[PPT] - Needham Growth Conference January 10-12th, 2012, New York City PowerPoint Presentation

SLIDE 1

The Fourteenth Annual

Needham Growth Conference

January 10-12th, 2012, New York City

The Leading Growth Company Focused Investment Bank for 27 Years

Heritage – Crystal Clean, Inc. (HCCI) Q3 2011

SLIDE 2

Safe Harbor Statement

This presentation 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 complete our used oil re- refinery as anticipated; we are unable to generate sufficient funds to build and support our used oil re-refinery; the used oil re-refinery does not perform as anticipated; 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

HCCI Presentation to Needham Growth Conference 1-12-2012 2

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 on 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 March 4, 2011. 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 presentation should be evaluated in light of such risks and in conjunction with the consolidated financial statements and the notes thereto included in our filings with the SEC and available on our website. This presentation refers to historical Earnings Before Interest, Taxes, Depreciation, and Amortization (EBITDA) on pages 6 and 34; reconciliations of EBITDA to our net income determined according to U.S. GAAP can be found on

ur website, www.crystal-clean.com, in the Investor Relations section.

SLIDE 3

3

HCCI Introduction

SLIDE 4

HCCI Overview

Provider of industrial and hazardous waste services to small and mid-sized customers

2nd largest provider of parts cleaning services
Also a leading provider of containerized waste, used oil and vacuum services

Customers outsource the handling and disposal of parts cleaning solvents and containerized waste to HCCI; allows them to focus on core business

67 branches primarily in the eastern and central portions of the U.S.

– Service more than 44,000 customer locations

HCCI Presentation to Needham Growth Conference 1-12-2012 4

– Service more than 44,000 customer locations

Focus on small industrial manufacturers (i.e., metal product fabricators and printers) and

vehicle maintenance providers (i.e., car dealerships and automotive repair shops)

Services reduce the volume of hazardous waste generated and associated regulatory burden for its customers Strong recurring revenue business with substantial majority of parts cleaning revenues under automatically renewing service contracts Constructing a used oil re-refinery to leverage used oil collection business, expected to drive revenue growth with improved margins

SLIDE 5

Highly Experienced Management Team

Joseph Chalhoub President, CEO and Director, founder of Heritage-Crystal Clean Former President of Safety-Kleen 11 30+ 30+ Greg Ray CFO, VP of Business Management and Secretary Formerly VP of Business Management at Safety-Kleen 11 25+ 25+ John Lucks VP of Sales and Marketing Served as the VP of Industrial Marketing and Business Management at Safety-Kleen 11 30+ 11+

Name Position/Experience Years at Company Years of Industry Experience Years of Used Oil Experience

HCCI Presentation to Needham Growth Conference 1-12-2012 5

Management at Safety-Kleen Tom Hillstrom VP of Operations Formerly responsible for the Management of Several Recycling Plants and Strategic Planning and Acquisitions at Safety-Kleen 8 20+ 19+ Glenn Casbourne VP of Engineering Served as VP Engineering for Safety-Kleen and Project Manager for E. Chicago re-refinery 2 25+ 25+ Mike DeAngelis VP of Sales and Service Division 1 Previously in charge of $400 mm Sales Division at Safety-Kleen 11 35+ 25+ Glenn Jones VP of Sales and Service Division 2 Previously oversaw $300 mm Sales Division at Safety-Kleen 10 25+ 24+

SLIDE 6

$4.7 $8.1 $11.4 $11.8 $7.4 $10.3 $7.2 $6.3 $0.0 $4.0 $8.0 $12.0 2005 2006 2007 2008 2009 2010 Q1-3 2010 Q1-3 2011

$59.2 $73.7 $89.7 $108.1 $98.4 $112.1 $76.1 $98.0 $0.0 $40.0 $80.0 $120.0 2005 2006 2007 2008 2009 2010 Q1-3 2010 Q1-3 2011

Improving Financial Momentum

($ in millions)

