Heritage-Crystal Clean, Inc
Q1 2016 Earnings Call Transcript

Published: 9 May 2016

[Operator:]

Good morning ladies and gentlemen and welcome to the Heritage-Crystal Clean, Inc. First Quarter 2016 Earnings Conference Call. Today's call is being recorded. [Operator Instructions] Some of the comments we will make today are forward-looking. 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 statements involve a number of risks and uncertainties that could cause actual results to differ materially from those anticipated by these forward-looking statements. These risks and uncertainties include a variety of factors, some of which are beyond our control. These forward-looking statements speak as of today, and you should not rely on them as representing our views in the future. We undertake no obligation to update these statements after this call. Please refer to our SEC filings, including our annual report on Form 10,-K as well as our earnings release posted on our website, for a more detailed description of the risk factors that may affect our results. Copies of these documents may be obtained from the SEC or by visiting the Investor Relations section of our website. Also please note that certain financial measures we may use on this call -- such as earnings before interest, taxes, and depreciation, amortization, EBITDA -- are non-GAAP measures. Please see our website for reconciliations of these non-GAAP financial measures to GAAP. For more information about our Company, please visit our website www.crystal-clean.com. With us today from the Company are the Founder, President, and Chief Executive Officer, Mr. Joseph Chalhoub; the Chief Operating Officer, Mr. Greg Ray; and the Chief Financial Officer, Mr. Mark DeVita. At this time, I would like to turn the call over to Joe Chalhoub. Please go ahead, Sir.

[Joseph Chalhoub:]

Thank you, and welcome to our conference call. Last night we issued our first quarter 2016 press release and posted it on the Investor Relations page of our website for your review. This morning, we will discuss the financial statements and our operations for the first quarter, and we will respond to questions you may have relating to our business. Our first quarter revenues were $78.5 million compared to $84 million in the first quarter of 2015, a decrease of 6.6%. The decrease was primarily due to a decrease in the pricing of our oil products in the oil business segment due to the lower crude oil prices. In our environmental services segment, revenues decreased 1% compared to the first quarter of 2015. The lack of growth in this segment is primarily the result of a decline in activity of customers, in and around the oil industry, and lower energy surcharge revenue due to lower energy costs. Even with the slight decline in revenue, we are pleased that we were able to increase our operating margins in the segment by almost 300 basis points in the first quarter of 2016 compared to the first quarter last year. While the headwinds to our environmental services revenue growth have been stronger than anticipated, we believe our focus on cross-selling to our over 100,000 customer locations will allow us to return to our historical growth rate before the end of fiscal 2016. First quarter results in the oil business segment were negatively impacted by the continued decline in the price of crude oil during January and February, which led to a decrease in the price of our product. During the first quarter, revenue decreased $5.1 million or 16.2% compared to the first quarter of fiscal 2015. However, we were able to make progress in several areas of the business which should position us for improved performance during the remainder of 2016. During the first quarter, we increased the weighted average price we charge our customers for our used oil collection service by over $0.25 per gallon compared to the fourth quarter of fiscal 2015. This contributed approximately $4 million in revenue during the first quarter. In addition, we were able to increase the revenue generated from our used oil filter collection services to $1.7 million, which is more than double the revenue generated from this service during the first quarter of 2015. We also increased revenue generated from our oily water disposal service. Despite these improvements in fees we did not improve the spread between the selling price of our oil products and the Street price for our used oil collection service during the first quarter. Due to this situation we aim to continue to increase our Street prices with the goal of improving our strength and restoring our spread to the level we've enjoyed before the collapse of the price of crude. We are pleased with the production record we've set for the first quarter at our re-refinery. Due to the increased nameplate capacity of 75 million gallons per year, we were able to produce more base oil than any previous 12-week quarter since we began operating our re-refinery. During the quarter, we produced base oil at approximately 96% of our nameplate capacity. We have the opportunity to further increase production and produce base oil at rates above the nameplate capacity of the re-refinery in the future. Although the past few quarters have been very tough in the oil business segment, there have been recent changes in the price of crude oil, which should help improve the price of our oil products and provide us with opportunity to eliminate future losses on a pre-SG&A expense basis in this segment. In the past week, both Chevron and Exxon increased their posted price by $0.20 per gallon for the type of base oil we sell. These improvements in selling price, along with our planned changes to Street price, should help the oil business reach breakeven during the second half of fiscal 2016. Our Chief Financial Officer, Mr. Mark DeVita, will now further discuss the financial results, and then we will open the call for your questions.

