDA does not reflect interest expense or the cash requirements necessary to service interest or principal payments on our debt; 
     
&#x EBITDA does not reflect tax expense or the cash requirements necessary to pay for tax obligations; and 
     
&#x 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. 
CONTACT:  Heritage-Crystal Clean, Inc.
          Greg Ray, Chief Financial Officer and VP Business Management
          (847) 836-5670
EX-99 3 exh_992.htm EXHIBIT 99.2
Exhibit 99.2
Conference Call Script for 5/5/2010
Operator:

Good morning ladies and gentlemen, and welcome to the Heritage - Crystal Clean, Incorporated, First Quarter 2010 Earnings conference call. Today’s call is being recorded. At this time, all callers’ microphones are muted, and you will have an opportunity at the end of the presentation to ask questions. Instructions will be provided at that time for you to queue up your question. We ask that all callers limit themselves to one or two questions.
 
Some of the comments we will make today are forward-looking.  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 statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. These risks and uncertainties include a variety of factors, some of which are beyond our control.
 
These forward-looking statements speak as of today and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. Please refer to our SEC filings, including our Annual Report on Form 10-K as well as our earnings release posted on our website for a more detailed description of the risk factors that may affect our results. Copies of these documents may be obtained from the SEC or by visiting the Investor Relations section of our website.
 
Also, please note that certain financial measures we may use on this call, such as “Earnings Before Interest, Taxes, Depreciation, and Amortization, or EBITDA,” are non-GAAP measures.  Please see our website for reconciliations of these non-GAAP financial measures to GAAP.
 
 
 

 
For more information about our Company, please visit our website at www.crystal-clean.com.
 
With us today, from the company, are the President and Chief Executive Officer, Mr. Joseph Chalhoub, the Chief Financial Officer and VP of Business Management, Mr. Greg Ray, and the Chief Accounting Officer, Ms. Ellie Chaves.  At this time I would like to turn the call over to Joe Chalhoub.  Please go ahead sir.

Joe Chalhoub:

Thank you, and welcome to our conference call.  Last night we issued our first quarter 2010 press release and posted it on the investor relations page of our website, for your review.

Today we will discuss the financials and our operations in the first quarter, provide an update on our oil re-refining project and respond to questions you may have relating to our business.

It is great to see our company resume year over year growth, albeit only 1%.  Our sales for the first quarter were $24.0 million compared to $23.8 million for the same quarter of 2009.  We are really encouraged that our average sales per working day has now posted two successive quarterly increases.  Our first quarter average daily sales was approximately $400,000 compared to $390,000 in the fourth quarter of 2009 and compared to $395,000 in the first quarter of 2009.

We continue to open new branches, and in the first quarter of 2010 we opened 4 new branches.  We now operate 62 branches including our first branch on the West Coast, in Los Angeles.  Of these branches, there were 58 that were in operation throughout both the first quarter of 2010 and 2009,
 
 
 

 
and the same-branch sales for these branches was basically flat.

We are making progress with our recently-announced used oil re-refining project.  If you missed our recent announcement, we are proceeding with the design and construction of a plant that will allow us to process 50 million gallons per year of used oil and recycle this to produce 30 million gallons of lubricating base oil.  The estimated capital cost for the project is about $40 million and our plan is to begin producing lube oil around the middle of 2012.  Based on recent market prices for the feedstock and products, we estimate that this plant, when running at capacity, would contribute roughly $90 million in annual revenue at a 20% EBITDA margin.

Our work on this project is proceeding as expected.  We have continued to work on finalizing the site selection, permitting, and plant engineering, and we have begun to place significant orders for the equipment.  At the end of the first quarter, our accumulated capitalized spending on this project was just under $1 million, and we had placed orders for another $3 million.

We have begun a more rapid expansion of our used oil collection program, and added 3 new oil trucks during the first quarter alone.  We expect to continue to add new trucks at this pace throughout 2010, and believe that this will add about $1 million in net cost due to startup losses on the new routes that will be expensed, not capitalized.  Other than this cost, virtually all the other incremental costs related to our re-refining project are expected to be capitalized.

Overall, the attitude and energy in our company is very positive. Our sales team successfully weathered a very tough economic storm.  Our hundreds of dedicated employees are re-energized and motivated to deliver superior performance in a recovering economy.
Our Chief Financial Officer and Vice President, Business Management, Mr. Greg Ray, will now further discuss the financial results, and then we will open the call for your questions.

Greg Ray:

Thank you Joe.

It’s good to be with our investors today for HCCI’s first quarter 2010 conference call.

As Joe indicated, our average daily sales have increased for the second quarter in a row, and our earnings reflect this higher level of sales, as well as some success in controlling our costs during the recession.

As you probably know, when there are significant swings in the price of crude oil or solvent, this can lead to swings in our costs and income.  I’m pleased that the first quarter of 2010 had relatively little of this noise to filter out.  Crude oil prices inched up during the quarter, and this led to modestly higher costs for fuel, transportation, and solvent.  However, these increased costs were offset by inventory benefits, as we sold our reuse solvent at higher prices than it had been carried in our inventory.  Consequently, on a net basis this quarter experienced little impact from changing oil prices.

However, when comparing the first quarter of 2010 to the first quarter of 2009, please keep in mind that in 2009 we recorded significant costs related to rapidly falling energy prices, and this represented about $900,000 of pre-tax expense.

Our operating costs continue to benefit from the cost reduction measures implemented early in 2009.  Compared to the year-ago quarter, we are operating four more branches and we are investing in the expansion of our oil collection fleet, yet operating costs are up just 2%.
 
 
 

 
Joe mentioned that during 2010 we expect to spend approximately $1 million as we roll out new oil collection trucks and routes.  We expect these costs to start off slowly and escalate as additional units are put on the road.  In the first quarter of 2010, we spent approximately $100,000 rolling out new oil trucks.

Our SG&A expense in the first quarter of 2010 was $4.4 million, about $0.5 million more than in the first quarter of 2009.  This increase primarily results from two factors: 1st, an accrual for a state sales tax audit, and 2nd, an accrual for our Management Incentive Plan, as this expense increases when our business becomes more profitable.
 
We incurred no interest expense in either the first quarter of 2010 or 2009, as operations have provided sufficient cash to meet our capital requirements.  In the near future, we expect our capital spending to exceed our cash generated from operations, as we incur higher capital expenditures for our used oil re-refining project. We are continuing to evaluate our financing options for this project, and we will announce our conclusions when appropriate.  At the end of the first quarter, we had more than $1.0 million of cash on hand, and we owed nothing on our $30 million revolving credit facility.

For the first quarter, our net profit available to common stockholders was $662,000, compared to a profit of $100,000 in the first quarter of 2009.  Our basic and fully diluted earnings per share was $0.06, compared to $0.01 in the year-ago quarter.

We have a busy year ahead and we are excited about the prospect of returning to double digit growth in the next few quarters.  We are also working diligently on the used oil re-refining project, which we expect will add significant shareholder value, and we will keep you updated on our progress.
 
Thank you for your continuing interest in Heritage – Crystal Clean.

At this time, I will turn control of the call over to our Operator and she will advise you of the procedure to submit your questions.







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