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 2016, which ended
September 10, 2016.
Third quarter and year-to-date highlights include:
- Revenues decreased 1.0%, to $81.9 million, compared to $82.7
million in the third quarter of fiscal 2015. Year-to-date
revenues decreased 3.5%, to $240.9 million, compared to $249.7
million in the first three quarters of fiscal 2015. The
year-over-year decrease in revenue was primarily due to the decline
in oil product pricing, and specifically the approximate 11%
decline in the market price for the type of base oil we
sell.
- Our 2016 third quarter EBITDA was $8.0 million. For the
first three quarters of fiscal 2016, EBITDA decreased 15.3% to
$17.5 million compared to the first three quarters of 2015.
- Our Environmental Services segment includes parts cleaning,
containerized waste, and vacuum services. During the third
quarter, Environmental Services revenues decreased $0.8 million, or
1.6%, compared to the third quarter of fiscal 2015.
Environmental Services revenues decreased $1.9 million, or 1.2%,
for the first three quarters of 2016 compared to the first three
quarters of 2015.
- Average revenues per working day in the third quarter of fiscal
2016 in our Environmental Services segment were approximately
$885,000, compared to $900,000 in the third quarter of fiscal
2015.
- Our Oil Business segment includes used oil collection
activities, sales of recycled fuel oil, and re-refining
activities. During the third quarter of fiscal 2016, Oil
Business revenues of $30.6 million were flat compared to the third
quarter of fiscal 2015. During the first three quarters of
fiscal 2016, Oil Business revenues decreased $6.9 million, to $84.8
million from $91.7 million in the first three quarters of fiscal
2015. The revenue decrease was mainly due to lower selling
prices for our base oil and RFO products, which was partially
offset by higher base oil volume sold. The decline in revenue was
further offset by increased revenue from used oil collection
charges and stop fees of approximately $13 million during the first
three quarters of 2016.
- During the third quarter of fiscal 2016, the average spot
market price for the type of lubricating base oil we produce
declined over 11% compared to the third quarter of fiscal
2015. However, the average spot market price during the third
quarter was up approximately 10% compared to the second quarter of
fiscal 2016.
- During the third quarter of fiscal 2016, we produced base oil
at a rate of 92% of the nameplate capacity of our re-refinery,
which was a slightly lower rate compared to the two prior quarters
in fiscal 2016. The decreased production rate was mainly due
to a planned, extended shutdown during the fiscal third
quarter.
- SG&A expense for the third quarter of fiscal 2016 was $11.6
million compared to $10.7 million during the third quarter of
fiscal 2015. In the first three quarters of fiscal 2016,
SG&A expense was $36.9 million, compared to $33.9 million in
the first three quarters of fiscal 2015. The increase in
SG&A expense was due to unusually high legal expenses of $2.1
million during the third quarter of fiscal 2016 and $5.5 million
for the first three quarters of fiscal 2016. The majority of
these legal expenses pertain to matters stemming from our
acquisition of FCC Environmental, including expenses incurred in
connection with arbitration claims brought against the sellers of
FCC Environmental in order to enforce our rights under the stock
purchase agreement. We are seeking reimbursement for legal
fees incurred in these matters.
- Net income attributable to common shareholders for the third
quarter was $2.3 million compared to net income attributable to
common shareholders of $2.7 million for the year earlier
quarter. Income per share was $0.10 in the third quarter of
fiscal 2016 compared to $0.12 in the third quarter of fiscal
2015. Net income attributable to common shareholders for the
first three quarters was $2.4 million compared to net income
attributable to common shareholders of $3.7 million for the first
three quarters of fiscal 2015. Net income per share was $0.11
in the first three quarters of fiscal 2016 compared to net income
per share of $0.17 in the first three quarters of fiscal
2015.
