November 14, 2012 Safe Harbor Statement All references to the - - PowerPoint PPT Presentation

HCCI Operations Presentation To Analysts & Investors November 14, 2012

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Safe Harbor Statement

All references to the “Company,” “we,” “our,” and “us” refer to Heritage-Crystal Clean, Inc., and its subsidiary. 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," "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 used oil re-refinery does not perform as anticipated; we are unable to generate sufficient funds to support

• ur used oil re-refinery; we are unable to collect sufficient used oil to run our used oil re-refinery at full capacity; the used oil

re-refinery may not generate the operating results that we anticipate; we do not realize the anticipated benefits from our acquisitions; 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

• ur handling of hazardous substances; the limited demand for our used solvent; our dependency on key employees; our

ability to effectively manage our extended network of branch locations; warranty expense and liability claims; personal injury litigation; dependency of suppliers; economic conditions 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 February 29, 2012 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.

HCCI Analysts/Investors Operations Presentation

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Presentation Overview

 Introductions  Environmental Services & Distribution Hub Review  Indianapolis Hub Tour  Oil Business & Review of Re-Refining Project  Virtual Re-Refinery Tour  Lunch  Re-Refinery Tour

HCCI Analysts/Investors Operations Presentation

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Environmental Services - Distribution Hub Operations

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 Service Offers

• Parts cleaning machines
• Containerized Waste
• Vacuum Services

 Branches

• 71 Facilities
• Primarily Sales & Service Activities

 Branches Need Support for Non-Sales & Service Activities

• Corporate Office
• Operations Hubs

Environmental Service - Overview

HCCI Analysts/Investors Operations Presentation

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Environmental Service Support

HCCI Analysts/Investors Operations Presentation

Parts Cleaning Machines, Clean Solvent, Aqueous Cleaners, Allied Products Used Solvent, Damaged Machines

Branches (71)

Parts Cleaning Waste Drums Vacuum Service

Containers to hold waste Containerized waste

Distribution Hubs (4)

3rd Party Facilities

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Utilize a hub-and-spoke system to support branch operations

Distribution Hubs – Service Branches

HCCI Analysts/Investors Operations Presentation

HUB

Branch Branch Branch Branch

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Distribution Hubs - Details

HCCI Analysts/Investors Operations Presentation

Atlanta, GA Indianapolis, IN Philadelphia, PA Shreveport, LA Service Area (U.S.) Southeast Midwest Northeast Southern & Western Branches Served 13 30 14 15 Square feet 26,000 32,000 30,000 20,000 Rail Access Yes No Yes Yes

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HCC Branch Locations

HCCI Analysts/Investors Operations Presentation

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Management of Returned Materials - Solvent

 Reuse Program

 Used reuse solvent is then sold to end-users

 Recycling Process

 Used solvent designated for our Non-Hazardous Program is fed into our fractional distillation process and recycled

HCCI Analysts/Investors Operations Presentation

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Indianapolis Hub Tour

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Oil Business

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Used Oil Re-Refining

Traditional Refining 89.4% Re-Refining (Safety- Kleen) 5.5% Re-Refining (8 Others) 3.6% Re-Refining (HCCI/Plan) 1.5%

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). (1) GPY is defined as gallons per year. (2) Management estimates the “Re-Refined” segment to be 29%. “Other” segment consists of asphalt plant fuel, space heater fuel, boiler fuel, steel mill fuel and other burning.

Total Volume: 2 BB GPY

Re-Refined 29% Fuel Use 71%

Total Volume: 945 MM GPY

U.S. Base Oil Supply by Source Used Oil Disposition in the U.S.(2)

(1) (1)

HCCI Analysts/Investors Operations Presentation

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Oil Business Success Triangle

Used Oil Collection

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

HCCI Analysts/Investors Operations Presentation

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Re-Refining Technology and Operations

 Production of marketable lubricant base oil requires hydrotreating, a process practiced at major refineries that adds significant complexity and capital cost  Critical issues are operability, economies of scale, and capital cost  Low capital cost per gallon of input or

• utput equals competitive advantage

 Several EPC firms willing to license re-refining technology

HCCI Analysts/Investors Operations Presentation

 Our management team has designed, constructed and

• perated the three largest

re-refineries in NA representing 65% available capacity  HCC re-refinery capital cost

• approx. $1 per annual

gallon of nameplate capacity; 50 million gallons  Start up six months ahead

• f schedule

HCC Highlights

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HCC Re-Refinery

 Construction of the re-refinery was completed at the end of 2011  Production and sale of base oil began in Q1 2012

