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) October 17, 2012
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: |
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[ ] | 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 October 17, 2012 the Registrant issued a press release, a copy of which is attached hereto as Exhibit 99.1 and is incorporated herein by reference.
Item 9.01. Financial Statements and Exhibits.
Exhibit 99.1. Press release dated October 17, 2012
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
Heritage-Crystal Clean, Inc.
(Registrant) |
||
October 17, 2012
(Date) |
/s/ MARK DEVITA
Mark DeVita Chief Financial Officer |
Exhibit Index | ||
99.1 | Press release dated October 17, 2012 |
EXHIBIT 99.1
ELGIN, Ill., Oct. 17, 2012 (GLOBE NEWSWIRE) -- Heritage-Crystal Clean, Inc. (Nasdaq:HCCI), a leading provider of parts cleaning, used oil re-refining, and hazardous and non-hazardous waste services primarily focused on small and mid-sized customers, today announced results for the third quarter and first three quarters of fiscal 2012 which ended September 8, 2012.
Third quarter highlights include:
The Company's Founder, President and Chief Executive Officer, Joe Chalhoub, commented, "We are pleased with the ramp up of our Oil Business segment as we showed continued progress at our Indianapolis, Indiana re-refinery. During the quarter we fed 10.0 million gallons of used oil into the re-refinery and we increased our base oil production rate to 89% of nameplate capacity, up from 69% in the previous quarter. We continue to work through the logistical and operational challenges which are typical with a new re-refinery, but we are pleased with our overall progress."
Chalhoub added: "Our Environmental Services segment continues to show strong revenue growth and strong same-branch sales growth as well. All three of our main services in this segment provided double digit revenue growth compared to the prior year quarter."
Mark DeVita, Chief Financial Officer stated, "While we continue to grow our Oil Business revenue, our margins in this segment remain under pressure. From the second quarter to the third quarter there was a decrease of approximately $0.44 per gallon (10%) in the average spot market price for base oil, as established by major refiners. The decline in pricing negatively impacted our revenue and margin for the quarter. We also continued to experience high transportation costs and high used oil collection costs due to our large number of new oil collection routes. As we collect and process more used oil, we expect our margins in this segment to improve."
DeVita added: "Our Environmental Services segment produced strong revenue growth during the third quarter. Our operating margin in this segment improved from approximately 16% in the year earlier quarter to approximately 19% during the third quarter. We continue to explore opportunities to improve our margin in this segment."
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," "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: the used oil re-refinery does not perform as anticipated; we are unable to generate sufficient funds to support our used oil re-refinery; we are unable to collect sufficient used oil to run our used oil re-refinery at full capacity; the used oil re-refinery may not generate the operating results that we anticipate; we do not realize the anticipated benefits from our acquisitions; 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 February 29, 2012 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, used oil re-refining, 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 re-refining, 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. Through our used oil re-refining program, we recycle used oil into high quality lubricating base oil, and we are a supplier to firms that produce and market finished lubricants. Heritage-Crystal Clean, Inc. is headquartered in Elgin, Illinois, and operates through 71 branches serving over 79,000 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 18, 2012 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 8, | December 31, | |