[Mark DeVita:]

Thanks, Joe. I appreciate the opportunity to discuss HCCI's first quarter 2016 results with our investors today. In the environmental services segment, sales decreased $0.5 million in the first quarter compared to the first quarter of 2015. As Joe mentioned, first quarter revenue declines resulted in part from a decline in activity of customers, in and around the oil industry, and lower energy surcharge revenue. The negative oil industry impact was felt primarily in our vacuum services and parts cleaning businesses. Of the 83 branches that were in operation throughout both the first quarter of 2016 and 2015, the growth in same-branch sales was 1.2%. Our average sales per working day in the environmental services segment decreased to approximately $870,000 compared to $880,000 in the first quarter of fiscal 2015, and decreased from $900,000 in the fourth quarter of 2015. In the oil business segment, sales for the first quarter were down $5.1 million from the first quarter of 2015. The decrease in revenue was due to lower selling prices for our base oil and recycled fuel oil products. The average price for our base oil product decreased by approximately 35% compared to the first quarter of fiscal 2015. This decrease was partially offset by the increase in used oil collection service revenue of almost $4 million. We are pleased with the improvement in the operating margin in our environmental services segment. Our profit before corporate SG&A in the environmental services segment increased to 26.4% during the first quarter of 2016 compared to 23.5% in the first quarter of 2015. The 26.4% figure represents a record high for a first quarter for this segment. This result was achieved despite the requirement to write down our solvent inventory by approximately $0.8 million, due to the continued decline in solvent prices which is related to the decline in crude oil price. In the first quarter, our oil business experienced a loss before corporate SG&A of $2.9 million compared to a loss before corporate SG&A of $1.7 million in the first quarter of 2015. The operating margin in our oil business was negatively impacted by the continued low selling prices for our oil products. Due to these lower selling prices, we were forced to write down the value of our oil product inventory by approximately $0.7 million during the quarter. Corporate SG&A was 15.6% of revenues, up from 13.2% in the year-ago quarter. Compared to the first quarter of fiscal 2015, costs increased in the first quarter of fiscal 2016 primarily due to higher legal fees. At the end of the quarter, we had $69.6 million of total debt and $22.4 million of cash on hand. We incurred $518,000 of interest expense for the first quarter of 2016 compared to interest expense of $554,000 in the year-ago quarter. For the first quarter, we experienced a loss of $1.8 million compared to a loss of $0.9 million in the first quarter of 2015. Our basic and fully diluted loss per share for the quarter was $0.08 compared to $0.04 in the year-ago quarter. After adjusting for our inventory write-down and non-cash compensation, our adjusted basic and fully diluted loss per share was $0.03 for the first quarter of fiscal 2016. Thank you for your continuing interest in Heritage-Crystal Clean. At this time, I will turn control of the call over to our operator to advise you of the procedure for submitting your questions.

[Operator:]

[Operator Instructions] And our first question comes from David Mandell with William Blair. Your line is open.

[David Mandell:]

Good morning guys. Environmental services sales -- kind of three parts. Were you able to get price this year? How are industrial customers trending? And can you quantify the impact of the lower oil fuel surcharge?

[Mark DeVita:]

This is Mark. Our biggest impact -- and we alluded to it in our prepared remarks -- for environmental services was related to this theme that we've talked about, price, since Q3 earnings call. And that is the overall impact from the oil business -- excuse me, oil industry and energy industry downturn. And that really amounted to almost a 6% headwind there. The surcharge was less than $300,000. It was an impact. And most of that energy surcharge, as far as the revenue side, is completely tied to energy cost, things such as diesel. So as that goes, and we've experienced benefit on that end, as well, and our cost of sales are operating expense. But the revenue line impact was again a little less than $300,000 negative, quarter-over-quarter.

