Heritage-Crystal Clean’s oil business segment – including oil collection and rerefining activities and sales of recycled fuel oil – recorded increases in revenue and operating margin for the fourth quarter and full fiscal year.
The segment had revenue of $65.8 million for the fourth quarter, up 60% from $41.1 million in the same period of 2020. For the full year revenue rose 71% to $197.2 million.
The company, which is based in Elgin, Illinois, cited an increase in base oil prices as the driving factor for the improvement.
“During the fourth quarter we continued to benefit from favorable base oil pricing conditions, and we executed well in regards to used oil collection route efficiency,” Heritage-Crystal Clean President and CEO Brian Recatto said in the company’s earnings release. “For the year, we are also very pleased with the improved cost performance and record base oil production at our rerefinery.”
The segment’s operating margin jumped to 33.7% for the quarter from 9.1% for the same period of 2020. For the year, operating margin rose to 35.2% from a break-even operating margin for 2020.
The higher operating margin compared to the fourth quarter of 2020 was attributed mainly to an increase in the spread between the netback – sales price net of freight impact – on the company’s base oil sales and the price paid to collect used oil.