The Company's Founder, President, and Chief Executive Officer,
Joe Chalhoub, commented, "We are pleased with the continued
improvement in the profitability of our Oil Business segment over
the last two quarters. During the third quarter we realized
the benefit of an improvement in our base oil spread due primarily
to higher base oil selling prices and a small improvement in our
average used oil collection charge."
Chalhoub added, "While revenue in our Environmental Services
segment continued to be under pressure in the third quarter due to
decreased activity at customers in and around the energy sector, we
expect to generate revenue growth in this segment during the fourth
quarter. Given the lack of revenue growth in the segment, we
are especially pleased with our improvement in operating margin for
the quarter."
Mark DeVita, Chief Financial Officer, stated, "We saw improved
operating margin percentages in both of our business segments
during the third quarter. During the third quarter our profit
before corporate SG&A expense in the Environmental Services
segment was 29.4% compared to 28.7% in the third quarter of fiscal
2015. In our Oil Business segment our profit before corporate
SG&A expense was 5.7% compared to 2.1% in the third quarter of
fiscal 2015."
DeVita added, "We are also pleased to report our cash flow from
operations was approximately $9.6 million during the third quarter
of fiscal 2016. Our cash balance at the end of the quarter
was $29.8 million, which represents a $4.5 million increase
compared to the end of the second quarter."
DeVita also added, "Our net income attributable to common
shareholders during the third quarter was negatively impacted by
legal fees and other expenses stemming from our acquisition of FCC
Environmental. We believe a majority of the legal fees and
other expenses stemming from our acquisition of FCC Environmental
have now been recognized. Excluding the impact of these
expenses our adjusted net income attributable to common
shareholders for the third quarter would have been $0.22 per
share."
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: general economic
conditions and downturns in the business cycles of automotive
repair shops, industrial manufacturing businesses and small
businesses in general; increased solvent, fuel and energy costs and
volatility in the price of crude oil, the selling price of
lubricating base oil, solvent, fuel, energy, and commodity costs;
our ability to enforce our rights under the FCC Environmental
purchase agreement; our ability to pay our debt when due and comply
with our debt covenants; our ability to successfully operate our
used oil re-refinery and to cost effectively collect or purchase
used oil or generate operating results; our ability to realize the
anticipated benefits from our used oil re-refinery expansion within
the expected time period, or at all; increased market supply or
decreased demand for base oil; further consolidation and/or
declines in the United States automotive repair and manufacturing
industries; the impact of extensive environmental, health and
safety and employment laws and regulations on our business;
legislative or regulatory requirements or changes adversely
affecting our business; competition in the industrial and hazardous
waste services industries and from other used oil re-refineries;
claims and involuntary shutdowns relating to our handling of
hazardous substances; the value of our used solvents and oil
inventory, which may fluctuate significantly; our ability to expand
our non-hazardous programs for parts cleaning; our dependency on
key employees; our level of indebtedness, which could affect our
ability to fulfill our obligations, impede the implementation of
our strategy, and expose us to interest rate risk; our ability to
effectively manage our extended network of branch locations; the
control of The Heritage Group over the Company; and the risks
identified in our Annual Report on Form 10-K filed with the SEC on
March 16, 2016 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 vehicle
service sectors. Our service programs include parts cleaning,
containerized waste management, used oil collection and
re-refining, vacuum truck services, waste antifreeze collection and
recycling, and field 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 and mid-sized 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 83
branches serving approximately 100,000 customer locations.
Conference Call
The Company will host a conference call on Thursday, October 20,
2016 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 information
available to investors and the public at
www.crystal-clean.com.