[David Mandell:]

Okay. And then, as far as branch openings -- what's your plan for this year?

[Mark DeVita:]

We're not going to deviate too much from our traditional pre-FCCE plan. We have actually, net-net, around the same amount of branches now as we did in the first quarter. We did, as part of some of our review work in trying to make sure that we were being efficient with our cost, we've added some, closed some. But we're still around just over 80 branches. I think technically today we are at 81. So while we are still in that add branch mode at maybe three -- or I think we've traditionally been, pre-FCCE, three to four a year. We will probably be in that same range, maybe the low end. But on a net basis, it might be a branch or two lower if we find that there are some branches that we're just not being efficient enough in. I don't know if Joe or Greg want to add anything to that.

[David Mandell:]

All right. Thanks for taking my questions.

[Operator:]

Thank you. And our next question comes from Luke Junk from Baird. Your line is open.

[Luke Junk:]

Good morning guys. Mark, a couple of follow-ups on the environmental business. First question just on the fuel surcharges -- wondering how those work contractually. Obviously fuel down a lot of last year; I guess you didn't call it out then. Is that a real-time adjustment, as fuel goes down, that you lower their surcharge? Or is it somehow tied to, say, an annual contract where that would adjust on only a periodic basis? Any help there would be great.

[Mark DeVita:]

I can't speak to each; there might be individual circumstances. But in general, it's tied to Department of Energy postings on a lagged basis. So it is somewhat systematic for most of the business. There are some exceptions, but the majority of it is tied to DoE postings. And then it's a month or two in arrears, then we make adjustments. So it will lag the change. And I don't know, again, if Greg or Joe have anything to add.

[Greg Ray:]

I think that's a good explanation, Mark.

[Luke Junk:]

And then second on the cross-selling initiatives that you mentioned both in the press release and in your prepared remarks -- just curious if you can maybe put in context how much progress you've seen in this regard already, or kind of what the status is there? Or maybe said differently, how much of the opportunity is still in front of us? Is it mostly incremental from here, you'd say?

[Greg Ray:]

I didn't get the question. I'm sorry.

[Mark DeVita:]

On cross-sell, what's the opportunity from here? I think we are just starting. But, Greg, you can --.

[Greg Ray:]

I'm happy to respond. So we really have been doing cross-selling intrinsic to our business model from our inception. And we do it because we have a bunch of guys in the branch who sell different services, and are encouraged to promote each of the services, and talk about it with other people that they work with. And we have unifying salespeople, like our branch sales managers and our branch managers, who call on customers and represent all the services. What we're doing a little bit differently this year -- and we've just kicked it off in the last few months -- is we're trying to be more structured or systematic with respect to our cross-sell. We're starting to measure, across our customer base, the number of services of different types that each customer uses. And we're trying to incent and reward our field salespeople for cross-penetrating and increasing the number of services that our customers are buying from us. We're doing this, obviously, because we get more revenue when we increase the penetration and cross-sell. In addition, we are doing it because that our data suggests that customers that use us for more services remains with us longer, are more loyal, and less likely to switch. So we're just at the infancy of trying out different incentive systems. Those of you who know our Company know we use contest and rankings and things like that to reward people and keep a high level of interest. And if we are able to be successful with this, and see material improvement, then we will be reporting back to you in the coming quarters about that in more tangible terms, in the context of what success we're having. But right now, we are just at the beginning, and we know that there's tremendous potential for us to sell more services to existing customers. Most of our customers use only a small fraction of the breadth of services that we offer. And most of our customers have potential to use us for significantly more services, and that's the target that we are addressing.

[Luke Junk:]

That's great color, Greg. Appreciate that. If I could just sneak one last one in on SG&A -- Mark, you had mentioned in your prepared remarks that one of the factors that led to the increase this quarter was higher legal fees. I guess if I look back to the first three quarters of last year, you guys were running in the, say, $10.5 million range, give or take. Was the legal fee most of the delta there? Does that go away as we go into the second and third quarter here?

