Heritage-Crystal Clean Inc (HCCI) Q4 2018 Earnings Conference Call Transcript

HCCI earnings call for the period ending December 29, 2018.

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Heritage-Crystal Clean Inc  (NASDAQ:HCCI)
Q4 2018 Earnings Conference Call
March 06, 2019, 10:30 a.m. ET

Contents:

Prepared Remarks:

Operator

Good morning, ladies and gentlemen, and welcome to the Heritage-Crystal Clean, Inc. Fourth Quarter 2018 Earnings Conference Call. Today's call is being recorded. At this time, all callers' microphones are muted.

(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 actual -- 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, depreciation, and amortization or EBITDA and adjusted EBITDA are non-GAAP measures. Please see our website for reconciliation 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 President and Chief Executive Officer, Mr. Brian Recatto; and the Chief Financial Officer, Mr. Mark DeVita. At this time, I would like to turn the call over to Brian Recatto. Please go ahead, sir.

Brian Recatto -- President, Chief Executive Officer and Director

Thank you and welcome to everyone joining us this morning. Last night, we issued our fourth quarter 2018 results. Our revenue for the fourth quarter increased 9.7%, compared to the fourth quarter of 2017 to $127.1 million, driven mainly by 15% growth in our Environmental Services segment. Mark will discuss our financial results in more detail in a moment.

I would like to talk specifically about our Environmental Services segment. From a revenue standpoint, I'm excited by the fact that we again delivered strong double-digit growth in the segment for the third straight quarter, and recorded record ES revenue of $85.9 million. This result is especially gratifying considering our fourth quarter results did not include any large field services projects, which boosted our revenues during the second and third quarter of this year.

This performance is a direct result of the approach used by our sales and service team to discover the true needs of our customers and then work hard to meet those requirements. All of our service lines in this segment experienced growth on a year-over-year basis.

Our revenue growth in 2018 was aided by the five new branches we added during 2017, as well as a sales and service resources we added throughout 2017. The cost incurred during 2018 associated with the new branches and resources added during 2017 was approximately $13.5 million, from which we generated approximately $15.4 million in revenue. During 2018, we implemented a less aggressive approach to adding new resources compared to 2017.

In fiscal 2018, we incurred approximately $1.7 million in operating costs, while generating approximately $1.7 million in revenue for the resources added during this year. Continued revenue growth and an increasing focus on cost containment during the last three quarters, allowed us to improve operating margin percentage during the fourth quarter of 2018 to 27.3%. During our third quarter earnings call, we indicated that we expected to the reach this level on a seasonally adjusted basis by the first quarter of fiscal 2019. Increasing operating margins to this level ahead of schedule was a nice achievement for us.

Moving onto our Oil Business. Oil Business revenue during the quarter was flat at $41.2 million, compared to the fourth quarter of fiscal 2017. Our base oil netback increased by $0.17 per gallon during the fourth quarter compared to last year, but was down $0.19 per gallon compared to the third quarter of fiscal 2018. The decline in base oil netback was primarily driven by marketwide oversupply of light-grade Group II base oil was developed in the second half of the fourth quarter, as well as decline in crude oil price.

The price for bunker and related fuels, followed crude downward during the second half of the fourth quarter. The falling commodity prices allowed us to decrease our net pay for oil directly from generators by $0.03 per gallon and our cost of used oil feedstock purchase from third-parties by $0.09 per gallon during the fourth quarter, compared with the third quarter.

We may have been able to decrease our feedstock cost even more, but for the fact that beginning in mid-October, high sulfur fuel oil began trading at a premium to WTI crude. High sulfur fuel oil continue to be priced at a premium to WTI crude through the remainder of 2018 and this premium has increased further during the first quarter of fiscal 2019. This pricing relationship negatively impacts rerefiners, relative to those who sell used oil into the RFO market, so the price for RFO was often tied to the price for high sulfur bunker fuel.

In used oil collection, we were able to partially offset the negative impact of lower base oil netbacks by increasing our oil collection route efficiency on a year-over-year basis for the third quarter in a row. During the fourth quarter, we increased our route efficiency by 4.6%, compared to the fourth quarter of 2017.