2012 | 2011 | |
ASSETS | ||
Current Assets: | ||
Cash and cash equivalents | $ 46,379 | $ 2,186 |
Accounts receivable - net | 29,044 | 17,047 |
Inventory - net | 26,415 | 21,260 |
Deferred income taxes | 3,301 | 986 |
Income tax receivables - current | 174 | 1,040 |
Other current assets | 3,409 | 1,955 |
Total Current Assets | 108,722 | 44,474 |
Property, plant and equipment - net | 71,740 | 66,653 |
Equipment at customers - net | 17,744 | 16,408 |
Software and intangible assets - net | 4,424 | 4,469 |
Goodwill | 1,798 | 1,798 |
Income tax receivables - noncurrent | — | 254 |
Total Assets | $ 204,428 | $ 134,056 |
LIABILITIES AND STOCKHOLDERS' EQUITY | ||
Current Liabilities: | ||
Accounts payable | $ 18,596 | $ 21,266 |
Accrued salaries, wages, and benefits | 3,074 | 2,930 |
Taxes payable | 1,310 | 1,121 |
Current maturities of long-term debt and term loan | 1,678 | 1,053 |
Other accrued expenses | 2,545 | 2,562 |
Total Current Liabilities | 27,203 | 28,932 |
Term loan, less current maturities | 18,625 | 19,500 |
Long-term debt, less current maturities | 953 | 1,338 |
Contingent consideration, less current portion | 580 | 1,027 |
Deferred income taxes | 7,802 | 4,706 |
Total Liabilities | 55,163 | 55,503 |
STOCKHOLDERS' EQUITY: | ||
Common stock - 22,000,000 shares authorized at $0.01 par value, 18,062,091 and 14,448,331 shares issued and outstanding at September 8, 2012 and December 31, 2011, respectively | $ 181 | $ 144 |
Additional paid-in capital | 141,217 | 73,065 |
Retained earnings | 7,867 | 5,344 |
Total Stockholders' Equity | 149,265 | 78,553 |
Total Liabilities and Stockholders' Equity | $ 204,428 | $ 134,056 |
Heritage-Crystal Clean, Inc. | ||||
Consolidated Statements of Income | ||||
(In Thousands, Except per Share Amounts) | ||||
(Unaudited) | ||||
Third Quarter Ended, | First Three Quarters Ended, | |||
September 8, | September 10, | September 8, | September 10, | |
2012 | 2011 | 2012 | 2011 | |
Revenues | ||||
Product revenues | 31,348 | 10,919 | 84,505 | 20,670 |
Service revenues | 30,718 | 26,325 | 90,341 | 77,281 |
Total revenues | $ 62,066 | $ 37,244 | $ 174,846 | $ 97,951 |
Operating expenses | ||||
Operating costs | 52,718 | 30,197 | 146,963 | 77,438 |
Selling, general, and administrative expenses | 5,575 | 4,886 | 17,569 | 14,242 |
Depreciation and amortization | 1,904 | 1,208 | 5,587 | 3,533 |
Loss (gain) on disposal of fixed assets - net | — | 1 | (3) | (11) |
Operating income | 1,869 | 952 | 4,730 | 2,749 |
Interest expense – net | 112 | 9 | 445 | 23 |
Income before income taxes | 1,757 | 943 | 4,285 | 2,726 |
Provision for income taxes | 723 | 335 | 1,762 | 1,061 |
Net income | $ 1,034 | $ 608 | $ 2,523 | $ 1,665 |
Net income per share: basic | $ 0.06 | $ 0.04 | $ 0.15 | $ 0.12 |
Net income per share: diluted | $ 0.06 | $ 0.04 | $ 0.15 | $ 0.11 |
Number of weighted average shares outstanding: basic | 18,060 | 14,325 | 16,412 | 14,293 |
Number of weighted average shares outstanding: diluted | 18,412 | 14,822 | 16,783 | 14,674 |
Heritage-Crystal Clean, Inc. | ||||
Reconciliation of Operating Segment Information | ||||
(In Thousands) | ||||
(Unaudited) | ||||
For the Quarter Ended, | ||||
September 8, 2012 | ||||
Environmental | Corporate and | |||
Services | Oil Business | Eliminations | Consolidated | |
Revenues | ||||
Product revenues | $ 2,638 | $ 28,710 | $ 31,348 | |
Service revenues | 29,501 | 1,217 | 30,718 | |
Total revenues | $ 32,139 | $ 29,927 | — | $ 62,066 |
Operating expenses | ||||
Operating costs | 24,985 | 27,733 | 52,718 | |
Operating depreciation and amortization | 1,084 | 665 | 1,749 | |
Profit before corporate selling, general, and administrative expenses | 6,070 | 1,529 | — | 7,599 |
Selling, general, and administrative expenses | — | — | 5,575 | 5,575 |
Depreciation and amortization from SG&A | — | — | 155 | 155 |