[Mark DeVita:]

Good question. That is most of the delta, yes. We believe it will taper off, although we might see it continued in some form -- maybe not as high as it was in Q1, but elevated costs for the next quarter or two. Most of this is related -- the reason we say it will taper off -- is most of it is related to legacy issues that are progressing, related to the FCC Environmental acquisition. So it's just something we have to finish working through.

[Luke Junk:]

Great. Thank you very much.

[Operator:]

Thank you. And our next question comes from Sean Hannan with Needham & Company. Your line is open.

[Sean Hannan:]

Yes, good morning, folks. Thanks for taking my question here; I have a number of them, actually. First, on the environmental services side -- and not necessarily trying to give you guys a hard time -- but the drop year-over-year still doesn't make a ton of sense to me. Within a somewhat comparable business, the Safety-Kleen business at Clean Harbors was actually seeing accelerating progress. So is there a way to maybe step back and think about any commentary you can provide about either customer losses as perhaps share losses? Or maybe in a different way of thinking about it, perhaps even being outhustled in terms of new acquisition to take away from, say, some of the smaller mom-and-pop regional players? Thanks.

[Greg Ray:]

This is Greg speaking. We think it's very clear in our minds that these losses we've been talking about are related to oilfield activity and fracking activity, and the reduction in that kind of business in the last nine months. When we look at it, we've identified specific accounts that we've lost; or have, in many cases, not lost, but just seen tremendous reduction in activity in certain market areas that we've identified and quantified and reviewed with our sales team, and go over account by account to understand what really went on with these accounts. And these are accounts that were involved in drilling. Some of them are pipe yards. Some of them are involved in producing materials that are used in the fracking industry. And we see it on a geographic basis, so that when we look at our business the areas that you would expect would have this kind of activity -- in Texas and Louisiana, and other markets that we serve that are linked to oilfield services -- are the only markets where we've seen this kind of decline, and we're not seeing it in other areas. I can't comment on why a competitor wouldn't see the same thing, unless they are disproportionately underrepresented in that space, or have something else to compensate for it. So I don't know why they are not experiencing the same thing we are. But it's very clear in our minds that it is not a loss of accounts competitively at this time. It's not something where we feel that it's going to be sustained long-term as a headwind. What we said several quarters ago was that we saw this happening late in the second half of 2015. We were losing a significant amount of this type of business, and it was sort of getting to the bottom very quickly. And we felt that the comparisons would remain difficult for four quarters, and then it would get easier again. So looking forward to by the halfway point in 2016, having the comparisons over, with respect to when we had that type of business in the prior year and at that point being able to show more of the traditional kinds of ES growth rates that you are used to from us.

[Sean Hannan:]

Sure, Bob. And I certainly appreciate that. Just in terms of the offset overhang from that subspace, which is -- certainly wasn't pronounced as it was this quarter versus the last few quarters. But your commentary is helpful.

[Greg Ray:]

And if I could add to that, maybe one reason it was -- and I might have commented on this in a prior conference call -- but some of this is that when those customers slow down or start closing facilities or mothballing things, sometimes that can lead to not only a sustained or lagged impact on our revenue, but it can even bump up the revenue in a particular account. Because there is cleanout work to be done or things that we have to do for them as they go into a dormancy stage, so that maybe why it accelerated in terms of the perceived impact. But not a big difference in our minds from what we thought was coming a quarter or two ago.

[Joseph Chalhoub:]

This is Joe here. And in the addition, we when we were looking at last -- when we look at last year, and we were looking at the numbers for 2015, and we were comparing them to the previous year 2015 is the first full year we've had the FCC revenue -- ES revenue in. So now that we are in a stable form, it's much clearer to see this thing. And as Greg said, we've gone in to these specific regions that have been affected, and analysed it, account by account.

[Sean Hannan:]

Sure. And that's very appreciated. Now on the pricing side, can you talk a little bit on -- I'm sorry; pricing floor of the re-refined oil -- can you talk a little bit about your observations in terms of what's very easily tracked for many of us in the posted price is, versus what you are actually realizing in pricing. How has that been trending in the industry in terms of that spread -- different than the business spread?