Sales EBITDA(1)

YTD +29%

HCCI Presentation to Needham Growth Conference 1-12-2012 6

$3.0 $5.7 $8.6 $8.2 $3.1 $5.6 $4.0 $2.7 $0.0 $5.0 $10.0 2005 2006 2007 2008 2009 2010 Q1-3 2010 Q1-3 2011 $1.1 $2.5 $4.3 $4.5 $1.8 $3.3 $2.3 $1.7 $0.0 $2.5 $5.0 2005 2006 2007 2008 2009 2010 Q1-3 2010 Q1-3 2011

(1) 2007 figures exclude inventory impairment charge, independent investigation charge and gain on contract termination of $2.2 million, $0.9 million and $3.0 million, respectively. 2008 figures exclude inventory impairment charge and non-cash stock based compensation issued at IPO of $2.8 million and $3.2 million, respectively. (2) Assumes Company was a C-Corporation in all periods represented. 2008 figure reflects add backs of the $2.2 million one-time charge related to the reorganization from LLC to C-Corporation and $372 thousand charge on preferred and mandatorily redeemable capital units. 2008 adjustments tax adjusted at 40%.

Operating Income(1) Net Income(1,2)

SLIDE 7

Well Positioned in Large, Growing Market

Investment Highlights

$6B+ market opportunity
Focused on underserved small- and mid-sized business market
Proven, highly experienced management team
Executive team comprised of same individuals who played a major role in building Safety-Kleen

into a $2B market cap company prior to its sale to Laidlaw in 1998

Proven, Highly Experienced Management Team

HCCI Presentation to Needham Growth Conference 1-12-2012 7

Compelling Financial Model

Substantial used oil re-refining market opportunity
Further growth from existing branches
Geographic expansion; still expanding in the eastern half of the U.S.
New product and service extensions

Multiple Avenues for Growth Superior Value Proposition

Non-hazardous and product reuse programs reduce regulatory burden on customers and provide

cost savings

Differentiated customer service focus creates long-term client relationships
Recurring revenue model; substantial majority of parts cleaning revenues under automatically renewing

service contracts

Historical revenue growth rates in excess of 15% (2000-2010)
Improving route density and overhead leverage drive earnings growth

SLIDE 8

8

Industry

SLIDE 9

9% 9%

Large, Attractive Market

800,000 establishments in the U.S. engaged in manufacturing or vehicle maintenance (2) Establishments need to remove grease and dirt from engine parts with solvent

Vacuum Services Parts Cleaning

Market Addressed by HCCI(1) Key Characteristics

HCCI Presentation to Needham Growth Conference 1-12-2012 9

48% 33% Establishments generate used oil or waste paint which cannot be poured down the drain For small- and medium-sized generators, it is more cost-effective to

utsource to HCCI than manage

themselves

(1) Source: Management estimates. (2) Source: U.S. Census Bureau 2007.

Industrial Hazardous Waste

Total Market = $6.0 billion

Used Oil Services & Used Oil Re-Refining

SLIDE 10

Competitive Landscape

Highly fragmented

Competitors typically include smaller regional firms or companies operating in a single city

Significant barriers to entry

Route density is needed before profitability can be achieved
Significant capital is required to provide equipment for customer use
A used oil re-refining plant can cost tens of millions of dollars to build

HCCI Presentation to Needham Growth Conference 1-12-2012 10

A used oil re-refining plant can cost tens of millions of dollars to build
Permits required for transportation and operating sites

Safety-Kleen is a primary competitor in parts cleaning, containerized waste management, used oil collection, used oil re-refining and vacuum truck services

HCCI believes that it competes favorably based on customer service and broad service
ffering

SLIDE 11

11

Business Strategy and Operations

SLIDE 12

Service Offerings

Solvent-based Aqueous-based Other Waste identification Pickup and disposal

Parts Cleaning Drum Management All branches All branches

HCCI Presentation to Needham Growth Conference 1-12-2012 12

Used oil, antifreeze and oily water removal Liquids containing sediment or sludge

