HeritageCrystal Clean Inc. (HCCI, Financial) filed Quarterly Report for the period ended 2012-06-16.
Heritage-crystal Clean, Inc. has a market cap of $294.7 million; its shares were traded at around $15.81 with a P/E ratio of 184.4 and P/S ratio of 1.9.
The increase in operating costs as a percentage of sales in the second quarter and first half of fiscal 2012 was in part related to the production of base oil and by-products at the used oil re-refinery, which was running throughout the second quarter. In addition, we continued to increase our used oil collection efforts in order to feed our used oil re-refinery, and we incurred costs at branches as we increased the number of used oil collection trucks in service. The increase in the price of diesel fuel impacted the cost of operating our service and collection fleet and caused our transportation costs of our overall branch and hub network to increase due to higher freight rates due to higher fuel surcharges from our vendors. Reuse solvent sales had a positive impact on operating costs during the second fiscal quarter of 2012 of $0.1 million compared to $0.5 million in the second quarter of fiscal 2011 and a positive impact on operating costs during the first half of 2012 of $0.2 million compared to $0.8 million in the first half of 2011.
At the end of the second quarter of 2012, the Environmental Services segment was operating 71 branch locations compared with 66 at the end of the second quarter of fiscal 2011. There were 66 branches that were in operation during both the second quarter of fiscal 2012 and the second quarter of fiscal 2011, which collectively experienced an increase of $3.4 million, or 12.4% in same-branch sales during the second quarter of fiscal 2012 compared to the same period of fiscal 2011. Excluding the three branches in this group that gave up customers to new branch openings, the remaining 63 branches experienced a collective increase in sales of $3.7 million, or 14.9% during the second quarter of fiscal 2012 compared to the second quarter of fiscal 2011. On a year-to-date basis, same branch sales increased $7.0 million, or 13.0%, for these same 66 branches. Excluding the three branches in this group that gave up customers to new branch openings, the remaining 63 branches experienced an increase of $7.5 million, or 15.5%.
SG&A decreased 2.2% in the first half of fiscal 2012, as compared to the first half of fiscal 2011 due to increased operating costs. Higher cost of petroleum based products negatively affected our operating costs. However, compared to the second quarter and first half of fiscal 2011, we did not receive the same benefit from selling our reuse solvent at prices higher than the carrying value or from increased inventory value of solvent returned from customers held in inventory for reuse. In addition, prices of diesel fuel remained higher than the prior year, which impacted the cost of operating our service fleet and caused the transportation costs of our overall branch and hub network to increase due to higher freight rates due to higher fuel surcharges. Newer branches in the west were particularly impacted by these additional fuel prices, as they are typically located further away from operational and logistical supply lines. In the second quarter of fiscal 2012, the profit before corporate SG&A in Environmental Services increased to 22.5% from 17.0% in the first quarter of fiscal 2012.
Oil Business profit before corporate SG&A increased $1.8 million and $4.0 million in the second quarter and first half of fiscal 2012, respectively, compared to a loss of $0.4 million and $1.2 million in the second quarter and first half of fiscal 2011, respectively. This was the result of increased margins from selling base oil, intermediate products, and byproducts from the used oil re-refinery compared to the first half of fiscal 2011 when most of the Oil Business revenue came from lower value used oil. Second quarter profit before corporate SG&A was negatively impacted by a write down in inventory value due to a decline in the price of oil.
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Heritage-crystal Clean, Inc. has a market cap of $294.7 million; its shares were traded at around $15.81 with a P/E ratio of 184.4 and P/S ratio of 1.9.
Highlight of Business Operations:
For the second quarter of fiscal 2012, sales increased $30.3 million, or 94.8%, to $62.3 million from $32.0 million in the second quarter of fiscal 2011. For the first half of fiscal 2012, sales increased $52.1 million, or 85.8%, to $112.8 million from $60.7 million for the first half of fiscal 2011. The increase was the result of sales of base oil and re-refinery byproducts at our used oil re-refinery in the second quarter and first half of fiscal 2012, which was still under construction in the first half of fiscal 2011. In addition, sales grew for all services in the first half of fiscal 2012 compared to the first half of fiscal 2011 as we continued to add customers.The increase in operating costs as a percentage of sales in the second quarter and first half of fiscal 2012 was in part related to the production of base oil and by-products at the used oil re-refinery, which was running throughout the second quarter. In addition, we continued to increase our used oil collection efforts in order to feed our used oil re-refinery, and we incurred costs at branches as we increased the number of used oil collection trucks in service. The increase in the price of diesel fuel impacted the cost of operating our service and collection fleet and caused our transportation costs of our overall branch and hub network to increase due to higher freight rates due to higher fuel surcharges from our vendors. Reuse solvent sales had a positive impact on operating costs during the second fiscal quarter of 2012 of $0.1 million compared to $0.5 million in the second quarter of fiscal 2011 and a positive impact on operating costs during the first half of 2012 of $0.2 million compared to $0.8 million in the first half of 2011.
At the end of the second quarter of 2012, the Environmental Services segment was operating 71 branch locations compared with 66 at the end of the second quarter of fiscal 2011. There were 66 branches that were in operation during both the second quarter of fiscal 2012 and the second quarter of fiscal 2011, which collectively experienced an increase of $3.4 million, or 12.4% in same-branch sales during the second quarter of fiscal 2012 compared to the same period of fiscal 2011. Excluding the three branches in this group that gave up customers to new branch openings, the remaining 63 branches experienced a collective increase in sales of $3.7 million, or 14.9% during the second quarter of fiscal 2012 compared to the second quarter of fiscal 2011. On a year-to-date basis, same branch sales increased $7.0 million, or 13.0%, for these same 66 branches. Excluding the three branches in this group that gave up customers to new branch openings, the remaining 63 branches experienced an increase of $7.5 million, or 15.5%.
SG&A decreased 2.2% in the first half of fiscal 2012, as compared to the first half of fiscal 2011 due to increased operating costs. Higher cost of petroleum based products negatively affected our operating costs. However, compared to the second quarter and first half of fiscal 2011, we did not receive the same benefit from selling our reuse solvent at prices higher than the carrying value or from increased inventory value of solvent returned from customers held in inventory for reuse. In addition, prices of diesel fuel remained higher than the prior year, which impacted the cost of operating our service fleet and caused the transportation costs of our overall branch and hub network to increase due to higher freight rates due to higher fuel surcharges. Newer branches in the west were particularly impacted by these additional fuel prices, as they are typically located further away from operational and logistical supply lines. In the second quarter of fiscal 2012, the profit before corporate SG&A in Environmental Services increased to 22.5% from 17.0% in the first quarter of fiscal 2012.
Oil Business profit before corporate SG&A increased $1.8 million and $4.0 million in the second quarter and first half of fiscal 2012, respectively, compared to a loss of $0.4 million and $1.2 million in the second quarter and first half of fiscal 2011, respectively. This was the result of increased margins from selling base oil, intermediate products, and byproducts from the used oil re-refinery compared to the first half of fiscal 2011 when most of the Oil Business revenue came from lower value used oil. Second quarter profit before corporate SG&A was negatively impacted by a write down in inventory value due to a decline in the price of oil.
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