[Joseph Chalhoub:]

Yes. I'll give you some indication here. Mark may add the -- if there's anything specific. But when we started the quarter -- the first quarter, and you get the posting and then you have the actual activities on the -- we started the quarter at much higher base oil; average base oil selling price where we've ended. And so we've seen a decline during the quarter -- towards the end of the quarter, there was already a bit of an uptick from the low point. And that uptick continues, and has continued now in the second quarter. We have seen the impact of -- first, there has been two price increases. The first one, all of the oil major players have gone in and put the price of about $0.15 per gallon. Although Motiva stayed behind for an extended period of time, the rest of the players in the oil industry have put the price up by $0.15, but Motiva followed. So the first round went to the system, and we've enjoyed the results of that increase. Now we have a second round starting with Chevron. Chevron put the price up by $0.20 -- this is just the last few days -- and then this week, also, Exxon went up by $0.20. Motiva hasn't pronounced any price increases. When one player puts its price up, the market doesn't necessarily respond; but when the two big players put the price up and the market starts to respond. So we are hopeful that we see the rest of the major oil producers follow the lead of these two larger players, and then we'll enjoy most of that increase when that happens.

[Sean Hannan:]

Okay. I guess what I'm trying to get at is that if you look to kind of a trough point within the last four or five months in the realized pricing that you are getting, is that uptick that we are seeing today -- is that outpacing where the posted prices have been changing?

[Mark DeVita:]

Well, it certainly hasn't yet, due to the recency of -- this is Mark, Sean -- due to the recency. Joe mentioned, it's been in the last week or so -- the two, Chevron and Exxon, have moved again. So we are seeing in our actual selling price some uptick from what we hope is the trough, at least the most recent trough from the end of the quarter. But if you take Shell had -- or Motiva had moved up I think $0.15. And then they were kind of catching up to where Chevron was, and had increased their posted prices right at the end of March. And then you throw on another $0.20 on top of, that we certainly haven't seen a $0.35 or $0.40 uptick in our pricing yet.

[Greg Ray:]

Let me help clarify this -- our expectation, the way we normally think about our business, is that, yes, the majors have posted prices and then they actually trade a lot of their activity at discounts off their posted prices, and re-refiners often have a further discount. But if the majors, as a group, move up by X cents a gallon, then subject to a month or six-week lag that sometimes occurs, we expect that our price is likely to move up by the same X cents, plus or minus a few percent. And so from the bottom, we've already seen a confirmed $0.15 improvement in posted prices. And we will get most of that unless there's something strange that happens over the course of the next ensuing few weeks. And if this $0.20 price increase that Chevron and Exxon have announced gets confirmed by the other major players, and sort of becomes the new prevailing price at the market, we would expect to get that further $0.20 improvement on our base oil -- again, in a month, in a month and a half, something like that to fill orders and get it through the system. And so it's a pretty good indication. It's not always the way it works, I would hasten to add, because there are times when majors move their postings, but their real discount off the posting could change. And that could affect how much we could realize, but that's not what we think of as normal and what we expect in the current round. Is that helpful?

[Sean Hannan:]

Absolutely. If you do the math on it, obviously we got skewed a little bit because some of these recent price raises just happened; there is a lag effect. But if you do the math on it, you guys actually should see some of that delta, in time, close.

[Greg Ray:]

And it doesn't take years. It will take a month to two months, something like that.

[Sean Hannan:]

Right.

[Greg Ray:]

So we're feeling good about that. And we're feeling that -- as Joe mentioned earlier -- in order to restore our spread, we're still working at increasing our charge for oil on the Street. And doing that and making further progress in increasing our charges, and getting a benefit on the loop price at the same time, is putting us in a position where we're feeling like we can restore the spread in the next quarter to a level that we were thinking was reasonable a year ago. But there are still a bunch of ifs there; we appreciate that. And we have to execute. But that's the path we're on.

[Sean Hannan:]

Wonderful. Thanks, folks.