Oil Recovery Vacuum Services 60% of branches 45% of branches

SLIDE 13

HCCI – Value Proposition

Typically little to no administrative infrastructure in place; unsophisticated

perators

Reduced regulatory burden Reduced generator status More time to focus on mission critical

Situation Facing Small Generators Value Proposition to Customers

HCCI Presentation to Needham Growth Conference 1-12-2012 13

Significant time and costs required to properly manage waste disposal in compliance with regulatory requirements More time to focus on mission critical aspects of business Reuse of used solvent enables classification as non-hazardous waste

SLIDE 14

Environmentally-Friendly Services

Parts Cleaning Services designed to minimize regulatory burdens on customers:

Non-hazardous Program - the Company provides customers with an alternative solvent not included in the EPA’s definition of hazardous waste. After use by customers, HCCI can pick up this solvent, distill it and re-use it for sale to customers Product Reuse Program - rather than managing used solvent as a waste, HCCI uses it as an ingredient for roofing asphalt. As a result, the used solvent is not considered hazardous waste, which reduces regulatory requirements for customers

HCCI Presentation to Needham Growth Conference 1-12-2012 14

Eliminates hazardous waste Achieves waste minimization Reduces manifesting May reduce EPA generator status Less paperwork, fewer inspections, reduced hazardous waste taxes

SLIDE 15

Customers

Large and highly diversified base

Over 44,000 locations served
Conducted over 270,000 parts cleaning service calls in 2010
During 2010, top ten customers represented only 7.8% of sales

Focus on small to medium-sized waste generators

HCCI Presentation to Needham Growth Conference 1-12-2012 15

Focus on small to medium-sized waste generators

Of the size and scale where internal capabilities not effective or cost efficient
Generally less price sensitive than larger companies
Diverse mix of customers utilizing a broad range of services
Model structured for successful cross-selling of additional services

SLIDE 16

Operations

Route-based economic model Route density is a significant profit driver One HCCI representative provides both sales and service functions for each customer Entrenched relationships with customers Highly incentivized to provide excellent customer service and cross-sell

HCCI Presentation to Needham Growth Conference 1-12-2012 16

Highly incentivized to provide excellent customer service and cross-sell additional products / services Cost efficient branch model Operate a network of 67 branches; hubs located in Indianapolis, Shreveport, Philadelphia and Atlanta Plan to double used oil collection trucks this year Consolidation of administrative functions that are not critical to sales / service

SLIDE 17

Benefits of Branch Model

Strong sales culture at the branches Encourages cross-selling and exceptional support Expanded from 14 to 67 branches

ver 12 years

States Served

HCCI Presentation to Needham Growth Conference 1-12-2012 17

67 branches provide solid platform
Strong opportunities for share growth in

existing markets

Opportunities for Western, Northeastern, and

Southeastern expansion

Typically service new regions via satellite

branch, eventually develop new branch

After new branch developed, target

breakeven within 12 months

Opportunistically add grass roots locations in

new geographies

Strong Branch Economics Focus on Operational Excellence

SLIDE 18

18

Used Oil Re-refining

SLIDE 19

Used Oil Re-refining Opportunity

Traditional Refining 91.4% Re-Refining (Safety-Kleen) 5.1% Re-Refining (4 Others) 2.0% Re-Refining (HCCI/Plan) 1.5%

Total Volume: 2 BB GPY

U.S. Base Lube Oil Supply by Source Used Oil Disposition in the U.S.