As we explained during our third quarter earnings conference call, we incurred an 18-day construction shutdown of our rerefinery, near the beginning of the fourth quarter. As a result, we incurred higher maintenance cost and lower rerefinery production, which led to sub-standard absorption of our fixed costs during the fourth quarter. On the positive side, we completed several equipment upgrades during this downtime, which we expect will allow us to operate the rerefinery on a more consistent basis now and in the future.

Overall 2018 was a year of great achievements in our Environmental Services business, and a year in which we laid the foundation for a better future in our Oil Business segment. As we look forward to 2019, we expect to face challenges in the near term and opportunities later in the year in the Oil Business segment, and we see continued momentum in the Environmental Services segment.

In the Oil Business, light grade Group II base oil is still in an oversupplied situation due to seasonality and the impact of lighter-than-normal refinery -- refinery turnaround activity during 2018. Historically, demand increases as the winter season nears its end. Assuming the same trend continues, we would expect to see upward pricing pressure for base oil.

Unfortunately, this has not yet occurred and our current base oil netback is approximately $0.35 per gallon lower than our average from the fourth quarter of 2018. From a feedstock standpoint, we're already back into a net charge for oil position and we continue to try to push our street price higher. And that improvement from our average pay for oil during the fourth quarter to our current street price is over $0.20 per gallon.

We have discussed the expected impacts of IMO 2020 regulation with our investors and analysts in the past. And we continue to believe this initiative will improve both the feedstock and finished product portions of our spread. While we anticipate seeing the effects from IMO 2020 prior to the year end of 2019, we are not as -- not certain as the exact timing and magnitude of these impacts. For now, we will continue to work hard to operate the rerefinery efficiently, and manage our spreads effectively.

From an Environmental Service segment perspective, we continue to see momentum, which we believe will support higher single-digit organic growth during 2019, and we look to add to that by closing an additional acquisition opportunities. From a profitability standpoint, we expect to improve upon our performance in 2018. While we expect to see seasonal pressure on our operating margin during the first quarter of this year, we anticipate full-year operating margin for 2019 will improve upon the 25.6% operating margin we produced during fiscal 2018.

Mark will now walk us through our fourth quarter financial results in more detail.

Mark DeVita -- Chief Financial Officer

Thanks, Brian. For the fourth quarter, we recorded net income attributable to common shareholders of $2.5 million compared to $11.7 million in fourth quarter of 2017. For the year, net income was $14.7 million, compared to $28.1 million in fiscal 2017. On an adjusted basis, net income for both fiscal 2018 and '17 was $16 million.

For the fourth quarter of 2018, we recorded diluted earnings per share of $0.11, compared to diluted earnings of $0.51 per share in the fourth quarter of 2017. Our 2017 fourth quarter earnings included a one-time adjustment of $0.27 per share, as a result of the Tax Cuts and Jobs Act, signed until late 2017. On adjusted basis, fourth quarter 2018 diluted earnings per share was $0.12 compared to $0.26 a diluted share for the fourth quarter of 2017. On an annual basis, 2018 adjusted diluted earnings per share was $0.68, compared to $0.70 a diluted share for fiscal 2017. Please refer to our reconciliation of GAAP to non-GAAP supporting schedules in our press release.

In the fourth quarter of fiscal 2018, Environmental Services revenues increased $11.2 million or 15% from $74.7 million in the fourth quarter of fiscal 2017 to $85.9 million in the fourth quarter of fiscal 2018. Higher revenue was due to increased activity in all the segment's businesses. Most of the increase was due to higher volume in our antifreeze, vacuum, and field services businesses, along with increases in volume and price in our containerized waste business and favorable pricing and mix in our parts cleaning business.

Revenue growth during the quarter was due in part to acquisitions made earlier in the year. If you remove the revenue attributable to those acquisitions, our revenue growth rate would have been 11.6% for the fourth quarter compared to the year-earlier quarter. Same-branch sales growth was 13.2% in the fourth quarter compared to the fourth quarter a year ago. If we remove acquisition-related revenue, which was integrated into existing branches during the year, same-branch sales growth would have been 10.7%.