[Operator:]

Thank you. And our next question comes from Kevin Steinke with Barrington Research. Your line is open.

[Kevin Steinke:]

Good morning, everyone. Thank you. I wanted to follow-up on environmental services. I don't know if you can give us the percentage of accounts, or percentage of environmental services revenue that are tied to the energy industry, or those particular geographic regions that you are talking about.

[Mark DeVita:]

This is Mark. As far as the number of branches, it's less than 10 branches. As far as their total revenue from those branches, I don't have that handy. But I do know that we measure the impact. And I think I've referenced this earlier, that we think it's negatively impacted our revenue by almost 6% in Q1. Is that all of the revenue there? No. And I would tell you, from a customer relationship standpoint, while I don't have the exact numbers in front of me -- in general, we're not losing customers. It speaks to a point Greg made earlier about us being -- working hard and keeping relationships there. In almost all cases, it's just a downturn in their activity. There have been some companies that have closed facilities; so in those cases, there is no more business. But we still have those relationships which should -- and we are not banking on it, by any stretch -- but even within those markets, should their activity increase again, we feel like we are well positioned to participate in that. But I can't tell you the exact amount of revenue that we still have across all these affected customers.

[Kevin Steinke:]

Okay. That's helpful, though, in terms of the number of branches. So just shifting gears to the oil business, where did you exit the quarter in terms of your average per-gallon charge for used oil, or where does it stand today? If you could give us any more color or quantification on where your charge for oil is, that would be helpful.

[Mark DeVita:]

If you remember, we spoke a couple of months ago, when we were going over Q4 results, we said that we had reached close to -- I think it was the mid-30s on a cents per gallon basis, for our charge. We are in that same range right now. We have seen somewhat of a headwind as crude has come up in price since that time. You've probably noticed that Brent and WTI have come back up. But we've done a pretty good job in holding most of the improvement. And you can see that in the weighted average number being over $0.25. So we are in that same range. I think the important thing to note is what Joe said in his prepared remarks, which is we don't think where we're at is where we need to be. We know we need to do more, and we are going to do more to increase that.

[Joseph Chalhoub:]

I'd like to maybe add a little bit more color on our pricing on the used oil. When we -- during the beginning of the year, last quarter, we went in aggressively to put these charges in that were needed to restore the spread, and we set it as a target. We were able to achieve it. We shared it with you. And I'm also pleased to see that overall the industry, the used oil processing industry, has also got into improve the service fees in order to minimize the losses in this industry. Now that we've achieved the first target, we can go back and we are looking at it, and the price of fluid is moving. But as we said earlier, we feel that we need to further have an uptick, now that we see the rest of the industry moving in the same direction.

[Kevin Steinke:]

Okay. That's helpful. And it is good to hear that the industry is moving in the same direction, although Mark also kind of mentioned there that it may be a little bit of a headwind from higher crude oil prices. But you haven't seen that kind of impact, the mentality of used oil collectors in terms of, well, they are not going to be as aggressive now on charging, now that crude oil prices have come up. Have you seen any of that at all, and that impacting your ability to increase?

[Joseph Chalhoub:]

We haven't seen it. That doesn't mean that it may not happen; we haven't seen it. Where we've had -- it's not really an issue. The reality is we do have very limited number of accounts at large that is part of the way we conduct business through the year is we have a formula that is attached to the price of crude. So when the price of crude goes up, we charge that, and when it goes down we charge more. So that is a very small number of our customers. And the vast majority of our customers, we don't have that formulation; so we are able to increase the fees when we decide to increase the fees.

[Greg Ray:]

I'd add that we've shared with you; we are in the $0.30 range for Street charges. And we've talked in prior calls about the magic or difficulty of that zero price point for customers. And today if somebody is charging less than we are -- and probably most competitors are charging significantly less than we are -- they are still probably charging. There is very few instances we see or hear about with competitors who think that they can break even; picking up used oil for free. So if they are charging a $0.10 and we are charging $0.30, we are still in the game. And we can sell our quality of service and our full menu, and other things, and try and hang on to customers. If oil prices -- and there are crude oil prices or fuel oil prices -- move up significantly from where they are today, and some of our competitors say, well, we are going to go back to free, that will be an important price point. And that will make it harder for us to expand our charges, or even to sustain what we've got. But where crude is right now, we are not seeing a prevalence of competitors picking up oil for free. And that makes a big difference to us, and we think a big difference to customers, that they are not comparing our charge service with somebody else doing it for free.