|
Heritage-Crystal Clean, Inc. |
Condensed Consolidated Balance
Sheets |
(In Thousands, Except Share and Par Value
Amounts) |
(Unaudited) |
|
|
|
|
|
|
|
September 10, 2016 |
|
January 2, 2016 |
ASSETS |
|
|
|
|
Current
Assets: |
|
|
|
|
Cash and
cash equivalents |
|
$ |
29,767 |
|
|
$ |
23,608 |
|
Accounts
receivable - net |
|
47,370 |
|
|
41,592 |
|
Inventory
- net |
|
20,723 |
|
|
24,774 |
|
Other
current assets |
|
6,563 |
|
|
4,810 |
|
Total Current
Assets |
|
104,423 |
|
|
94,784 |
|
Property,
plant and equipment - net |
|
131,400 |
|
|
131,365 |
|
Equipment
at customers - net |
|
23,277 |
|
|
23,172 |
|
Software
and intangible assets - net |
|
20,786 |
|
|
22,202 |
|
Goodwill |
|
31,510 |
|
|
30,325 |
|
Total
Assets |
|
$ |
311,396 |
|
|
$ |
301,848 |
|
|
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY |
|
|
|
|
Current
Liabilities: |
|
|
|
|
Accounts
payable |
|
$ |
31,612 |
|
|
$ |
25,129 |
|
Current
maturities of long-term debt |
|
6,659 |
|
|
6,700 |
|
Accrued
salaries, wages, and benefits |
|
4,875 |
|
|
4,330 |
|
Taxes
payable |
|
7,209 |
|
|
6,735 |
|
Other
current liabilities |
|
3,965 |
|
|
3,617 |
|
Total Current
Liabilities |
|
54,320 |
|
|
46,511 |
|
Long term
debt, less current maturities |
|
59,917 |
|
|
62,778 |
|
Deferred
income taxes |
|
3,699 |
|
|
2,726 |
|
Total
Liabilities |
|
$ |
117,936 |
|
|
$ |
112,015 |
|
|
|
|
|
|
STOCKHOLDERS'
EQUITY: |
|
|
|
|
Common stock -
26,000,000 shares authorized at $0.01 par value, 22,272,941 and
22,213,364 shares issued and outstanding at September 10, 2016 and
January 2, 2016, respectively |
|
$ |
223 |
|
|
$ |
222 |
|
Additional paid-in
capital |
|
183,788 |
|
|
182,558 |
|
Retained earnings |
|
8,784 |
|
|
6,385 |
|
Total Heritage-Crystal
Clean, Inc. Stockholders' Equity |
|
192,795 |
|
|
189,165 |
|
Noncontrolling
interest |
|
665 |
|
|
668 |
|
Total
Equity |
|
$ |
193,460 |
|
|
$ |
189,833 |
|
Total
Liabilities and Stockholders' Equity |
|
$ |
311,396 |
|
|
$ |
301,848 |
|
|
|
|
|
|
|
|
|
|
Heritage-Crystal Clean, Inc. |
Condensed Consolidated Statements of
Income |
(In Thousands, Except per Share
Amounts) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
Third Quarter Ended, |
|
First Three Quarters Ended, |
|
|
|
September 10, 2016 |
|
September 12, 2015 |
|
September 10, 2016 |
|
September 12, 2015 |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
27,182 |
|
|
$ |
32,888 |
|
|
$ |
75,582 |
|
|
$ |
99,509 |
|
|
Service revenues |
|
54,690 |
|
|
49,797 |
|
|
165,295 |
|
|
150,154 |
|
Total
revenues |
|
$ |
81,872 |
|
|
$ |
82,685 |
|
|
$ |
240,877 |
|
|
$ |
249,663 |
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
Operating costs |
|
$ |
61,695 |
|
|
$ |
63,499 |
|
|
$ |
187,654 |
|
|
$ |
197,576 |
|
|
Selling, general, and
administrative expenses |
|
10,726 |
|
|
9,872 |
|
|
34,455 |
|
|
31,553 |
|
|
Depreciation and
amortization |
|
4,196 |
|
|
4,419 |
|
|
12,442 |
|
|
13,050 |
|
|
Other expense (income)
- net |
|
