Quaker Chemical reported an increase in fourth quarter net income, but a decline for 2019. Its net sales were higher for the quarter and 2019, following its merger with Houghton International, but would have posted declines without the transaction.
Quaker Chemical – also known as Quaker Houghton – posted net income $15.2 million for the fourth quarter, up 95 percent, while net income for the year totaled $31.6 million, down 47 percent from 2018.
Net sales reached $391.3 million for the fourth quarter, up 85 percent compared to the same period the previous year. Net sales on the year increased 31 percent to $1.1 billion.
The company attributed the large increases in net sales to additional net sales driven from its merger with Houghton International and its acquisition of the operating divisions of Norman Hay in the second half of 2019. Houghton and Norman Hay contributed $200 million of net sales for the quarter and $319.4 million for the year, according to Quaker Chemical.
Quaker Chemical completed the merger with Houghton in August, forming the new Quaker Houghton. Quaker Chemical said it acquired all of the issued and outstanding shares of Houghton from Gulf Houghton Lubricants Ltd. The final purchase consisted of approximately $170.8 million in cash; the issuance of approximately 4.3 million shares of common stock of Quaker Chemical with par value of $1.00, comprising 24.5 percent of the common stock of Quaker at closing; and Quakers refinancing of approximately $660 million of Houghtons net indebtedness at closing, not including cash proceeds from the divestiture.
Quaker Houghton also acquired the operating divisions of Norman Hay in October.
Excluding the net sales of Houghton and Norman Hay, fourth quarter net sales would have declined 10 percent, driven by a decrease in sales volume and a negative impact from foreign currency translation, according to the company.
The company also provided pro forma numbers which are adjusted to include the results of Houghton and eliminate the effects of the merger. Pro forma net sales for the quarter declined 2 percent from $401 million, driven primarily by lower volume and a negative impact from foreign currency translation, partially offset by additional net sales from Norman Hay, according to the company.
Pro forma 2019 net sales declined 6 percent to $1.6 billion.
“The quarter played out generally as we expected, with significant challenges in end market conditions and foreign exchange headwinds, Quaker Houghton Chairman, CEO and President Michael Barry, said in the companys earnings release. The negative impact on net sales was largely driven by the compounding conditions of a weak global automotive market, a generally weaker industrial environment in most parts of the world, and continued customer inventory corrections and reductions in consumption.
Heritage-Crystal Clean reported almost $42 million in revenue for its oil business segment for the fourth quarter ending Dec. 29, up slightly from $41.2 million the previous quarter, an almost 2 percent increase.
Revenue for the segment on the year totaled $141.9 million, up 2 percent from $139 million in 2018.
We were able to deliver significant improvement in operating margin during the quarter compared to the fourth quarter of 2018 due to record base oil production, which helped offset lower base oil prices, Heritage-Crystal Clean President and CEO Brian Recatto said in the companys earnings release. With consistent operation of our rerefinery, we have the opportunity to generate improved operating margin in the oil business segment during 2020.
Elgin, Illinois-based Heritage-Crystal Cleans oil business segment includes used oil collection activities, sales of recycled fuel oil and rerefining activities.
Norwell, Massachusetts-based Clean Harbors Safety-Kleen segment – which includes oil rerefining – reported revenues of $328.5 million for the fourth quarter ending Dec. 31, up almost 2 percent from $322.8 million in the year-earlier period.
For 2019, revenues reached $1.3 billion, up almost 2 percent from 2018. These third-party revenues include sales of base oil, blended products and reclaimed fuel oil and a small amount of byproducts.
Revenue in our Safety-Kleen segment increased 2 [percent]. Steady growth and pricing gains in the branch network offset a challenging environment for Safety-Kleen Oil, where base oil and blended pricing and the value of certain re-refining byproducts came under pressure, Clean Harbors President and CEO Alan McKim said in the companys earnings news release. Waste oil collection was stable at 55 million gallons, with a slightly improved charge-for-oil rate year-over-year and sequentially.