Second Quarter Highlights Include:
- Revenue for the second quarter of 2023 was $192.2 million,
compared to $156.6 million for the same quarter of 2022, an
increase of 22.7%.
- Environmental Services segment revenue of $96.0 million
represents a record high for a three-month quarter, an increase of
22.8% from the year-ago quarter.
- Environmental Services segment profit before corporate selling,
general and administrative expenses was a three-month quarter
record of $23.9 million, an increase of 28.3% from the recast
profit of the year-ago quarter.
- Industrial and Field Services segment revenue was a record
$47.1 million, an increase of 243.5% from the year-ago quarter.
Compared to the first quarter of 2023, this represents an increase
of $1.3 million or 3%.
- Industrial and Field Services segment profit before corporate
selling, general and administrative expenses was $7.5 million, an
increase of $6.3 million from the recast profit from the year-ago
quarter.
Heritage-Crystal Clean, Inc. (Nasdaq: HCCI), a leading provider
of parts cleaning, hazardous and non-hazardous waste services, used
oil re-refining, antifreeze recycling, industrial and field
services, and emergency and spill response services today announced
results for the second quarter which ended June 30, 2023.
Second Quarter Review
Beginning with our 2023 fiscal year, we changed our financial
reporting cycle to a calendar year-end and end-of-month quarterly
reporting cycle. The second quarter of 2023 includes 5 additional
working days as a result of our fiscal quarter change. We estimate
that the additional working days resulted in an increase in
revenues of 7.8% in the second quarter of 2023 when compared to the
second quarter of 2022 for the Environmental Services and
Industrial & Field Services segments. Absent the significant
decrease in base oil pricing, we would have otherwise estimated a
similar impact in the Oil Business from the change in fiscal
quarter.
Revenue for the second quarter of 2023 was $192.2 million
compared to $156.6 million for the second quarter of 2022, an
increase of 22.7%.
Overall operating profit decreased by $9.5 million and as a
percentage of revenue decreased to 19.3% compared to 29.7% during
the second quarter of 2022. This decrease in profit margin was
driven primarily by the decrease in revenues in the Oil Business
segment as well as higher costs due to lower solvent and oil
inventory values, and higher re-refinery turnaround expenses. Our
second quarter corporate SG&A expense was $23.4 million, or
12.2% of revenue, compared to $16.5 million, or 10.5% of revenue,
for the second quarter of 2022. As a result of the 5 additional
working days in the second quarter of 2023 compared to the second
quarter of 2022, we estimate current quarter corporate SG&A
expenses were higher by $1.8 million.
Net income for the second quarter was $8.6 million compared to
net income of $21.1 million in the year-ago quarter. Basic earnings
per share were $0.36 compared to $0.90 in the year-ago quarter.
Heritage-Crystal Clean, Inc. Acquisition by J.F. Lehman &
Company
On July 19, 2023, the Company announced that it has entered into
a definitive merger agreement (the “merger agreement”) to be
acquired by an investment affiliate of J.F. Lehman & Company
(“JFLCO”), a leading private equity investment firm focused on the
aerospace, defense, maritime and environmental sectors, in an
all-cash transaction that values the Company at approximately $1.2
billion (the “merger”). Under the terms of the merger agreement,
JFLCO will acquire all the outstanding shares of the Company for
$45.50 per share in cash. The purchase price represents a premium
of approximately 24.9% to the Company’s 60-day volume-weighted
average price on July 19, 2023, the last full trading day prior to
the public announcement of the transaction. The transaction is
expected to close in the fourth quarter of 2023, subject to
customary closing conditions, including approval by the Company
shareholders and the expiration of the waiting period under the
Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976. Upon
completion of the transaction, the Company will become a privately
held company and shares of the Company common stock will no longer
be listed on the Nasdaq Stock Exchange or trade in any other public
market.
Due to the pending transaction with J.F. Lehman, the Company
will not be hosting a conference call for the second quarter of
2023.
Segments
Effective January 1, 2023, the Company revised its reportable
segments based on our investment in Patriot Environmental Services
in 2022. Previously we had two reportable segments: "Environmental
Services," and "Oil Business." Under the revised segment
presentation, the Company now has three reportable segments:
"Environmental Services," "Oil Business," and "Industrial &
Field Services." Prior period segment results presented for
comparative purposes below have been recast to reflect the newly
reportable segment, Industrial & Field Services, as a separate
segment.