Total selling, general, and administrative expenses | 5,730 | 5,730 | ||
Loss (gain) on disposal of fixed assets - net | — | — | ||
Operating income | 1,869 | |||
Interest expense - net | — | — | 112 | 112 |
Income before income taxes | 1,757 | |||
Provision for income taxes | — | — | 723 | 723 |
Net income | $ 1,034 | |||
For the Quarter Ended, | ||||
September 10, 2011 | ||||
Environmental | Corporate and | |||
Services | Oil Business | Eliminations | Consolidated | |
Revenues | ||||
Product revenues | $ 2,065 | $ 8,854 | $ 10,919 | |
Service revenues | 25,564 | 761 | 26,325 | |
Total revenues | $ 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 (loss) 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 SG&A | — | — | 141 | 141 |
Total selling, general, and administrative expenses | 5,027 | 5,027 | ||
Loss (gain) on disposal of fixed assets - net | 1 | 1 | ||
Operating income | 952 | |||
Interest expense - net | — | — | 9 | 9 |
Income before income taxes | 943 | |||
Provision for income taxes | — | — | 335 | 335 |
Net income | $ 608 |
First Three Quarters Ended, | ||||
September 8, 2012 | ||||
Environmental | Corporate and | |||
Services | Oil Business | Eliminations | Consolidated | |
Revenues | ||||
Product revenues | $ 7,813 | $ 76,692 | $ 84,505 | |
Service revenues | 86,886 | 3,455 | 90,341 | |
Total revenues | $ 94,699 | $ 80,147 | — | $ 174,846 |
Operating expenses | ||||
Operating costs | 73,053 | 73,910 | 146,963 | |
Operating depreciation and amortization | 3,195 | 1,956 | 5,151 | |
Profit before corporate selling, general, and administrative expenses | 18,451 | 4,281 | — | 22,732 |
Selling, general, and administrative expenses | — | — | 17,569 | 17,569 |
Depreciation and amortization from SG&A | — | — | 436 | 436 |
Total selling, general, and administrative expenses | 18,005 | 18,005 | ||
Loss (gain) on disposal of fixed assets - net | (3) | (3) | ||
Operating income | 4,730 | |||
Interest expense - net | — | — | 445 | 445 |
Income before income taxes | 4,285 | |||
Provision for income taxes | — | — | 1,762 | 1,762 |
Net income | $ 2,523 | |||
First Three Quarters Ended, | ||||
September 10, 2011 | ||||
Environmental | Corporate and | |||
Services | Oil Business | Eliminations | Consolidated | |
Revenues | ||||
Product revenues | $ 6,219 | $ 14,451 | $ 20,670 | |
Service revenues | 75,163 | 2,118 | 77,281 | |
Total revenues | $ 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 (loss) 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 SG&A | — | — | 445 | 445 |
Total selling, general, and administrative expenses | 14,687 | 14,687 | ||
Loss (gain) on disposal of fixed assets - net | (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 |
Total assets by segment as of September 8, 2012 and December 31, 2011 were as follows (in thousands):
September 8, 2012 | December 31, 2011 | ||
Total Assets: | |||
Environmental Services | $ 34,895 | $ 32,208 | |
Oil Business | 79,192 | 67,008 | |
Unallocated Corporate Assets | 90,341 | 34,840 | |
Total | $ 204,428 | $ 134,056 |
Segment assets for the Environmental Services and Oil Business segments consist of property, plant, and equipment, intangible assets, and inventories allocated to each segment. Assets for the Corporate unallocated amounts consist of property, plant, and equipment used at the Corporate headquarters, as well as cash, accounts receivable, and net deferred 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 Half Ended, | |||
(Dollars in Thousands) | (Dollars in Thousands) | |||
September 8, 2012 | September 10, 2011 | September 8, 2012 | September 10, 2011 | |
Net income (loss) | $ 1,034 | $ 608 | $ 2,523 | $ 1,665 |
Interest expense - net | 112 | 9 | 445 | 23 |
Provision for income taxes | 723 | 335 | 1,762 | 1,061 |
Depreciation and amortization | 1,904 | 1,208 | 5,587 | 3,533 |
EBITDA(a) | $ 3,773 | $ 2,160 | $ 10,317 | $ 6,282 |
(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. |
CONTACT: Mark DeVita, Chief Financial Officer, at (847) 836-5670