1,439 |
|
|
99 |
|
|
1,238 |
|
|
(153 |
) |
Operating
income |
|
3,816 |
|
|
4,796 |
|
|
5,088 |
|
|
7,637 |
|
Interest
expense – net |
|
463 |
|
|
404 |
|
|
1,432 |
|
|
1,366 |
|
Income
before income taxes |
|
3,353 |
|
|
4,392 |
|
|
3,656 |
|
|
6,271 |
|
Provision
for income taxes |
|
942 |
|
|
1,637 |
|
|
1,140 |
|
|
2,418 |
|
Net
income |
|
2,411 |
|
|
2,755 |
|
|
2,516 |
|
|
3,853 |
|
Income
attributable to noncontrolling interest |
|
76 |
|
|
46 |
|
|
117 |
|
|
115 |
|
Net income
attributable to Heritage-Crystal Clean, Inc. common
stockholders |
|
$ |
2,335 |
|
|
$ |
2,709 |
|
|
$ |
2,399 |
|
|
$ |
3,738 |
|
|
|
|
|
|
|
|
|
|
Net income
per share: basic |
|
$ |
0.10 |
|
|
$ |
0.12 |
|
|
$ |
0.11 |
|
|
$ |
0.17 |
|
Net income
per share: diluted |
|
$ |
0.10 |
|
|
$ |
0.12 |
|
|
$ |
0.11 |
|
|
$ |
0.17 |
|
|
|
|
|
|
|
|
|
|
Number of
weighted average shares outstanding: basic |
|
22,267 |
|
|
22,153 |
|
|
22,246 |
|
|
22,136 |
|
Number of
weighted average shares outstanding: diluted |
|
22,550 |
|
|
22,438 |
|
|
22,417 |
|
|
22,405 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Heritage-Crystal Clean, Inc. |
Segment Information |
(In Thousands) |
(Unaudited) |
|
Third Quarter Ended, |
September 10, 2016 |
|
|
|
EnvironmentalServices |
|
Oil Business |
|
Corporate and Eliminations |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
4,691 |
|
|
$ |
22,491 |
|
|
$ |
— |
|
|
$ |
27,182 |
|
|
Service revenues |
|
46,591 |
|
|
8,099 |
|
|
— |
|
|
54,690 |
|
Total
revenues |
|
$ |
51,282 |
|
|
$ |
30,590 |
|
|
$ |
— |
|
|
$ |
81,872 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
Operating costs |
|
34,456 |
|
|
27,239 |
|
|
— |
|
|
61,695 |
|
|
Operating depreciation
and amortization |
|
1,742 |
|
|
1,618 |
|
|
— |
|
|
3,360 |
|
Profit before corporate selling,
general, and administrative expenses |
|
$ |
15,084 |
|
|
$ |
1,733 |
|
|
$ |
— |
|
|
$ |
16,817 |
|
Selling,
general, and administrative expenses |
|
|
|
|
|
10,726 |
|
|
10,726 |
|
Depreciation and amortization from SG&A |
|
|
|
|
|
836 |
|
|
836 |
|
Total
selling, general, and administrative expenses |
|
|
|
|
|
$ |
11,562 |
|
|
$ |
11,562 |
|
Other
expense - net |
|
|
|
|
|
1,439 |
|
|
1,439 |
|
Operating
income |
|
|
|
|
|
|
|
|
|
3,816 |
|
Interest
expense – net |
|
|
|
|
|
463 |
|
|
463 |
|
Income
before income taxes |
|
|
|
|
|
|
|
$ |
3,353 |
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended, |
September 12, 2015 |
|
|
|
EnvironmentalServices |
|
Oil Business |
|
Corporate and Eliminations |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
4,923 |
|
|
$ |
27,965 |
|
|
$ |
— |
|
|
$ |
32,888 |
|
|
Service revenues |
|
47,199 |
|
|
2,598 |
|
|
— |
|
|
49,797 |
|
Total
revenues |
|
$ |
52,122 |
|
|
$ |
30,563 |
|
|
$ |
— |
|
|
$ |
82,685 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
Operating costs |
|
35,532 |
|
|
27,967 |
|
|
— |
|
|
63,499 |
|
|
Operating depreciation
and amortization |
|
1,647 |
|
|
1,949 |
|