Our Environmental Services segment includes parts cleaning,
containerized waste management, wastewater vacuum services, and
antifreeze recycling activities. Environmental Services revenue was
$96.0 million during the quarter compared to $78.2 million during
the second quarter of fiscal 2022. The 22.8% increase in revenue
was mainly due to the continued increase in demand and higher
prices for our services compared to the prior year quarter. We
experienced revenue increases across all service lines in the
segment when compared to the second quarter of 2022. Environmental
Services profit before corporate selling, general, and
administrative expenses was $23.9 million, or 24.9% of revenue,
compared to the recast profit of $18.6 million, or 23.8% of
revenue, in the year-ago quarter. The increase in operating margin
was mainly driven by increased revenues in comparison with the
increase in our labor and transportation expenses.
President and CEO Brian Recatto commented, "We are pleased with
the strong revenue growth and continued improvement in the
operating margin in this segment. Early in the third quarter, we
implemented another price increase in our containerized waste
business to help offset continual cost increases from some of our
disposal vendors. We are confident this action will allow us to
show continued, incremental improvement in our operating margin
percentage in this segment in the coming quarters."
The Industrial & Field Services segment consists of the
Company's industrial and field services, as well as the activities
at our non-hazardous waste processing facilities. Industrial &
Field Services revenue was $47.1 million for the second quarter of
fiscal 2023 compared to $13.7 million for the second quarter of
fiscal 2022. The $33.4 million increase in revenue was mainly
driven by revenue from our acquisition of Patriot Environmental
Services during the second half of 2022 and, to a lesser extent, by
higher demand and increased prices for our products and services.
Industrial & Field Services profit before corporate SG&A
expense increased $6.3 million, or 538.7%, in the second quarter of
2023 compared to the second quarter of fiscal 2022 mainly driven by
revenue from our acquisition of Patriot Environmental Services.
Operating margin for the second quarter of 2023 was 16.0% compared
to the recast margin of 8.6% in the second quarter of 2022. The
increase in operating margin was mainly driven by the higher margin
from our acquisition of Patriot Environmental Services compared to
our legacy Industrial & Field Services business.
Recatto commented, "Despite activity at some of our customers in
this segment being less than forecasted, we were still able to
produce incremental revenue growth and higher operating margin
dollars compared to the first quarter of 2023. We are also
optimistic that we will generate additional growth as we continue
to invest and expand our PFAS infrastructure and service
offering."
Our Oil Business segment includes used oil collection and
re-refining activities, as well as sales of recycled fuel oil.
During the second quarter of 2023, Oil Business revenue was $49.1
million, a decrease of $15.6 million, or 24.1%, compared to $64.8
million in the second quarter of fiscal 2022. A decrease in base
oil sales price was the main driver of the decrease in revenue
compared to the prior year quarter. Oil Business segment operating
margin decreased to 11.6% in the second quarter of 2023 compared to
41.4% in the second quarter of fiscal 2022. The lower operating
margin compared to the second quarter of 2022 was mainly due to a
decrease in revenue along with increased transportation expenses,
labor costs and higher cost of goods sold.
Recatto commented, "Despite a significant decline in base oil
netback, a soft demand market for base oil, and intentionally
moving up the timing of our annual extended turnaround to the
second quarter, we were still able to produce an operating margin
percentage which was consistent with our second quarter conference
call expectations.
Since the end of the second quarter we have made great progress
on lowering our pay-for-oil. Early in the third quarter of 2023, on
a run-rate basis, our pay-for-oil has decreased by approximately
$0.10 per gallon compared to our weighted average for the second
quarter. We also see signs that the base oil market should improve
from both a pricing and a demand standpoint compared to the end of
the second quarter."
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: the occurrence of any event, change or other
circumstances that could give rise to the termination of our merger
agreement with JFLCO; the inability to complete the proposed merger
with JFLCO due to the failure to obtain stockholder approval for
the proposed merger or the failure to satisfy other conditions to
completion of the proposed merger; risks related to disruption of
management’s attention from the Company's ongoing business
operations due to the proposed merger; unexpected costs, charges or
expenses resulting from the proposed merger; The Company's ability
to retain and hire key personnel in light of the proposed merger;
certain restrictions during the pendency of the proposed merger
that may impact the Company's ability to pursue certain business
opportunities or strategic transactions; the ability of the buyer
to obtain the necessary financing arrangements set forth in the
commitment letters received in connection with the proposed merger;
potential litigation relating to the proposed merger that could be
instituted against the parties to the merger agreement or their
respective directors, managers or officers, including the effects
of any outcomes related thereto; the effect of the announcement of
the proposed merger on the Company's relationships with its
customers, operating results and business generally; and the risk
that the proposed merger will not be consummated in a timely
manner, if at all; our ability to successfully integrate our
acquisition of Patriot Environmental Services, Inc. and achieve the
benefits contemplated by the acquisition; 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, including a drop in the price of crude oil, the selling
price of lubricating base oil, solvent, fuel, energy, and commodity
costs; the impact of inflationary pressures on our business; 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; 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 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; the impact of legal proceedings
and class action litigation on us and our ability to estimate the
cash payments we will make under litigation settlements; our
ability to effectively manage our network of branch locations; the
control of The Heritage Group over the Company; and the risks
identified in the Company's Annual Report on Form 10-K filed with
the SEC on March 1, 2023. 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.