In the fourth quarter of 2018, Oil Business revenues were flat at $41.2 million, compared to the fourth quarter of fiscal 2017. Mainly due to a planned extended shutdown at our rerefinery and the resulting negative impact on production, partially offset by higher base oil netbacks. Oil Business segment operating margin fell sharply to negative 7.1% in the fourth quarter of 2018, compared to 7.9% in the fourth quarter of fiscal 2017.

During the fourth quarter of fiscal 2018, we sold 12.7 million gallons of base oil, compared to 13.6 million gallons in the fourth quarter of fiscal 2017. We sold approximately 3.1 million gallons of RFO during the fourth quarter, which was down 18% or 0.7 million gallon compared to the fourth quarter of fiscal 2017.

Turning now to income before corporate SG&A expense. Oil Business income before corporate SG&A expense decreased $6.2 million in the fourth quarter from $3.3 million in the fourth quarter of 2017, to negative $2.9 million in the fourth quarter of 2018. The decrease in income before corporate SG&A was mainly due to higher maintenance and transportation expenses caused by the long shutdown. An increase in the cost of used oil feedstock was only partially offset by higher selling prices for our Oil Business products, compared to the year ago quarter, which also negatively impacted our operating margin.

Profit before corporate SG&A expense in the Environmental Services segment was a record high at $23.4 million in the fourth quarter of 2017 -- 2018, excuse me, which resulted in operating margin percentage of 27.3%, which was relatively flat compared to the operating margin of 27.2% in the fourth quarter of 2017. Even though our operating margin percentage was relatively flat compared to the fourth quarter of 2017, profit dollars before corporate SG&A expense increased $3.1 million over the same period a year ago.

Our overall corporate SG&A expense as a percentage of revenue was 12.2% for the fourth quarter, slightly lower than 12.7% of revenue in the fourth quarter of 2017, mainly due to higher revenue and lower salaries and incentive compensation, partially offset by the absence of a reduction in tax reserves, which occurred in the fourth quarter of 2017.

The Company's effective income tax rate for 2018 was 26.6% compared to 17.3% in fiscal 2017. The difference in the effective tax rate is principally attributable to the impact on our deferred taxes, as of December 30, 2017, due to the reduction in the US federal corporate tax rate to 21%. Fourth quarter EBITDA was $9.4 million, compared to $14.2 million in the year ago quarter.

Turning to the balance sheet. Cash on hand at the end of the quarter stood at $43.6 million, compared to $41.9 million at the end of the fourth quarter of 2017. And total debt stood at $29 million compared to $28.7 million one year ago. Our cash flow from operation for fiscal 2018 was $30 million, compared to $45.3 million in fiscal 2017, which included one-time gains and awards of $11.8 million.

Our continued goal is to use our excess cash to execute our growth strategy, seeking additional acquisition opportunities, as well as to pursue capital projects, to help drive revenue growth and improve operational efficiency. Early in the first quarter of fiscal 2019, we closed on two tuck-in acquisitions in the Environmental Services segment. Total annual revenue generated from these transactions is expected to be approximately $6 million (ph). We continue to look for acquisition targets to augment our organic growth initiatives.

Finally, I would like to take a moment to discuss the new leasing accounting standard ASC 842, which we are required to implement beginning this year. We are on less fee (ph) for approximately 1,400 items, consisting primarily of buildings, railcars, trucks, and trailers, as of year end 2018, which means the implementation of this standard will have a material effect on our balance sheet.

Based on the work we have performed to this point, we believe the implementation of this new standard will result in new right-of-use assets and corresponding liabilities of between $59 million and $68 million being added to our balance sheet as of the first quarter of fiscal 2019. We believe the impact on our income statement from this implementation of the new accounting standard will be immaterial.

I want to thank everyone for their interest in Heritage-Crystal Clean. Now, I will turn control the call over to our operator to begin the Q&A portion of the call.


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Questions and Answers:

Operator

Thank you, sir. (Operator Instructions) And our first question will come from Luke Junk with Baird. Your line is now open.

Luke Junk -- Baird -- Analyst

Good morning, guys.

