Afton Chemical reported a lower operating profit despite increased sales – citing such factors as rising costs for raw materials and energy and continued disruptions in the global supply chain – while Heritage-Crystal Clean’s oil business segment reported higher, record revenue for the third quarter, compared to results in the same period last year.
Afton Chemical
Afton Chemical, the petroleum additives segment of NewMarket Corp., reported operating profit of $72.1 million for its third quarter, a 29% decline from $102.2 million in the same period last year. “The decrease was mainly due to higher raw material and conversion costs, partially offset by increased selling prices and higher shipments,” NewMarket said in its earnings release.
Sales for the segment reached $619.1 million in the quarter, up 21% from $510.3 million. Shipments increased 12% in the quarter, the company noted, with increases in both lubricant additives and fuel additives shipments across all regions except Europe, which reported a decrease in fuel additives shipments.
In its earnings release, NewMarket Chairman and CEO Thomas Gottwald said the company continued to see downward pressure on its operating margins due to rising raw materials and energy costs, transportation network issues and other costs associated with the continuing global supply chain disruptions. “While we have made some progress in adjusting our selling prices, our costs have continued to rise,” Gottwald said. “Margin improvements will continue to be a priority until we see margins consistently within our historical ranges.”
NewMarket, based in Richmond, Virginia, reported net income of $52 million, or $4.80 per diluted share, down 45% from $95.8 million, or $8.77 per diluted share.
Heritage-Crystal Clean
Heritage-Crystal Clean’s oil business segment – including oil collection and rerefining activities and sales of recycled fuel oil – reported revenues of $50.9 million for the quarter ending Sept. 11, a 106% jump from $24.7 million in 2020’s third quarter and 42% higher than $35.8 million in the same quarter in 2019.
“An increase in base oil prices was the main driver of the increase in revenue, along with an increase in base oil sales volume, compared to the prior year quarter,” the company, based in Elgin, Illinois, said in its earnings news release.
The oil business segment’s operating margin also increased sharply to a record 43% in the third quarter, compared to 3% in the same quarter last year. The company explained that the higher operating margin was mainly due to an increase in the spread between the netback – sales price net of freight impact – on its base oil sales and the price paid or charged to its customers for the removal of their used oil. “During the third quarter we continued to benefit from favorable base oil pricing conditions, and we executed well in regard to used oil collection route efficiency,” President and CEO Brian Recatto said in the earnings release. “In addition, we produced record base oil volume at our rerefinery during the third quarter, which contributed to the record operating profit in our oil business segment.” Oil Business segment profit before corporate selling, general and administrative expenses was a record $21.8 million.