|
— |
|
|
3,596 |
|
Profit before corporate selling,
general, and administrative expenses |
|
$ |
14,943 |
|
|
$ |
647 |
|
|
$ |
— |
|
|
$ |
15,590 |
|
Selling,
general, and administrative expenses |
|
|
|
|
|
9,872 |
|
|
9,872 |
|
Depreciation and amortization from SG&A |
|
|
|
|
|
823 |
|
|
823 |
|
Total
selling, general, and administrative expenses |
|
|
|
|
|
$ |
10,695 |
|
|
$ |
10,695 |
|
Other
expense - net |
|
|
|
|
|
99 |
|
|
99 |
|
Operating
income |
|
|
|
|
|
|
|
|
|
4,796 |
|
Interest
expense – net |
|
|
|
|
|
404 |
|
|
404 |
|
Income
before income taxes |
|
|
|
|
|
|
|
$ |
4,392 |
|
|
|
|
|
|
|
|
|
|
|
|
First Three Quarters Ended, |
September 10, 2016 |
|
|
|
Environmental Services |
|
Oil Business |
|
Corporate and Eliminations |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
14,826 |
|
|
$ |
60,756 |
|
|
$ |
— |
|
|
$ |
75,582 |
|
|
Service revenues |
|
141,254 |
|
|
24,041 |
|
|
|
— |
|
|
165,295 |
|
Total
revenues |
|
$ |
156,080 |
|
|
$ |
84,797 |
|
|
$ |
— |
|
|
$ |
240,877 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
Operating costs |
|
106,892 |
|
|
80,762 |
|
|
— |
|
|
187,654 |
|
|
Operating depreciation
and amortization |
|
5,166 |
|
|
4,789 |
|
|
— |
|
|
9,955 |
|
Profit (loss) before corporate
selling, general, and administrative expenses |
|
$ |
44,022 |
|
|
$ |
(754 |
) |
|
$ |
— |
|
|
$ |
43,268 |
|
Selling,
general, and administrative expenses |
|
|
|
|
|
34,455 |
|
|
34,455 |
|
Depreciation and amortization from SG&A |
|
|
|
|
|
2,487 |
|
|
2,487 |
|
Total
selling, general, and administrative expenses |
|
|
|
|
|
$ |
36,942 |
|
|
$ |
36,942 |
|
Other
expense - net |
|
|
|
|
|
1,238 |
|
|
1,238 |
|
Operating
income |
|
|
|
|
|
|
|
5,088 |
|
Interest
expense – net |
|
|
|
|
|
1,432 |
|
|
1,432 |
|
Income
before income taxes |
|
|
|
|
|
|
|
$ |
3,656 |
|
|
|
|
|
|
|
|
|
|
|
|
First Three Quarters Ended, |
September 12, 2015 |
|
|
|
Environmental
Services |
|
Oil Business |
|
Corporate and Eliminations |
|
Consolidated |
|
|
|
|
|
|
|
|
|
|
Revenues |
|
|
|
|
|
|
|
|
|
Product revenues |
|
$ |
15,634 |
|
|
$ |
83,875 |
|
|
$ |
— |
|
|
$ |
99,509 |
|
|
Service revenues |
|
142,344 |
|
|
7,810 |
|
|
— |
|
|
|
150,154 |
|
Total
revenues |
|
$ |
157,978 |
|
|
$ |
91,685 |
|
|
$ |
— |
|
|
$ |
249,663 |
|
Operating
expenses |
|
|
|
|
|
|
|
|
|
Operating costs |
|
109,836 |
|
|
87,740 |
|
|
— |
|
|
|
197,576 |
|
|
Operating depreciation
and amortization |
|
5,045 |
|
|
5,653 |
|
|
— |
|
|
|
10,698 |
|
Profit (loss) before corporate
selling, general, and administrative expenses |
|
$ |
43,097 |
|
|
$ |
(1,708 |
) |
|
$ |
— |
|
|
$ |
41,389 |
|
Selling,
general, and administrative expenses |
|
|
|
|
|
|
31,553 |
|
|
|
31,553 |
|
Depreciation and amortization from SG&A |
|
|
|
|
|
|
2,352 |
|
|
|
2,352 |
|
Total
selling, general, and administrative expenses |
|
|
|
|
|
$ |
33,905 |
|
|
$ |
33,905 |
|
Other
(income) - net |
|
|
|
|
|
|
(153 |
) |
|
|
(153 |
) |
Operating
