During the first quarter of 2013, the negative impact of unfavorable commodity prices continued to weigh on the profitability of our oil business segment and on our overall profitability, said Joe Chalhoub, Heritage-Crystal Cleans founder, president and CEO. Base oil pricing continued to decline during most of the quarter. Fortunately, we believe that the unsustainable economic conditions present in the industry during the first quarter have begun to subside.

CFO Mark Devita pointed out that negative base oil pricing trends were a headwind during the first quarter. The average spot market price for the grade of base oil we produce declined approximately 9 percent for the first quarter, compared to the fourth quarter of 2012, he said. This follows declines in both the third and fourth quarters of 2012.

The company noted its rerefinery in Indianapolis, which has about 2,000 barrels per day of API Group II base oil capacity, operated at a much higher rate during 2013s first fiscal quarter than it did in the year-ago quarter.

Chalhoub noted the companys board of directors has approved a plan to expand the refinerys annual input capacity by 25 million gallons. This expansion will bring the nameplate capacity of the facility from its current 50 million gallon level up to 75 million gallons, he said. We expect the additional capacity to be added incrementally over the remainder of 2013 and the first half of 2014, with the entire amount of additional capacity in place by mid-2014.