Participants in the Solicitation
The Company and JFLCO and their respective directors, executive
officers and other members of management and employees, under
Securities and Exchange Commission (“SEC”) rules, may be deemed to
be “participants” in the solicitation of proxies from stockholders
of the Company in favor of the proposed merger. Information about
the Company’s directors and executive officers is set forth in the
Company's Proxy Statement on Schedule 14A for its 2023 Annual
Meeting of Shareholders, which was filed with the SEC on May 1,
2023. To the extent holdings of the Company’s securities by its
directors or executive officers have changed since the amounts set
forth in such 2023 proxy statement, such changes have been or will
be reflected on Initial Statements of Beneficial Ownership on Form
3 or Statements of Change in Ownership on Form 4 filed with the
SEC. Additional information concerning the interests of the
Company's participants in the solicitation, which may, in some
cases, be different than those of the Company's stockholders
generally, will be set forth in the Company's proxy statement
relating to the proposed merger when it becomes available.
Additional Information and Where to Find It
This release may be deemed to be solicitation material in
respect of the proposed acquisition of the Company by JFLCO. In
connection with the proposed transaction, the Company intends to
file relevant materials with the SEC, including a proxy statement
in preliminary and definitive form. BEFORE MAKING ANY VOTING
DECISION, INVESTORS AND STOCKHOLDERS OF THE COMPANY ARE URGED TO
READ ALL RELEVANT DOCUMENTS FILED WITH THE SEC, INCLUDING THE
COMPANY'S PROXY STATEMENT (IF AND WHEN AVAILABLE), BECAUSE THEY
CONTAIN OR WILL CONTAIN IMPORTANT INFORMATION ABOUT THE PROPOSED
TRANSACTION. INVESTORS AND SECURITY HOLDERS ARE OR WILL BE ABLE TO
OBTAIN THE DOCUMENTS (if and when available) free of charge at the
SEC’s website at www.sec.gov, or free of charge from the Company by
directing a request to Mark DeVita, EVP & CFO, at
mark.devita@crystal-clean.com.
No Offer or Solicitation
This release is not intended to and shall not constitute an
offer to buy or sell or the solicitation of an offer to buy or sell
any securities, or a solicitation of any vote or approval, nor
shall there be any offer, solicitation or sale of securities in any
jurisdiction in which such offer, solicitation or sale would be
unlawful prior to registration or qualification under the
securities laws of any such jurisdiction. No offer of securities
shall be made in the United States absent registration under the
U.S. Securities Act of 1933, as amended, or pursuant to an
exemption from, or in a transaction not subject to, such
registration requirements.
About Heritage-Crystal Clean, Inc.
Heritage-Crystal Clean, Inc. provides parts cleaning, used oil
re-refining, hazardous and non-hazardous waste disposal, emergency
and spill response, and industrial and field services to vehicle
maintenance businesses, manufacturers and other industrial
businesses, as well as utilities and governmental entities. Our
service programs include parts cleaning, regulated containerized
and bulk waste management, used oil collection and re-refining,
wastewater vacuum, emergency and spill response, industrial and
field services, waste antifreeze collection, recycling and product
sales. These services help our customers manage their used
chemicals and liquid and solid wastes, while also helping to
minimize their regulatory burdens. Through our used oil re-refining
program, during fiscal 2022, we recycled approximately 66 million
gallons of used oil into high quality lubricating base oil, and we
are a supplier to firms that produce and market finished
lubricants. Through our antifreeze program during fiscal 2022 we
recycled approximately 4.5 million gallons of spent antifreeze
which was used to produce a full line of virgin-quality antifreeze
products. Through our parts cleaning program during fiscal 2022 we
recycled 2.3 million gallons of used solvent into virgin-quality
solvent to be used again by our customers. In addition, we sold 0.6
million gallons of used solvent into the reuse market. Through our
containerized waste program during fiscal 2022 we collected
approximately 22 thousand tons of regulated waste which was sent
for energy recovery. Through our wastewater vacuum services program
during fiscal 2022 we treated approximately 84 million gallons of
wastewater. Heritage-Crystal Clean, Inc. is headquartered in
Hoffman Estates, Illinois, and operates through 105 branch and
industrial services locations serving approximately 104,000
customer locations.