Production of re-refined lubricating base oil limited by lack of

used oil re-refining capacity

Less than 10% of base lube oil is produced at re-refineries
Strong potential to capture market share from traditional oil

refining

HCCI Presentation to Needham Growth Conference 1-12-2012 19 Sources: Used Oil Re-refining Study to Address Energy Policy Act of 2005, Section 1838, U.S. Department of Energy, Office of Fossil Energy, Office of Oil and Natural Gas, July 2006, page 5-1 & 5-2 and Company estimates (data reported by DOE as of 1995 and 1996). Re-Refined 18% Asphalt Plant Fuel 29% Space Heater Fuel 12% Boiler Fuel 19% Steel Mill Fuel 8% Other Burning 14%

Total Volume: 945 MM GPY

High Value Added

Used Oil Disposition in the U.S.

Re-refined oil is preferred from environmental perspectives

such as resource recovery and reuse, energy efficiency and pollution prevention

Most used oil collected is used for lower quality fuel

applications at fraction of re-refined lube oil price

SLIDE 20

Snapshot of HCCI Re-Refining Project

50 million gallons per year used oil input Input Capacity Output Capacity 30 million gallons per year base lubricating oil output Construction started mid-2010 at Indianapolis site

HCCI Presentation to Needham Growth Conference 1-12-2012 20

Planned Timing Incremental Costs Expected Contribution Construction started mid-2010 at Indianapolis site Expect to begin lube base oil production around the end of 2011 Intermediate production (VGO) commenced during Q3 2011 Approximately $45-50 million capital cost and $5 - $10 million working capital Used oil collection ramp-up depressed 2010 operating income by $1 million and 2011

perating income by $2 million

At capacity, assuming March, 2010 oil prices, the Company expects the used oil re- refinery to achieve:

Approximately $90 million in annual revenue
Approximately 20% operating margin

SLIDE 21

Re-Refining Project Status

Project construction to date has gone well, allowing acceleration of targeted completion date

HCCI Presentation to Needham Growth Conference 1-12-2012 21

Executed $20 million 5-year Term A Loan to fund project

SLIDE 22

HCCI Used Oil Re-refining Experience

Trained at Breslube and managed successful

start-up of E. Chicago re-refinery

Oversaw used oil collection business at

Safety-Kleen

Extensive experience with acquisitions and

Joe Chalhoub, President and CEO

Chemical Engineer & Entrepreneur
1977 started Breslube Enterprises re-refinery

in Ontario, Canada

1987 sold controlling interest in Breslube to

Safety-Kleen, remained with business

Greg Ray, VP Business Mgt and CFO

1984 helped start Evergreen Oil re-refining

business in California

1987 oversaw growth of Evergreen’s used oil

collection business

1994 joined Safety-Kleen and took

Tom Hillstrom, VP Operations

HCCI Management helped create North American re-refining industry
Designed, built and operated two largest re-refineries in North America (currently owned by Safety-Kleen)

representing 75% of industry capacity

These two re-refineries continue to operate successfully and profitably

HCCI Presentation to Needham Growth Conference 1-12-2012 22

Extensive experience with acquisitions and

integration Safety-Kleen, remained with business

1991 led design and construction of SK E.

Chicago re-refinery

1994 joined Safety-Kleen and took

responsibility for used oil collection, expanding to create first nationwide used oil service

Led or managed numerous acquisitions

including #2 and #3 used oil collectors in U.S.

Glenn Casbourne, VP Engineering

Gary Farrar, VP Oil Supply & Byproducts

Chemical Engineer
Lead design engineer for both Breslube and
E. Chicago re-refineries
VP Engineering for SK and Project Manager

for E. Chicago re-refinery

Extensive experience in traditional refining

including major projects for British Petroleum and Citgo

Experience with all aspects of used
il, starting career as service rep/driver
Expanded Breslube oil collection in Canada

and U.S.

Responsible for procurement of used oil

feedstock and sale of re-refining byproducts

Experience with lube oil sales and

marketing, including work at Exxon, Mobil, and Valero

Developed re-refined base oil markets for

Safety-Kleen

Management experience with

blender/compounder

Cary Palulis, VP Base Lube Sales

SLIDE 23

Oil Re-Refining Success Triangle

HCCI Presentation to Needham Growth Conference 1-12-2012 23

Used Oil Collection

Source: J. Chalhoub presentation to Fifth International Conference on Recovery and Reuse, November 1983, Las Vegas, NV.

