You are a newly hired business analyst with an engineering background. You’ve be
ID: 1108204 • Letter: Y
Question
You are a newly hired business analyst with an engineering background. You’ve been told to look at a company called Heritage Crystal Clean. To do so, please look at their 2012 Annual Report at the site:
http://www.crystal-clean.com/investor/attachments/5-10-2013_12_52_42_PM_HCC%2012%20AR.pdf
Answer the following questions, based on your review of these materials (All answers are worth 5 points):
(1) What industries can Crystal Clean be described as being in?
(A) Environmental services
(B) Used lubricating oil recycling
(C) Zinc metals recovery
(D) Electric arc furnace dust recycling
(2) Which activities do you think are important for Horsehead to do well in to succeed (circle all that you think apply)?
(A) Finding sources of low cost electric arc furnace dust
(B) Understanding the laws governing disposal of used solvents
(C) Collecting used motor oil
(D) Re-refining used motor oil
(3) From a Porter’s Five Forces perspective, identify each of the following with the appropriate “Force” (Competition/Rivalry, Bargaining Power of Suppliers, Bargaining Power of Customers, Threat of New Entrants, Threat of Substitutes):
(A) A competitor has announced a new synthetic lubricating oil based on a improved process that makes it from natural gas rather than re-refined lube oil or crude oil
(B) A competitor announced they are expanding the capacity of their plants
(C) Buyers of re-refined lube oil are want to negotiate the price they purchase lube oil from you downward because they have many alternative sellers to buy from
(D) Used motor oil providers to the re-refinery want to negotiate a higher price
(E) Chevron has announced a new lube oil facility that is starting up this year in Mississippi
(4) What was Crystal Clean’s reported net income for the 2012?
(A) A gain of $2.254 million
(B) A gain of $23.1 million
(C) A loss of $2.254 million
(D) A gain of $1.474 million
(5) Was there a significant addition to revenues from 2011 to 2012?
(A) This information is not available in the report
(B) No, they were similar in both years
(C) Yes, product revenues increased from $39.1 million to $119.5 million
(D) The report only shows net income information
(6) Did cash provided by operating activities increase from 2011 to 2012?
(A) Yes
(B) No
(C) This cannot be determined
(7) Did total share holder equity increase from 2011 to 2012?
(A) Yes
(B) No
(C) This cannot be determined
(8) Did Crystal Clean get cash in 2012 from issuing stock?
(A) Yes, this can be seen on page 53 of the report
(B) Yes, this can be seen from page 51 of the report
(C) It can’t be determined
(9) Is Crystal Clean planning to grow?
(A) Yes, it plans to expand its re-refining capacity from 50 to 75 million gallons per year
(B) No,
(C) It can’t be determined
(10) If they are planning a “strategic” investment, would it significantly impact their Balance Sheet?
(A) Yes
(B) No
(C) It can’t be determined
(11) What happened in the second half of 2012 that negatively impacted their income and operating cash flow?
(A) Lube base oil prices increased
(B) Lube base oil prices declined
(C) They obtained an air permit to expand their re-refining facility
(D) They added staff to help the environmental services line
Explanation / Answer
1. (B) Used lubricating oil recycling
2. (B) understanding the laws governing disposal of used solvents
3. (C) Buyers of re-refined lube oil are want to negotiate the price they purchase lube oil from you downward because they have many alternative sellers to buy from
4. (A) A gain of $2.254 million
5. (C) Yes, product revenues increased from $39.1 million to $119.5 million
6. (A) yes
7. (A) yes
8. (B) yes, this can be seen from page 51 of the report
9. (A) yes, it plans to expand its re-refining capacity from 50 to 75 million gallons per year
10. (A) yes
11. (C) They obtained an air permit to expand their re-refining facility
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