income |
|
|
|
|
|
|
|
|
7,637 |
|
Interest
expense – net |
|
|
|
|
|
|
1,366 |
|
|
|
1,366 |
|
Income
before income taxes |
|
|
|
|
|
|
|
$ |
6,271 |
|
|
|
|
|
|
|
|
|
|
|
|
Total assets by segment as of September 10, 2016 and
January 2, 2016 were as follows:
|
|
|
|
|
(Thousands) |
|
September 10, 2016 |
|
January 2, 2016 |
Total
Assets: |
|
|
|
|
|
Environmental Services |
|
$ |
130,384 |
|
|
$ |
133,718 |
|
|
Oil
Business |
|
137,377 |
|
|
132,556 |
|
|
Unallocated
Corporate Assets |
|
43,635 |
|
|
35,574 |
|
|
|
Total |
|
$ |
311,396 |
|
|
$ |
301,848 |
|
|
|
|
|
|
|
|
|
|
|
|
Segment assets for the Environmental Services and Oil Business
segments consist of property, plant, and equipment, intangible
assets, accounts receivable, goodwill, and inventories.
Assets for the corporate unallocated amounts consist of cash, other
current assets, and property, plant, and equipment used at the
corporate headquarters.
|
Heritage-Crystal Clean, Inc. |
Reconciliation of our Net Income Determined in
Accordance with U.S. GAAP to Earnings Before Interest, Taxes,
Depreciation & Amortization (EBITDA) and to Adjusted
EBITDA |
(Dollars in thousands) |
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
|
|
Third Quarter Ended, |
|
First Three Quarters Ended, |
|
|
|
|
|
|
|
|
|
|
|
|
|
September 10, 2016 |
|
September 12, 2015 |
|
September 10, 2016 |
|
September 12, 2015 |
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
2,411 |
|
|
$ |
2,755 |
|
|
$ |
2,516 |
|
|
$ |
3,853 |
|
|
|
|
|
|
|
|
|
|
|
Interest
expense - net |
|
463 |
|
|
404 |
|
|
1,432 |
|
|
1,366 |
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes |
|
942 |
|
|
1,637 |
|
|
1,140 |
|
|
2,418 |
|
|
|
|
|
|
|
|
|
|
|
Depreciation and amortization |
|
4,196 |
|
|
4,419 |
|
|
12,442 |
|
|
13,050 |
|
|
|
|
|
|
|
|
|
|
|
EBITDA
(a) |
|
$ |
8,012 |
|
|
$ |
9,215 |
|
|
$ |
17,530 |
|
|
$ |
20,687 |
|
|
|
|
|
|
|
|
|
|
|
Legal Fees
(b) |
|
1,805 |
|
|
491 |
|
|
5,044 |
|
|
639 |
|
|
|
|
|
|
|
|
|
|
|
Fines and
Restitution (c) |
|
1,579 |
|
|
— |
|
|
1,579 |
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
Non-cash
compensation (d) |
|
138 |
|
|
225 |
|
|
897 |
|
|
822 |
|
|
|
|
|
|
|
|
|
|
|
Inventory
write down(e) |
|
— |
|
|
2,431 |
|
|
1,651 |
|
|
6,846 |
|
|
|
|
|
|
|
|
|
|
|
Acquisition
and integration costs of FCC Environmental(d) |
|
— |
|
|
140 |
|
|
— |
|
|
1,538 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Adjusted
EBITDA |
|
$ |
11,534 |
|
|
$ |
12,502 |
|
|
$ |
26,701 |
|
|
$ |
30,532 |
|
|
|
|
|
|
|
|
|
|
|
(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. |
|
|
|
|
|
(b) |
Legal fees
incurred to resolve routine and non-routine matters stemming from
the acquisition of FCC Environmental and International Petroleum
Corp. |
|
|
(c) |
Fines and
restitution related to activities at FCC Environmental and
International Petroleum Corp. prior to our acquisition of these
companies. |
|
|
(d) |
Adjusted
EBITDA represents EBITDA adjusted for certain non-cash or