Brian Recatto -- President, Chief Executive Officer and Director

Good morning, Luke.

Mark DeVita -- Chief Financial Officer

Morning.

Luke Junk -- Baird -- Analyst

So my first question is on the Oil Business and managing spreads and what I'm wondering is, how do you balance the two objectives of -- on one hand, achieving a higher average charge for oil per gallon versus obviously the longer-term drive toward getting more volumes onto your own trucks and improving your route efficiency?

Brian Recatto -- President, Chief Executive Officer and Director

Yeah, that's like the benefit that we're seeing right now in the marketplace is that, overall the used motor oil market lengthened up in the back half of Q4. So we're seeing pretty strong demand from third parties that want access to our rerefinery. So what we're going to do Luke is, is try to focus on controlling our logistics costs, we're going to expand our RFO program, and in 2019, look for more local outlets for oil, focus on our -- the lanes around our rerefinery to be aggressive and pursue direct volume in our plant and then augment that with third parties.

So if we're seeing reduced debt (ph) sitting in our routes, we could park some trucks in 2019 to make sure that we achieve efficiency. That's the most important thing for us to be efficient with the trucks. We don't think we're going to have any trouble, filling out the plant, given the used motor oil in general is longer. Does that answer the question?

Luke Junk -- Baird -- Analyst

Yeah, that's helpful. And then just a follow-up to that. Regarding the plant operations, specifically in the upgrades that you made during the fourth quarter. You mentioned in your prepared remarks, we should expect more consistent operations. Could you just expand on that and maybe comment on some of the specific changes that we made?

Brian Recatto -- President, Chief Executive Officer and Director

Yes, we made quite a few changes, obviously it was a pretty long 18-day shutdown. We essentially -- if you guys remember we had issues with our -- I think I mentioned on one of the calls, we had problems with our air cooler. In the first quarter of 2018, we replaced that. In 2019, and actually -- we had freezing problems within 2018. That performed extremely well.

In 2019, we just went through the -- probably the coldest weather obviously in the city. We didn't have any issues with that piece of equipment. Then we also rebuilt the lower half of our vacuum tower. We've had historically some weak metallurgy in that vacuum tower. We lined the bottom half of the vessel with a better metallurgy. We also replaced some piping and valving in critical areas that we've had issues with from a rotating equipment and metallurgical standpoint. So we think those things will help tremendously.

And lastly, we upgraded our -- if you remember, we had made some technological advances in our vacuum tower to reduce the resin carryover into our catalyst guard beds. We improved upon that system during Q4, which will give us more extended life in our catalyst performance and our guard beds, which will lower our overall cost structure in 2019. So all in all, it was a great turnaround for us. A lot of hard work went into, and our guys did a great job with the construction project. We had no incidents during the construction. And so far in 2019, the plant's been running well.

Luke Junk -- Baird -- Analyst

Okay. And if I could just sneak in a really question with that end, Mark. Do you by chance have just the cost impact of the shutdown. In terms of the profit before corporate items in the Oil Business, is there a dire(ph)amount that you could splice up for the maintenance costs and higher transportation cost specifically, relating to the shutdown?

Mark DeVita -- Chief Financial Officer

Well, I'll let you do the math. I'll give you a -- kind of the -- if we compare our margin year-over-year for Q4, we printed the negative 7.1 in year earlier, almost 8%. And the shutdown maintenance was the -- and related costs were attributable or can be kind of blamed for about 5.6%, that decrease in margin and transportation a little more than 4%. See you basically have 11% of that 14%, 15% change with those two items.

We do have on the -- it was more expensive to get feedstock, but our selling prices went up, they didn't completely cancel each other out as Brian and I alluded to in our prepared remarks, but that it was much bigger issue for the shutdown costs -- the maintenance costs and the transportation costs, then bad leverage from labor and benefit standpoint was another 2.5% and that's pretty much due to the shutdown as well as extended shutdown. So that's lion share of your 14%, 15% decrease in margin on a year-over-year basis for Q4.