[Kevin Steinke:]

Okay. Very helpful. And just one last question from me. I don't know if you touched on this in an earlier question. But could you talk to your ability to implement the price increases in the environmental services segment that you typically do towards the end of the prior year?

[Mark DeVita:]

This is Mark, Kevin. We've had the same type of success we've had in prior years on the price side. A lot of the issues -- at least price and mix, technically -- but a lot of the issues we've had with revenue, outside of the surcharge thing that we talked about, is really volume-related. Some of it is even related to we've gotten more disciplined, at least year-over-year, versus some of the legacy FCC environmental ES business, or at least businesses that we classified as ES. And that's helped drive improved margins. But our pricing power -- we're not really seeing any change versus what we've traditionally experienced.

[Greg Ray:]

And to add color, what that means in practical terms is usually when we do our price increases at the end of each year, we expect to realize 70%, 80% of our targeted price increase or our list price increase. And we pretty much accomplished that every year successfully, except for the recession year five or six years ago, when we really weren't able to hold our price increase. But in the last -- the one we did last November -- we've accomplished largely what we would've expected. And that's separate from the things we've talked about that are specific to our oil business, where we've been raising the prices due to other factors. And that means our oil Street price, our oil filter price; we've raised dramatically, and done that more frequently than just that the one point in time last year. The oily water we pick up on our used oil truck, the antifreeze that we pick up on our used oil trucks and all those areas, we've targeted larger price increases, and on a more continuing basis than have been getting those as well.

[Kevin Steinke:]

Okay. That's helpful. Thank you very much for taking my questions.

[Operator:]

Thank you. [Operator Instructions] And our next question comes from Sean Hannan with Needham & Company. Your line is open.

[Sean Hannan:]

Yes, thanks for taking a follow-up here. Two questions; number one, so if we are looking for breakeven or better on the oil business side in the second half, you had previously, I think, assumed or communicated that you were assuming some level of pricing improvement to materialize in order to get there. And it's been quite a dead cat bounce, at least as we were talking a little bit earlier around posted pricing. But is the degree of this bounce what you were actually assuming? Or is it above, and why now are we not to change on expectations for the back end of the year? Thanks.

[Mark DeVita:]

I'll provide some color, and then Greg and Joe can chime in. We didn't have a set assumption of base oil is going to go up X cents a gallon or RFO in our thinking. We knew we needed some help on the overall pricing for the product mix. As far as our outlook, is there potential that we could achieve breakeven, based, let's say, on some of the recent spot price -- excuse me, posted price increases hits and we are able to execute on the other end of the spread like we've talked about -- that we could hit it sooner than we otherwise had targeted? I think that's possible. But given the markets and, quite frankly, last several quarters' performance, I think we are a little leery to assume that that's going to happen.

[Sean Hannan:]

Very fair answer. Okay. Next question, just administrative -- so if I back out the write-down in stock comp -- so looking for an adjusted cash EPS, it appears, back-of-the-envelope, that might have been a breakeven EPS. Or can you confirm that or deny?

[Mark DeVita:]

The adjusted was $0.03.

[Sean Hannan:]

$0.03 -- okay. Sorry if I had missed that. All right, thank you.

[Mark DeVita:]

No worries.

[Operator:]

Thank you. And I'm showing no further questions. I would now like to turn the call back to management for any further remarks.

[Mark DeVita:]

If there are no further questions, we will conclude the call.

[Joseph Chalhoub:]

Thank you, everyone.

[Mark DeVita:]

Thank you.

[Operator:]

Ladies and gentlemen, thank you for participating in today's conference. This concludes today's program. You may all disconnect. Everyone have a great day.