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Heritage-Crystal Clean, Inc. Announces 2008 Third Quarter Financial Results ELGIN, Ill., Oct. 14, 2008 (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 third
quarter of fiscal year 2008. Third quarter highlights include: * Sales increased 22%, to $25.6 million, compared to $20.9 million in the third quarter of fiscal 2007. For the first three quarters of fiscal 2008, sales increased 21%, to $73.4 million, compared to $60.5 million in the first three quarters of fiscal 2007. * Same-branch sales growth was 20%, measured for the 47 branches that were in operation throughout both the third fiscal quarters of 2008 and 2007. We currently operate 54 branches, compared to 48 at the end of the third quarter of 2007. * Average sales per working day increased to approximately $440,000, compared to $360,000 in the third quarter of fiscal 2007. * Pro forma EPS (diluted) increased by 67%, to $0.15, compared to $0.09(1) in the third quarter of fiscal 2007. Mr. Joseph Chalhoub, President and Chief Executive Officer of Heritage-Crystal Clean, Inc. commented, ``We are pleased with the strong sales growth we achieved during the quarter. We are also happy with our improved income before taxes, which reached $2.8 million, an increase of 55% compared to $1.8 million in the third quarter of 2007.'' Mr. Greg Ray, CFO and VP of Business Management, added, ``Our improved income was a particularly good result considering that we incurred costs related to being a public company of approximately $370,000 which among others included Board of Directors compensation and insurance, incremental legal and accounting fees and Sarbanes-Oxley consulting services in the most recent quarter, compared to none in the prior year. During the most recent quarter, we experienced higher costs for energy-related materials such as solvent and vehicle fuel, but this was partially mitigated by improved margins on our reuse solvent, as we sold solvent that had been carried in inventory at historically lower values.'' 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 and downturns in the business cycles of automotive repair shops, industrial manufacturing business and small businesses in general; increased solvent, fuel and energy costs; 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 Wednesday, October 15, 2008 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 (719-325-4803).
(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.
Financial Statements
Heritage-Crystal Clean, Inc.
Consolidated Balance Sheets
(In Thousands, Except Share and Par Value Amounts)
(Unaudited)
September 6, December 29,
2008 2007
---------- ----------
ASSETS
Current Assets:
Cash and cash equivalents $ 363 $ 479
Accounts receivable, net of allowance for
doubtful accounts of $849 and $1,130 at
September 6, 2008 and December 29, 2007,
respectively 15,516 13,446
Inventory 14,530 10,447
Deferred income taxes 1,163 --
Prepaid and other current assets 1,937 1,208
---------- ----------
Total Current Assets 33,509 25,580
Fixed assets, net of accumulated
depreciation 20,584 19,420
Deferred offering costs -- 1,276
Deferred income taxes 132 --
Software and intangible assets, net of
accumulated amortization 1,956 1,708
---------- ----------
Total Assets $ 56,181 $ 47,984
========== ==========
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 7,003 $ 7,258
Accrued salaries, wages, and benefits 2,172 1,560
Taxes payable 2,115 983
Other accrued expenses 1,249 1,169
---------- ----------
Total Current Liabilities 12,539 10,970
Note payable - bank 1,165 22,045
---------- ----------
Total Liabilities 13,704 33,015
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, 10,675,390 shares
issued and outstanding at September 6,
2008 107 --
Additional paid-in capital 42,493 --
Accumulated deficit (123) (2,364)
---------- ----------
Total Stockholders' Equity $ 42,477 $ 12,708
---------- ----------
Total Liabilities and Stockholders' Equity $ 56,181 $ 47,984
========== ==========
Heritage-Crystal Clean, Inc.
Consolidated Statements of Operations
(In Thousands, Except Per Share Amounts)
(Unaudited)
Third Quarter Ended First Three Quarters Ended
September 6, September 8, September 6, September 8,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Sales $ 25,646 $ 20,967 $ 73,482 $ 60,541
Cost of sales 6,020 5,480 17,936 15,361
Cost of sales
- inventory
impairment -- -- -- 2,182
----------- ----------- ----------- -----------
Gross profit 19,626 15,487 55,546 42,998
----------- ----------- ----------- -----------
Operating
costs 12,523 10,100 36,640 29,270
Selling,
general, and
adminis-
trative
expenses 4,278 3,263 15,042 9,882
Proceeds from
contract
termination -- -- -- (3,000)
----------- ----------- ----------- -----------
Operating
income 2,825 2,124 3,864 6,846
Interest
expense -
net 24 314 395 957
----------- ----------- ----------- -----------
Income before
income taxes 2,801 1,810 3,469 5,889
Provision for
income taxes 1,179 -- 3,206 --
----------- ----------- ----------- -----------
Net income 1,622 1,810 263 5,889
Preferred
return -- 390 339 1,171
----------- ----------- ----------- -----------
Net income
(loss)
available to
common
shareholders $ 1,622 $ 1,420 $ (76) $ 4,718
=========== =========== =========== ===========
Net income
(loss) per
share
available to
common
shareholders:
basic $ 0.15 $ 0.20 $ (0.01) $ 0.66
Net income
(loss) per
share
available to
common
shareholders:
diluted $ 0.15 $ 0.20 $ (0.01) $ 0.65
=========== =========== =========== ===========
Pro forma
data:
Net income $ 1,622 $ 1,810 $ 263 $ 5,889
Less: Pro
forma
provision for
income taxes -- 742 497 2,415
Less: Return
on preferred
and
mandatorily
redeemable
capital units -- 401 372 1,206
----------- ----------- ----------- -----------
Pro forma net
income (loss)
available to
common
members $ 1,622 $ 667 $ (606) $ 2,268
=========== =========== =========== ===========
Pro forma net
income (loss)
per share:
basic $ 0.15 $ 0.09 $ (0.06) $ 0.32
Pro forma net
income (loss)
per share:
diluted $ 0.15 $ 0.09 $ (0.06) $ 0.31
=========== =========== =========== ===========
Number of
weighted
average
common shares
outstanding:
basic 10,675 7,182 9,657 7,176
Number of
weighted
average
common shares
outstanding:
diluted 10,848 7,242 9,657 7,223
=========== =========== =========== ===========
Heritage-Crystal Clean, Inc.
Reconciliation of our Net Income Determined in Accordance to GAAP
to Earnings Before Interest,Taxes, Depreciation
& Amortization (EBITDA)
Third Quarter Ended
(Dollars in thousands)
September 6, September 8,
2008 2007
----------- -----------
Net income $ 1,622 $ 1,810 (a)
Interest expense - net 24 314
Provision for income taxes 1,179 --
Depreciation and amortization 844 673
----------- -----------
EBITDA (b) $ 3,669 $ 2,797
=========== ===========
(a) For the third quarter ended September 8, 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.
Contact: Heritage-Crystal Clean, Inc.
Greg Ray, Chief Financial Officer and VP Business Management
(847) 836-5670
Source: Heritage-Crystal Clean, Inc.
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