HCCI Analysts/Investors Operations Presentation

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Used Oil Re-Refinery Yields

HCCI Analysts/Investors Operations Presentation

15.0% 12.5% 12.5% 60.0% BS&W Asphalt Extender Fuel Base Oil

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Increased Re-Refining Capacity

Additional Re-Refining Facility Expand Capacity of Indianapolis Facility

 Exploring multiple sites for a potential second facility  Working to obtain the air permit required to allow for additional input at the Indianapolis Facility  Air permit would be granted by IDEM (Indiana Department of Environmental Management)

HCCI Analysts/Investors Operations Presentation

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Re-Refinery Operations 2009 – 2012

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Re-refinery Operations – 2009 - 2012

HCCI Analysts/Investors Operations Presentation

 Siting and Design – 2009 - 2010  Staffing – 2010 - 2012  Construction & Handover – 2010 - 2011  First Year of Operation – 2011 - 2012

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Siting Activities

HCCI Analysts/Investors Operations Presentation

 HCC identified seven potential sites based on the following criteria

 Access to transportation  Proximity to HCC’s market  Site availability  Capital costs (infrastructure/ site procurement)  Permitting

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Siting Activities

HCCI Analysts/Investors Operations Presentation

 The candidate sites were compared by performing an extensive transportation study, modeling the projected volumes and collection points along with the costs for rail and OTR transportation.  The sites were also compared based on expected timing of permitting (air, land, etc.) and local regulatory requirements.  Local community acceptance of a facility such as ours played a significant role as we considered each potential site.  Indianapolis was the chosen site

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HCC Indianapolis Re-refinery - 2012

HCCI Analysts/Investors Operations Presentation

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Design Activities

HCCI Analysts/Investors Operations Presentation

 Safe operation was focus of design group (operations and engineering).

 Process Equipment designed to meet all standards for safe

• peration at Operating Conditions

 Process controls designed to eliminate process upsets  State of the art Fire Protection System

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HCC Indianapolis Re-refinery - 2012

HCCI Analysts/Investors Operations Presentation

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Staffing Activities – Re-refinery Support and Operation

Logistics Department Operating Staff

 Identified and hired Railcar Logistics Manager with 15+ years experience in railcar logistics and transportation modeling in industry  Identified and hired OTR Logistics Manager with 20+ years experience  Recruiting started in 2010 – targeting experienced

• perating/maintenance and laboratory personnel

 Identified former BP refinery closure in Yorktown, VA with available

• perating staff

 Recruited, hired and transferred 14 refinery operators (20+ years average experience) and maintenance foreman to Indianapolis  Recruited and hired Laboratory Manager with 10+ years experience within the industry

HCCI Analysts/Investors Operations Presentation

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Logistics Challenges – Bulk Shipments

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Railcar Fleet Increases

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HCC Indianapolis Re-refinery – Vacuum Distillation Unit

HCCI Analysts/Investors Operations Presentation

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Construction and Handover

HCCI Analysts/Investors Operations Presentation

 The construction, handover and start-up of HCCI’s Indianapolis Used Oil Re-refinery represented an extremely aggressive

• schedule. The Vacuum Distillation Unit construction schedule

was less than one year from start of demolition to mechanical

• handover. The Hydrotreating unit was completed and turned over

to operations within five months after the VDU start-up.  All Operating Manuals, Process Safety training, procurement of supplies, etc. were completed during the first half of 2011.  Shakedown schedule (time between Mechanical Handover and Start-Up) was minimized due to focused cooperation between engineering, construction and operations:

 Vacuum Distillation Unit – 16 days  Hydrotreating Unit – 19 days

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Construction Phase – Indianapolis Re-refinery

HCCI Analysts/Investors Operations Presentation

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First Year of Operation – Vacuum Distillation Unit

HCCI Analysts/Investors Operations Presentation

 The first year of operation was a learning process, identifying operating limitations and taking advantage

• f superior design.

 The Vacuum Distillation Unit performance test run showed that the unit could operate above design capacity with excellent product yields.  Compliance with Air Permit verified during extensive testing.

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First Six Months of Operation – Hydrotreating Unit

HCCI Analysts/Investors Operations Presentation

 The Hydrotreating Unit began producing high quality lubricating oils since start-up in January 2012.  Extended Shutdown in Q3 to debottleneck HT unit by adding additional catalyst reactor bed.  After debottlenecking project, HT unit has operated above design capacity.

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HCC Indianapolis Re-refinery - 2012

HCCI Analysts/Investors Operations Presentation

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Virtual Re-Refinery Tour

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Q&A