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)
June 30, 2023
December 31,
2022
(unaudited)
ASSETS
Current assets:
Cash and cash equivalents
$
33,100
$
22,053
Accounts receivable - net
104,704
114,408
Inventory - net
47,024
40,727
Assets held for sale
—
1,125
Other current assets
14,652
12,989
Total current assets
199,480
191,302
Property, plant and equipment - net
232,318
222,942
Right of use assets
126,290
123,742
Equipment at customers - net
30,157
26,465
Software and intangible assets - net
97,091
102,335
Goodwill
112,236
112,236
Other assets
15,219
15,219
Total assets
$
812,791
$
794,241
LIABILITIES AND STOCKHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
52,602
$
55,087
Current portion of lease liabilities
28,490
27,277
Contract liabilities - net
3,259
2,525
Accrued salaries, wages, and benefits
9,339
12,443
Taxes payable
3,211
6,037
Other current liabilities
10,553
12,382
Total current liabilities
107,454
115,751
Lease liabilities, net of current
portion
103,426
100,738
Other long term liabilities
770
986
Long-term debt, net of current portion
84,479
89,383
Deferred income taxes
60,765
57,155
Total liabilities
$
356,894
$
364,013
STOCKHOLDERS' EQUITY:
Common stock - 36,000,000 shares
authorized at $0.01 par value, 23,687,649 and 23,593,163 shares
issued and outstanding at June 30, 2023 and December 31, 2022,
respectively
$
237
$
236
Additional paid-in capital
208,913
208,533
Retained earnings
247,057
221,826
Accumulated other comprehensive loss
(310
)
(367
)
Total stockholders' equity
455,897
430,228
Total liabilities and stockholders'
equity
$
812,791
$
794,241
Heritage-Crystal Clean,
Inc.
Condensed Consolidated
Statements of Income
(In Thousands, Except per
Share Amounts)
(Unaudited)
Second Quarter Ended,
First Half Ended,
June 30, 2023 (91
days)
June 18, 2022 (84
days)
June 30, 2023 (181
days)
June 18, 2022 (168
days)
Revenues
Service revenues
$
121,342
$
75,584
$
240,794
$
144,500
Product revenues
62,141
74,789
128,481
139,262
Rental income
8,683
6,274
16,372
12,251
Total revenues
$
192,166
$
156,647
$
385,647
$
296,013
Operating expenses
Operating costs
$
146,387
$
104,755
$
286,448
$
206,538
Selling, general, and administrative
expenses
20,361
15,024
38,061
28,759
Depreciation and amortization
11,802
6,777
23,969
13,285
Other (income) expense - net
(265
)
1,001
(734
)
791
Operating income
13,881
29,090
37,903
46,640
Interest expense – net
1,929
250
3,743
473
Income before income taxes
11,952
28,840
34,160
46,167
Provision for income taxes
3,310
7,733
8,929
12,182
Net income
$
8,642
$
21,107
$
25,231
$
33,985
Net income per share: basic
$
0.36
$
0.90
$
1.07
$
1.45
Net income per share: diluted
$
0.36
$
0.89
$
1.06
$
1.44
Number of weighted average shares
outstanding: basic
23,681
23,489
23,665
23,482
Number of weighted average shares
outstanding: diluted
23,931
23,644
23,898
23,640
Heritage-Crystal Clean,
Inc.
