Heritage-Crystal Clean, Inc. Provides Re-Refinery Update
Monday, April 2, 2012
Press Release from NORA Member Heritage-Crystal Clean, Inc.
Elgin, Ill. (April 2, 2012) – Heritage-Crystal Clean, Inc. (Nasdaq: HCCI), a leading provider of parts cleaning, used oil re-refining, and hazardous and non-hazardous waste services to small and mid-sized customers, is pleased to provide an update on the status of its recently constructed used oil re-refinery in Indianapolis, Indiana.
Following mechanical completion of the second phase of the re-refinery at the end of 2011, the plant began to produce lubricant base oil during the first quarter of 2012. The startup activities were executed without significant difficulties, and the testing of all major components supported our expectation that we could operate the facility at the design capacity of 50 million gallons per year of used oil feedstock. By the end of the quarter, we had commenced regular operation. Concurrent with the testing, we began to produce high quality Group II base oil, and during the first quarter we sold approximately 2.5 million gallons of this product.
We are also updating our estimate of the results that we expect from the re-refinery, once it is operating at the design capacity of 50 million gallons per year of feedstock (a rate we plan to achieve in 2013), and based on recent prices of lube and crude oil. Using market conditions and prices prevailing in March 2012, we estimate that, assuming that the re-refinery is operating at design capacity, the re-refinery would produce annual revenue of approximately $130 million, and contribute annual operating income of approximately $30 million.
The revenue and profitability of the re-refinery will depend on a number of factors, some of which are beyond our control, such as oil prices and the cost of feedstock. In particular, our expected results are heavily dependent on the price of base oil; a decline in base oil prices of $0.10/gallon would result in a reduction in both our revenue and our operating income of approximately $3 million per year, at design capacity.
The Company's Founder, President and Chief Executive Officer, Joe Chalhoub, commented, "We are very excited about the progress of our used oil re-refinery, and we are enthusiastic about the growth opportunity this represents for the Company.”
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 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 our 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 acquisition of the Warrior Group; 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 our 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.
About Heritage-Crystal Clean, Inc.
Heritage-Crystal Clean, Inc. provides parts cleaning, used oil re-refining, and hazardous and non-hazardous waste services to small and mid-sized customers in both the manufacturing and automotive service sectors. Our service programs include parts cleaning, containerized waste management, used oil collection and re-refining, and vacuum truck services. These services help our customers manage their used chemicals and liquid and solid wastes, while also helping to minimize their regulatory burdens. Our customers include businesses involved in vehicle maintenance operations, such as car dealerships, automotive repair shops, and trucking firms, as well as small manufacturers, such as metal product fabricators and printers. Through our used oil re-refining program, we recycle used oil into high quality lubricating base oil, and we are a supplier to firms that produce and market finished lubricants. Heritage-Crystal Clean, Inc. is headquartered in Elgin, Illinois, and operates through 67 branches serving over 58,000 customer locations.
The Company uses its website to make available information to investors and the public at www.crystal-clean.com.
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