Profits Dip at Safety-Kleen, Jump at Quaker Chem


Profits Dip at Safety-Kleen, Jump at Quaker Chem

Despite increases in used oil collection and sales volumes of rerefined base oils, Clean Harbors reported lower second quarter revenue and profits for its Safety-Kleen Sustainability Solutions segment, citing unfavorable market conditions including an unexpected June price drop and lower spot pricing.

The Safety-Kleen Sustainability Solutions segment’s third-party revenues – which are from sales of base oils and other rerefined products, sales of finished lubricants and fees it charges to collect waste oil – fell 13% in the second quarter.

“During the quarter the [Safety-Kleen Sustainability Solutions] segment set operational records collecting 64 million gallons of oil and achieving our highest Q2 base oil sales volume,” Clean Harbors Co-Chief Executive Officer Mike Battles said in the company’s earnings news release.

“However, financial results in the segment were below our expectations due to unfavorable macro supply dynamics and pricing headwinds in the base oil market that included an unexpected June price decline and lower spot pricing throughout the quarter. To address the compression in our re-refining spread, we rapidly shifted from a pay-for-oil to a charge-for-oil pricing model while still collecting a record amount of used oil. We also maximized plant production, optimizing the economics of the business while navigating the current environment.”

Meanwhile, Quaker Chemical reported a 105% jump in net income for the quarter, which it attributed to targeted efforts to improve the profitability of its business.

Clean Harbors

Safety-Kleen parent company Clean Harbors, based in Norwell, Massachusetts, said the business unit’s third-party revenues – which are from sales of base oils and other rerefined products, sales of finished lubricants and fees it charges to collect waste oil — during the April-to-June period fell to $236.3 million, from $271.7 million.

Battles noted that within Safety-Kleen Sustainability Solutions, “we expect challenging market conditions to extend throughout the remainder of the year, given that the summer driving season did not stabilize pricing due to global oversupply and destocking efforts by U.S. customers. Therefore, we expect base oil and blended pricing to remain under pressure in the back half of 2023.” He said its near-term focus will continue to be on effectively managing waste oil collection to supply its plants with the lowest cost gallons possible and running its plants efficiently, while continuing to grow overall sales volumes. “Even though we are lowering our 2023 expectations for the SKSS segment again due to current market factors, we fully expect that reduction to be offset by profitable growth in ES,” Battles concluded.

Quaker Chemical

Quaker Chemical – also known as Quaker Houghton – reported a jump in net income to $29.3 million, compared to $14.3 million.

“Despite market conditions, we have made meaningful progress improving the profitability of our business through our margin initiatives and delivered double-digit year-over-year earnings growth and solid cash flow,” CEO and President Andy Tometich said in its earnings release.

The Conshohocken, Pennsylvania based company said its net sales increased 1% to $494.4 million, attributed to an increase in selling price and product mix of approximately 11%, partially offset by a 10% decrease in sales volumes.  “The increase in selling price and product mix was primarily attributable to increases in selling prices in all segments to offset the significant inflationary pressures on the business,” the company said. “The decline in sales volume was primarily attribute to a continuation of softer market conditions and the impact of the war in Ukraine in the [Europe, Middle East and Africa] segment.”

Net sales in the Americas increased 7% to $235.2 million, while they decreased 1% to $143.5 million in the Europe, Middle East and Africa region. In Asia-Pacific net sales decreased 11% to 98.7 million.

Segment operating earnings jumped 32% in the Americas to $69 million and by 27% in Europe, Middle East and Africa to $25.6. million. In Asia-Pacific, operating earnings rose 12% to $28 million.

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