SLIDE 24

Used Oil Collection

Our goal is to collect enough feedstock to ensure self-sufficient plant

peration

Used oil can be collected from wide geography but transportation economics are important; a large branch network is key Operation of many trucks serving thousands of generators requires significant investment in infrastructure and management

HCCI Presentation to Needham Growth Conference 1-12-2012 24

significant investment in infrastructure and management Most often, customers are looking for used oil collector to provide a menu of corollary services, adding complexity to the business

SLIDE 25

Re-Refining Technology

Production of marketable lubricating base oil requires hydrotreating, a process practiced at major refineries that adds significant complexity and capital cost Several EPC firms willing to license re-refining technology and designs including distillation and hydrotreating Critical issues are operability, economies of scale, and capital cost

HCCI Presentation to Needham Growth Conference 1-12-2012 25

Critical issues are operability, economies of scale, and capital cost Inconsistency of used oil feedstock, including industrial waste contaminants, creates need for screening and testing programs and robust process Other firms with less experience have been unable to deliver acceptable performance in commercial scale plants

SLIDE 26

Lube Product Sales

We expect our re-refinery will produce high quality lubricating base oils Product acceptance can require engine sequence testing to demonstrate API/SAE performance Marketing plan includes base oil sales to independent blenders/compounders

HCCI Presentation to Needham Growth Conference 1-12-2012 26

Longer term opportunities to go downstream and sell blended and packaged lubricants

SLIDE 27

27

Growth Strategies

SLIDE 28

Same-Branch Sales Growth Geographic Expansion Expanded Service Offerings

Growth Strategies

HCCI Presentation to Needham Growth Conference 1-12-2012 28

Potential Acquisitions Geographic Expansion

SLIDE 29

Same-Branch Sales Growth Geographic Expanded Service Offerings

Growth Strategies – Same-Branch Sales

Obtain new customers in existing markets Cross-sell multiple services to existing customers Increase route density to further expand operating margins Same branch sales growth averaged 18% per year from 2004 to 2008 across the established branches; however declined 11% in 2009 due to the recession. Recovery in 2010 resulted in same branch sales growth of 13%.

HCCI Presentation to Needham Growth Conference 1-12-2012 29

Potential Acquisitions Geographic Expansion

in same branch sales growth of 13%. Accelerate growth through integrated sales and service approach; utilize incentives, such as commission and awards to drive sales

SLIDE 30

Same-Branch Sales Growth Geographic Expanded Service Offerings

Growth Strategies – Expanded Service

All branches offer parts cleaning and containerized waste services Only 60% and 45% of branches offer used oil collection or vacuum truck services, respectively, presenting significant

pportunity for further market penetration

Long history of introducing and developing new business programs

HCCI Presentation to Needham Growth Conference 1-12-2012 30

Potential Acquisitions Geographic Expansion

New business programs in development to be offered through branches

SLIDE 31

Growth Strategies – Geographic Expansion

Same-Branch Sales Growth Geographic Expanded Service Offerings

Operate from 67 branches servicing 41 states Significant opportunities for expansion, especially within the Northeastern and Southeastern U.S. Long term opportunity exists to develop Western U.S. and international branches

HCCI Presentation to Needham Growth Conference 1-12-2012 31

Potential Acquisitions Geographic Expansion

SLIDE 32

Growth Strategies – Potential Acquisitions

Same-Branch Sales Growth Geographic Expanded Service Offerings

Successfully acquired and integrated the assets of several small companies over past decade Early 2011 purchased Warrior Oil and affiliates for approximately $4 million to add used oil collection volume in Indiana, Kentucky, and Illinois Additional acquisition opportunities exist, particularly in used

il collection due to fragmented nature of industry

HCCI Presentation to Needham Growth Conference 1-12-2012 32

Potential Acquisitions Geographic Expansion

Growth plans don’t depend on acquisitions; more than 90% of historic growth has been organic