Reconciliation of Operating
Segment Information
(Unaudited)
Second Quarter Ended,
June 30, 2023 (91
days)
(thousands)
Environmental
Services
Oil Business
Industrial and Field
Services
Corporate and
Eliminations
Consolidated
Revenues
Service revenues
$
72,018
$
2,855
$
46,469
$
—
$
121,342
Product revenues
15,875
46,266
—
—
62,141
Rental income
8,072
11
600
—
8,683
Total revenues
$
95,965
$
49,132
$
47,069
$
—
$
192,166
Operating expenses
Operating costs
68,459
40,781
37,147
—
146,387
Operating depreciation and
amortization
3,641
2,675
2,398
—
8,714
Profit before corporate selling, general,
and administrative expenses
$
23,865
$
5,676
$
7,524
$
—
$
37,065
Selling, general, and administrative
expenses
20,361
20,361
Depreciation and amortization from
SG&A
3,088
3,088
Total selling, general, and administrative
expenses
$
23,449
$
23,449
Other (income) - net
(265
)
(265
)
Operating income
13,881
Interest expense – net
1,929
1,929
Income before income taxes
$
11,952
Second Quarter Ended,
June 18, 2022 (84
days)
(thousands)
Environmental
Services
Oil Business
Industrial and Field
Services
Corporate and
Eliminations
Consolidated
Revenues
Service revenues
$
59,277
$
2,604
$
13,703
$
—
$
75,584
Product revenues
12,633
62,156
—
—
74,789
Rental income
6,265
9
—
—
6,274
Total revenues
$
78,175
$
64,769
$
13,703
$
—
$
156,647
Operating expenses
Operating costs
56,812
35,841
12,102
—
104,755
Operating depreciation and
amortization
2,769
2,125
423
—
5,317
Profit before corporate selling, general,
and administrative expenses
$
18,594
$
26,803
$
1,178
$
—
$
46,575
Selling, general, and administrative
expenses
15,024
15,024
Depreciation and amortization from
SG&A
1,460
1,460
Total selling, general, and administrative
expenses
$
16,484
$
16,484
Other expense - net
1,001
1,001
Operating income
29,090
Interest expense – net
250
250
Income before income taxes
$
28,840
First Half Ended,
June 30, 2023 (181
days)
(thousands)
Environmental
Services
Oil Business
Industrial and Field
Services
Corporate and
Eliminations
Consolidated
Revenues
Service revenues
$
143,018
$
5,665
$
92,111
$
—
$
240,794
Product revenues
32,075
96,406
—
—
128,481
Rental income
15,639
17
716
—
16,372
Total revenues
$
190,732
$
102,088
$
92,827
$
—
$
385,647
Operating expenses
Operating costs
136,999
77,079
72,370
—
286,448
Operating depreciation and
amortization
7,140
5,280
5,476
—
17,896
Profit before corporate selling, general,
and administrative expenses
$
46,593
$
19,729
$
14,981
$
—
$
81,303
Selling, general, and administrative
expenses
38,061
38,061
Depreciation and amortization from
SG&A
6,073
6,073
Total selling, general, and administrative
expenses
$
44,134
$
44,134
Other (income) - net
(734
)
(734
)
Operating income
37,903
Interest expense – net
3,743
3,743
Income before income taxes
$
34,160
First Half Ended,
June 18, 2022 (168
days)
(thousands)
Environmental Services
Oil Business
Industrial and Field
Services
Corporate and
Eliminations
Consolidated
Revenues
Service revenues
$
114,479
$
5,212
$
24,809
$
—
$
144,500
Product revenues
25,013
114,249
—
—
139,262
Rental income
12,228
23
—
—
12,251
Total revenues
$
151,720
$
119,484
$
24,809
$
—
$
296,013
Operating expenses
Operating costs
114,837
70,006
21,695
—
206,538
Operating depreciation and
amortization
5,236
4,209
845
—
10,290
Profit before corporate selling, general,
and administrative expenses
$
31,647
$
45,269
$
2,269
$
—
$
79,185
Selling, general, and administrative
expenses
28,759
28,759
Depreciation and amortization from
SG&A
2,995
2,995
Total selling, general, and administrative
expenses
$
31,754
$
31,754
Other expense - net
791
791
Operating income
46,640
Interest expense – net
473
473
Income before income taxes
$
46,167
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
(Unaudited)
Second Quarter Ended,
First Half Ended,
(thousands)
June 30, 2023 (91
days)
June 18, 2022 (84
days)
June 30, 2023 (181
days)
June 18, 2022 (168
days)
Net income
$
8,642
$
21,107
$
25,231
$
33,985
Interest expense – net
1,929
250
3,743
473
Provision for income taxes
3,310
7,733
8,929
12,182
Depreciation and amortization
11,802
6,777
23,969
13,285
EBITDA (a)
$
25,683
$
35,867
$
61,872
$
59,925
Non-cash compensation (b)
1,197
1,292
2,455
2,785
Costs associated with mergers and business
acquisitions (c)
458
823
507
835
Loss on disposal of re-refinery assets
(d)
—
1,194
—
1,194
Provision for civil action settlement
(e)
—
750
—
750
Adjusted EBITDA (f)
$
27,338
$
39,926
$
64,834
$
65,489
(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)
Non-cash compensation expenses
which are recorded in SG&A.
(c)
Costs associated with mergers and
business acquisitions which are recorded in SG&A.
(d)
Loss on disposal of assets
related to our re-refinery operations.
(e)
Civil action settlement accrual
recorded in Corporate SG&A Expense.
(f)
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.
View source
version on businesswire.com: https://www.businesswire.com/news/home/20230809666854/en/
Mark DeVita, Executive Vice President and Chief Financial
Officer, at (847) 836-5670
Hertiage Crystal Clean (NASDAQ:HCCI)
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