EXHIBIT 99.1
Heritage-Crystal Clean, Inc. Announces 2008 Second Quarter Financial Results
ELGIN, Ill., July 23, 2008 (PRIME NEWSWIRE) -- Heritage-Crystal Clean, Inc. (Nasdaq:HCCI), a leading provider of parts cleaning, hazardous and non-hazardous waste services to small and mid-sized customers, today announced results for the second quarter of fiscal year 2008.
Second quarter highlights include:
* Sales increased 22%, to $24.8 million, compared to $20.4 million in the second quarter of fiscal 2007. For the first half of fiscal 2008, sales increased 21%, to $47.8 million, compared to $39.6 million in the first half of fiscal 2007. * Same-branch sales growth was 19%, measured for the 47 branches which were in operation at the start of the year-ago quarter. * Average sales per working day increased to approximately $420,000, compared to $345,000 in the second quarter of fiscal 2007. * Pro forma EPS (diluted) increased by 44%, to $0.13, compared to $0.09(1) in the second quarter of fiscal 2007.
Mr. Joseph Chalhoub, President and Chief Executive Officer of Heritage-Crystal Clean, Inc. commented, "We are pleased with the continuing strong sales growth we achieved during the quarter. We are also happy with our improved income before taxes, which reached $2.5 million, an increase of 36% compared to $1.8 million in the second 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 $300,000 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 substan ces; 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 includ ed 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.primenewswire.com/newsroom/prs/?pkgid=4974
Conference Call
The company will host a conference call on Thursday, July 24, 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, www.crystal-clean.com/investor/, and can participate in the call by dialing (719-325-4920).
(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
(Unaudited)
June 14, 2008 Dec. 29, 2007
------------ ------------
ASSETS
Current Assets:
Cash and cash equivalents $ 434,391 $ 479,364
Accounts receivable, net of allowance for
doubtful accounts of $661,617 and
$1,129,657 at June 14, 2008 and
December 29, 2007, respectively 14,812,231 13,446,073
Inventory 13,426,349 10,447,373
Deferred income taxes 1,078,633 --
Prepaid and other current assets 1,349,639 1,207,426
------------ ------------
Total Current Assets 31,101,243 25,580,236
Fixed assets, net of accumulated
depreciation 20,238,045 19,420,294
Deferred offering costs -- 1,275,694
Deferred income taxes 380,084 --
Software and intangible assets, net of
accumulated amortization 1,849,709 1,707,395
------------ ------------
Total Assets $ 53,569,081 $ 47,983,619
============ ============
LIABILITIES AND STOCKHOLDERS' EQUITY
Current Liabilities:
Accounts payable $ 6,354,266 $ 7,257,643
Accrued salaries, wages, and benefits 1,579,422 1,559,941
Taxes payable 2,067,583 983,128
Other accrued expenses 1,079,128 1,169,260
------------ ------------
Total Current Liabilities 11,080,399 10,969,972
Note payable - bank 1,705,000 22,045,000
------------ ------------
Total Liabilities 12,785,399 33,014,972
Redeemable Capital Units -- 2,261,391
STOCKHOLDERS' EQUITY:
Preferred members' capital -- 14,703,813
Common members' capital -- 367,932
Common stock - 15,000,000 Shares
authorized at $0.01 par value, 10,675,390
shares issued and outstanding at
June 14, 2008 106,754 --
Additional paid-in capital 42,422,298 --
Accumulated deficit (1,745,370) (2,364,489)
------------ ------------
Total Stockholders' Equity $ 40,783,682 $ 12,707,256
------------ ------------
Total Liabilities and
Stockholders' Equity $ 53,569,081 $ 47,983,619
============ ============
Heritage-Crystal Clean, Inc.
Consolidated Statements of Operations
(Unaudited)
Second Quarter Ended First Half Ended
June 14, June 16, June 14, June 16,
2008 2007 2008 2007
----------- ----------- ----------- -----------
Sales $24,837,826 $20,386,092 $47,835,269 $39,574,192
Cost of sales 5,630,289 4,876,978 11,915,980 9,881,173
Cost of sales -
inventory
impairment -- -- -- 2,182,330
----------- ----------- ----------- -----------
Gross profit 19,207,537 15,509,114 35,919,289 27,510,689
----------- ----------- ----------- -----------
Operating costs 12,601,403 9,888,264 24,117,458 19,169,347
Selling, general,
and administrative
expenses 4,131,455 3,518,237 10,762,565 6,618,829
Proceeds from
contract
termination -- -- -- (3,000,000)
----------- ----------- ----------- -----------
Operating income 2,474,679 2,102,613 1,039,266 4,722,513
Interest expense -
net 18,647 302,329 371,338 642,356
----------- ----------- ----------- -----------
Income before
income taxes 2,456,032 1,800,284 667,928 4,080,157
Provision for
income taxes 1,046,644 -- 2,026,814 --
----------- ----------- ----------- -----------
Net income (loss) 1,409,388 1,800,284 (1,358,886) 4,080,157
Preferred return -- 390,299 339,188 780,598
----------- ----------- ----------- -----------
Net income (loss)
available to
common
shareholders $ 1,409,388 $ 1,409,985 $(1,698,074) $ 3,299,559
=========== =========== =========== ===========
Net income (loss)
per share
available to
common
shareholders:
basic $ 0.13 $ 0.20 $ (0.19) $ 0.46
Net income (loss)
per share
available to
common
shareholders:
diluted $ 0.13 $ 0.19 $ (0.19) $ 0.46
=========== =========== =========== ===========
Pro forma data:
Net income (loss) $ 1,409,388 $ 1,800,284 $(1,358,886) $ 4,080,157
Pro forma provision
for income taxes -- 738,116 497,246 1,672,864
Return on preferred
and mandatorily
redeemable capital
units -- 400,488 372,474 805,720
----------- ----------- ----------- -----------
Pro forma net
income (loss)
available to
common members $ 1,409,388 $ 661,680 $(2,228,606) $ 1,601,573
=========== =========== =========== ===========
Pro forma net
income (loss) per
share: basic $ 0.13 $ 0.09 $ (0.24) $ 0.22
Pro forma net
income (loss) per
share: diluted $ 0.13 $ 0.09 $ (0.24) $ 0.22
=========== =========== =========== ===========
Number of weighted
average common
shares
outstanding:
basic 10,675,390 7,181,790 9,147,554 7,172,830
Number of weighted
average common
shares
outstanding:
diluted 10,927,360 7,241,790 9,147,554 7,213,630
----------- ----------- ----------- -----------
Heritage-Crystal Clean, Inc.
Reconciliation of our Net Income Determined in Accordance to GAAP
to Earnings Before Interest, Taxes, Depreciation & Amortization
(EBITDA)
Second Quarter Ended
June 14, June 16,
2008 2007
---------- ----------
Net income $1,409,388 $1,800,284 (a)
Interest expense 18,647 302,329
Provision for income taxes 1,046,644 --
Depreciation and amortization 821,083 638,387
---------- ----------
EBITDA(b) $3,295,762 $2,741,000
========== ==========
(a) For the second quarter ended June 16, 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