Brian Recatto -- President, Chief Executive Officer and Director

And then, Luke, going forward assuming a normal shutdown duration, we lost 1.2 million gallons of production, because of the extra time we spent completing the construction side of the turnaround and I think we're well set up for a more consistent turnaround schedule. I mean I think we mentioned on a previous call, we're shooting for 26 days a year to be shutdown to do maintenance activities on the refinery.

Luke Junk -- Baird -- Analyst

And this is a super helpful detail. I'll leave it there. Thank you, guys.

Mark DeVita -- Chief Financial Officer

Thanks.

Operator

Thank you. And our next question will come from line of Michael Hoffman with Stifel. Your line is now open.

Michael Hoffman -- Stifel -- Analyst

Hi, Brian and Mark, thank you. I missed -- you said the number. I missed it, Mark. How many gallons of base oil did you say you sold in the quarter?

Mark DeVita -- Chief Financial Officer

We sold 12.7 million.

Michael Hoffman -- Stifel -- Analyst

12.7 million. Okay. And then it was -- RFO was 3.1, did I get -- I heard that right?

Mark DeVita -- Chief Financial Officer

You did.

Michael Hoffman -- Stifel -- Analyst

Okay, perfect. And then, all of the work that was done, does it change the targeted production number of 46.8 million gallons of base oil.

Mark DeVita -- Chief Financial Officer

I still think we're in that range.

Michael Hoffman -- Stifel -- Analyst

Okay. And we're still looking at approximately somewhere around 50 million gallons a year of RFO.

Mark DeVita -- Chief Financial Officer

I am not quite sure about that. It's -- we've been doing less RFO, if you adjust for a quirky (ph) quarter in Q4, that was lower than what we did in RFO in Q2 and Q3. Now again, we did -- we wanted to avoid the problem of limited feedstock, which in part attributed to some of our problems last year. So part of that was just different management. We're obviously collecting more based on our route efficiency and just from a pure volume standpoint, you can tell that. But we look to leverage our collection versus trying to attract third parties. So depending on where you are getting those gallons, we don't want to get deeper into the RFO market. Brian, I don't know if you have any more color.

Brian Recatto -- President, Chief Executive Officer and Director

Yes, I think, Michael, what will happen this year is, we'll probably do more swaps versus expanding our RFO sales. Given the fact that we think we know HSFO is going to go down in price as we look at the strip. I mean at the end of the year, it's a $10 price differentials from WTI. So logically, we'll work with our other refinery partners that swap oil where it makes sense to drive our logistics cost down. So I think you'll see more swapping from us, probably not more RFO activity.

And then in terms of rerefinery production, we produced 43 million gallons this year. With more expected uptime, we certainly think we're going to get more into that 47 million range for production for the year, barring on any unforeseen issues at the plant that made our projections, right now. So, we're going to do that.

Michael Hoffman -- Stifel -- Analyst

So if you think about it just to frame this -- given the spread pressures in the first half, but maybe a 10% volume benefit and using the balancing act on the RFO to manage the spread. Without any benefit of IMO 2020, a flat year-over-year margin dollars of margin is not an unreasonable way to think at the moment until we see what happens with how IMO 2020 drives -- it just go back down and all that.

Mark DeVita -- Chief Financial Officer

I mean I'll let Brian comment, but I would hope, and we don't know where IMO 2020 is going to be, but I would hope we can beat flat -- over the last year, it really to me is just how much better is the business is going to be and --

Brian Recatto -- President, Chief Executive Officer and Director

Yeah, I would agree with that. I mean we're going to be disappointed if we don't perform better than we did in 2018, Michael and that's given that we do get the benefit of what we think is going to happen relative to IMO 2020. We're already seeing -- as I said earlier, we're seeing a lengthening of used motor oil in the market. We moved really quickly at the end of Q4 and the beginning of this year to change our used motor oil pricing. We made a $0.20 move. We're going to keep pushing the envelope there.

Yes, we're feeling, I mean you know the base oil market. You can read the same things that we're reading. The base oil market is weak right now. We expect that to change. You're going to see demand for lighter, sweeter crudes go up. You're going to see feedstock costs go up, going into virgin refiners that's going to have to -- it's going to have to move base oil pricing up.

