Re-refiner Heritage-Crystal Clean has obtained the required air permit to allow the company to expand the annual capacity at its Indianapolis, Indiana re-refinery from 50 million to 75 million gallons of used oil, the Company's Founder, President, and Chief Executive Officer, Joe Chalhoub, stated during a fourth quarter conference call February 20 during which he also announced results for the fourth quarter of fiscal 2012 and for the full fiscal year, which ended December 29, 2012. The expansion will allow the company to produce 45 million gallons of API Group II lube base oil, or about 3,000 barrels per day.

Fourth quarter revenues increased 41.4%, to $77.6 million, compared to $54.9 million in the fourth quarter of fiscal 2011. This increase was due to organic growth in the Environmental Services segment and the ramp up of the Oil Business segment, according to Chalhoub. For fiscal 2012, revenues increased 65.2% to $252.5 million, compared to $152.9 million in fiscal 2011. This increase was due to organic growth in the Environmental Services segment and production of re-refined base oil and byproducts at the used oil re-refinery.

Heritage-Crystal Clean's Oil Business segment includes used oil collection and re-refining activities. During the fourth quarter of fiscal 2012, the Oil Business segment revenues increased $16.4 million, to $33.2 million from $16.8 million in the fourth quarter of fiscal 2011, reflecting revenues from sales of base oil produced in the company's used oil re-refinery in Indianapolis, which had only produced intermediate products and byproducts in the fourth quarter of fiscal 2011. During fiscal 2012, Oil Business revenues increased $80.0 million, or 240%.

Chalhoub commented, "The fourth quarter contained both achievements and challenges for the Company. Commodity pricing continued to negatively impact the revenue and margin performance in our Oil Business segment. We also continue to work on improving the efficiency of our used oil collection routes, reducing the cost of transportation, and improving the efficiency of our re-refinery operations."

Mark DeVita, Chief Financial Officer stated "In our Oil Business the fourth quarter average spot price for Group II base oil declined by approximately 5% compared to the third quarter. This deterioration follows a decline of approximately 10% from the second quarter to the third quarter. This trend negatively impacted our segment revenue and margin. The average spot price for Group II base oil declined further at the beginning of 2013. We believe that current base oil pricing and the resulting spread between crude oil and lube oil prices reflect conditions that are not sustainable in the long run for the virgin production of lube oil from crude."