SLIDE 33

33

Financial Overview

SLIDE 34

Financial Highlights

Demonstrated strong growth in financial performance from 2005 to 2010
Sales CAGR of 13.6%
EBITDA CAGR of 17.0%(1)
Operating income CAGR of 13.3%(1)
Emerging from difficult economic environment during severe recession in 2008-2009 to

show strong year-over-year improvement in 2010

After new branch developed, target breakeven within 12 months and strong free cash flow

HCCI Presentation to Needham Growth Conference 1-12-2012 34

After new branch developed, target breakeven within 12 months and strong free cash flow

beginning in Year 3

Profitability enhancements over time include leveraging SG&A and other fixed costs and

implementing price increases

First 3 quarters consist of 12 weeks; fourth quarter consists of 16 or 17 weeks
Estimated re-refining construction costs of approximately $45-50 million and EBITDA

impact of $1 million in 2010 and expect $2 million impact in 2011 related to roll-out of additional used oil collection capacity

(1) 2007 figures exclude inventory impairment charge, independent investigation charge and gain on contract termination of $2.2 million, $0.9 million and $3.0 million, respectively. 2008 figures exclude inventory impairment charge and non-cash stock based compensation issued at IPO of $2.8 million and $3.2 million, respectively.

SLIDE 35

Long History of Strong Revenue Growth

($ in millions)

$80.0 $100.0 $120.0

HCCI Presentation to Needham Growth Conference 1-12-2012 35

$0.0 $20.0 $40.0 $60.0 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010

SLIDE 36

Improving Average Sales Per Working Day

($ in thousands)

$460 $475 $480 $540 $640

$500 $600 $700

HCCI Presentation to Needham Growth Conference 1-12-2012 36

$325 $345 $360 $380 $390 $420 $440 $430 $395 $380 $380 $390 $400 $430 $460 $475

$200 $300 $400

Q1 '07 Q2 '07 Q3 '07 Q4 '07 Q1 '08 Q2 '08 Q3 '08 Q4 '08 Q1 '09 Q2 '09 Q3 '09 Q4 '09 Q1 '10 Q2 '10 Q3 '10 Q4 '10 Q1 '11 Q2 '11 Q3 '11

SLIDE 37

37

Conclusion

SLIDE 38

Well Positioned in Large, Growing Market

Investment Highlights

$6B+ market opportunity
Focused on underserved small- and mid-sized business market
Proven, highly experienced management team
Executive team comprised of same individuals who played a major role in building Safety-Kleen

into a $2B market cap company prior to its sale to Laidlaw in 1998

Proven, Highly Experienced Management Team

HCCI Presentation to Needham Growth Conference 1-12-2012 38

Compelling Financial Model

Substantial used oil re-refining market opportunity
Further growth from existing branches
Geographic expansion; still expanding in the eastern half of the U.S.
New product and service extensions

Multiple Avenues for Growth Superior Value Proposition

Non-hazardous and product reuse programs reduce regulatory burden on customers and provide

cost savings

Differentiated customer service focus creates long-term client relationships
Recurring revenue model; substantial majority of parts cleaning revenues under automatically renewing

service contracts

Historic revenue growth rates in excess of 15% (2000 – 2010)
Improving route density and overhead leverage drive earnings growth

SLIDE 39

For more information, please contact: Greg Ray, CFO & VP Heritage – Crystal Clean, Inc. 2175 Point Blvd., Suite 375 Elgin, Illinois 60123 (847) 836-5670 Greg.Ray@Crystal-Clean.com

39

Or visit our company website at: www.crystal-clean.com

SLIDE 40

The Fourteenth Annual

Needham Growth Conference

January 10-12th, 2012, New York City

The Leading Growth Company Focused Investment Bank for 27 Years