We're already seeing improved demand as we look out in the February and March for base oil, which is a great thing for us. You've had some shipping problems the early part of this year in terms of exporting base oil because of even fog (ph) conditions in Houston affected shipping lanes. We think this thing is going to get cleaned up. Yes, there's going to be pressure in Q1, but we're optimistic that with what's happening on the macro front, that we'll have a good back half of the year, you can outperform relative to 2018.

Mark DeVita -- Chief Financial Officer

If you take even the IMO 2020 impact out of it and you look at and we don't know the impact of this either, but how likely is it that the turnaround season is late in '19 as it was in '18. How likely is it that the storm season is as light in '19 as it was in 18. I mean, there were a lot of things that stacked up and had base oil production pretty high relative to what we've seen in some of the past year. So, and that's without any capacity changes. So there is reason to think that we should -- without much problem beat what we did in '18. It's just a matter of how much.

Brian Recatto -- President, Chief Executive Officer and Director

As you know, there will be a strong demand for diesel, I mean refineries are going to have to do --

Michael Hoffman -- Stifel -- Analyst

(multiple speakers) I mean IMO 2020 could be really interesting. I'm just I was trying to frame it against without that, could you have an up year-over-year and what you're saying is, yes, that 4% or 10% volume growth despite the margin, the spread compression, you should produce year-over-year profit growth.

Brian Recatto -- President, Chief Executive Officer and Director

We are going to have work our rear ends off on used motor oil pricing on the street. We're doing that. That's going to be the real key there.

Michael Hoffman -- Stifel -- Analyst

Okay. So the years of -- I'll flip this question around a different way. You have a great Environmental Services business, I mean you've demonstrated that by reinvesting in growth in '16, '17, you turnaround didn't start showing the operating leverage of it '18, it's great topline growth, there is lots of acquisitions. The best case may be used oils could be 15% of total EBITDA. Why are you staying in the plant side of it? You mean, I get -- see in the collection cycles, it fits the ES business, but why are you staying in the plant side?

Brian Recatto -- President, Chief Executive Officer and Director

Well, I think more than ever, we want to be on the plant side until we see where IMO 2020 flushes out. Michael, I mean at this point, we've got a home for the used motor oil we collect. It's very important for us to be in that business on the street. Every single customer that we do business with, generates used motor oil, generates only water.

We've got four wastewater treatment plants. It's the major component of what we're doing on the street. I like having the ability to process it ourselves. I mean, obviously, if we don't see anything happening with IMO 2020 to change the dynamics and have a more consistent spread, maybe we'd think about that, but at this point we're convinced that we're going to see some upside with the rerefinery.

We've done a lot of elements work on improving the operations of the plant. We're going to keep doing that. We're just about done with capital. We've got one more major environmental project, which doesn't involve shutting the plant down. So we feel pretty good about the two years of hard work that we put into optimizing the plant. So that's why we're not going to go to exit the business right now.

Michael Hoffman -- Stifel -- Analyst

Okay, fair enough. Thank you.

Brian Recatto -- President, Chief Executive Officer and Director

And, but, just one more point to that is, we absolutely are going to focus our growth capital on the Environmental Services business and we've indicated that on other calls. Our money is going to be invested in growing that business and I'd love -- in our vision two to three years out, is for this going to be 80% ES and 20% Oil or as low as we can make it, but have the ability to market out in the field the way we do.

Michael Hoffman -- Stifel -- Analyst

Yes. I get it. It's a great business and you've produced terrific results.

Brian Recatto -- President, Chief Executive Officer and Director

Thank you.

Mark DeVita -- Chief Financial Officer

Thank you.

Operator

Thank you. (Operator Instructions) Our next question will come from line of Ryan Merkel with William Blair. Your line is now open.

Ryan Merkel -- William Blair -- Analyst

Hey, guys, good morning.

Brian Recatto -- President, Chief Executive Officer and Director

Hi, Ryan.

Mark DeVita -- Chief Financial Officer

Hi, Ryan.

Ryan Merkel -- William Blair -- Analyst

So I wanted to ask about the ES business. Obviously seeing great momentum there. Brian, I think you talked about high-single-digit growth was the outlook for 2019.