infrequently occurring items such as: |
|
|
|
(1)
Acquisition and integration costs related to the purchase of FCC
Environmental, which are included in SG&A |
|
|
|
(2) Non-cash
compensation expenses which are recorded in SG&A |
|
|
(e) |
The write
down of inventory values resulted in lower carrying costs for
certain types of inventories. Depending on various factors,
it is possible that these lower inventory values may result in
lower cost of sales in future periods and thereby positively impact
profitability in future periods. |
|
We have
presented Adjusted EBITDA because we consider it an important
supplemental measure of our performance and believe it may be used
by analysts, investors, our lenders, and other interested parties
in the evaluation of our performance. Other companies in our
industry may calculate Adjusted EBITDA differently than we
do. Adjusted 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. Adjusted 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. |
|
|
Use of Non-GAAP Financial
Measures |
|
Adjusted net earnings and adjusted net earnings per
share are non-GAAP financial measures. Non-GAAP financial
measures should be considered in addition to, but not as substitute
for, financial measures prepared in accordance with GAAP.
Management believes that adjusted net earnings and adjusted net
earnings per share provide investors and management useful
information about the earnings impact of certain legal fees,
restitution, and fines. |
|
|
|
|
|
Reconciliation of our Net Earnings and Net
Earnings Per Share Determined in Accordance with U.S. GAAP to our
Non-GAAP Adjusted Net Earnings and Non-GAAP Adjusted Net Earnings
Per Share |
(Dollars in thousands, except per share
data) |
(Unaudited) |
|
|
|
|
|
|
|
Third Quarter Ended, |
|
|
|
September 10, 2016 |
|
|
|
|
GAAP net earnings |
|
|
$ |
2,335 |
|
|
|
|
|
Legal fees(a) |
|
|
1,805 |
|
Tax effect on legal
fees |
|
|
(488 |
) |
|
|
|
|
Restitution(b) |
|
|
1,059 |
|
Tax effect on
restitution |
|
|
(286 |
) |
|
|
|
|
Fines(b) |
|
|
520 |
|
|
|
|
|
Adjusted net
earnings |
|
|
$ |
4,945 |
|
|
|
|
|
GAAP basic
and diluted earnings per share |
|
$ |
0.10 |
|
|
|
|
|
Legal fees
per share |
|
0.08 |
|
Tax effect
on legal fees per share |
|
(0.02 |
) |
|
|
|
Restitution
per share |
|
0.05 |
|
Tax effect
on restitution per share |
|
(0.01 |
) |
|
|
|
|
Fines per
share |
|
0.02 |
|
|
|
|
|
Adjusted
basic and diluted earnings per share |
|
$ |
0.22 |
|
|
|
|
|
(a)
Legal fees incurred to resolve routine and non-routine matters
stemming from the acquisition of FCC Environmental and
International Petroleum Corp. |
|
|
|
|
(b)
Fines and restitution related to activities at FCC Environmental
and International Petroleum Corp. prior to our acquisition of these
companies. |
|
CONTACT
Mark DeVita, Chief Financial Officer, at (847) 836-5670
Hertiage Crystal Clean (NASDAQ:HCCI)
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