Brian Recatto -- President, Chief Executive Officer and Director

Yes.

Ryan Merkel -- William Blair -- Analyst

Can you just break that into pieces for us? Market growth, price, I think you mentioned acquisitions and then I expect you opened some new branches. Can you just walk through the pieces there?

Mark DeVita -- Chief Financial Officer

Yes. Let's go with the price first. We had about in Q4 -- again we implemented our price increase running, if I remember a couple of our four-week periods earlier than we typically do. So we have a little more clarity now. That -- I mean, it wasn't the full quarter. So it's still not fully in effect in the results that we printed. But we've got a little more of a glimpse and we've had about 3% price overall in what we printed that is, that usually is the mix, the more mature businesses tend to have more price and that's exactly what happened this quarter.

And the less mature ones, (inaudible) we're still trying to grow and take advantage of efficiencies, integrate the businesses and there's cost to achieve synergies all sort of things. So those have very little impact or basically almost on volume, but if we look forward, and we say, well, we're not fully baked in, and we're going to do some work on some of those businesses, I just mentioned that are still at early stage, at least relatively for us.

We think we can get about five. So the lion's share of the rest of that is -- probably 80% of the rest of that, because the high-single digit is going to be just a regular organic growth strategy, and the remainder will be the new branches or new resources that we're going to have. We look to add about five branches during the year and probably total headcounts and field base mostly sales resources is probably around 20. And those will be at various points in the year, so just like it was in 2017, but it's a more aggressive plan than what we had in 2018, based on what Brian already went through. So hopefully that gives you a feel as to the pieces.

Brian Recatto -- President, Chief Executive Officer and Director

And the reason we feel like we could do five branches this year is, we think that the job market is loosening up a little bit, that's really why we slowed down the openings of branches in 2018 and we had trouble staffing our existing branches, but we are seeing noticeable improvement and we've certainly ramped up our recruiting department. And as Mark said, we're looking at five branches, most of those being in the western half of the US, which is where we lag density. We'll also open up another hub in the western half of the US to help reduce our logistics cost.

Mark DeVita -- Chief Financial Officer

Yes, I would tell you that -- I'll echo Brian's comment, if there was any risk, we didn't add as many head as we wanted to last year and that was the reason. So we have reacted, made some changes, and we do have some tailwinds, probably the last quarter, -- maybe quarter and a half --

Brian Recatto -- President, Chief Executive Officer and Director

Yeah, I agree.

Mark DeVita -- Chief Financial Officer

-- to get a little better and our number of openings decreased. So we think we have momentum in that area. But that's why we feel confident. If we weren't able to add as much it would be because we couldn't find the right people.

Ryan Merkel -- William Blair -- Analyst

Okay. That's really helpful. And then moving to ES margins. Again 2018 was great year. You expect improvement. Can you just give us a range or how much expansion you're thinking just to help calibrate our models?

Mark DeVita -- Chief Financial Officer

I think, we're probably looking to add another year full number -- our full year number that Brian gave, probably in the range of another 150 basis points for year-over-year. And you know better than anyone Ryan, you've been covering us forever. The Q1 is we have a headwind, 200 basis points to 300 basis points. If you look at Q1 versus the other quarter, if you go back three, four, five years, you see other than '17, when it was only a couple hundred, you see the trend is pretty solid. So well, we wouldn't expect that increase versus the Q4 print (ph) than Q1, we should be able to at least do and probably improve upon what Q1 was last year.

Brian Recatto -- President, Chief Executive Officer and Director

Yes, I agree.

Ryan Merkel -- William Blair -- Analyst

Okay, perfect. I'm passing on. Thanks.

Operator

Thank you. There are no further questions in the queue at this time. Ladies and gentlemen, thank you for your participation on today's conference. This does conclude our program and we may all disconnect. Everybody have a wonderful day.

Duration: 37 minutes

Call participants:

Brian Recatto -- President, Chief Executive Officer and Director

Mark DeVita -- Chief Financial Officer

Luke Junk -- Baird -- Analyst

Michael Hoffman -- Stifel -- Analyst

Ryan Merkel -- William Blair -- Analyst

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