Quaker Chemical Rebounds; Rerefiner Revenue Up

Clean Harbors Safety-Kleen segment and Heritage-Crystal Cleans oil business segment each reported higher revenue for the fourth quarter and full year, while lubricant supplier Quaker Chemical rebounded with strong net income for the fourth quarter and full year.

Clean Harbors

Clean Harbors Safety-Kleen segment - which includes oil rerefining - reported revenues of $322.8 million for the quarter ending Dec. 31, up almost 7 percent from $302.8 million in 2017s fourth quarter. These third-party revenues include sales of base oil, blended products and reclaimed fuel oil and a small amount of byproducts.

The Norwell, Massachusetts-based company said in its earnings presentation that the fourth-quarter increase in revenue for its Safety-Kleen segment was primarily driven by higher production volumes, its closed loop initiative and pricing and growth within the branch networks core lines of business. In 2017, the company rolled out Safety-Kleens closed loop offering, under which it sells finished lubricants directly to the same customers from which it collects used oils.

The segments third-party revenues for full-year 2018 climbed to $1.3 billion, up almost 7 percent.

Within Safety-Kleen, the team effectively managed the spread between used oil and base oil during the year while growing volumes of our direct lube sales by 70 percent, Clean Harbors Chairman, President and CEO Alan McKim said in the companys earnings news release.

In the companys earnings conference call, McKim said that, similar to the past several quarters, its rerefineries ran well, with production levels above a year ago.

As we move into 2019, our focus is on increasing blended sales, through not only direct lube sales, but growing volumes with our key distributors, he said. After selling less than 40 million gallons of total blended products in 2018, we aim to expand that to 50 million gallons in 2019, with about half of the increase coming from our closed loop [offering] and the remainder from our distributors.

Quaker Chemical

Quaker Chemical reported $7.9 million in net income for the quarter ending Dec. 31, improving on a $9.4 million net loss in 2017s fourth quarter. For full-year 2018, the companys $59.8 million net income was up 168 percent from $22.3 million for 2017.

Both the fourth-quarter and full-year 2018 and 2017 results were impacted by expenses related to the companys pending combination with Houghton International Inc. and the companys initial estimate and subsequent adjustments related to the 2017 U.S. Tax Cuts and Jobs Act (known as U.S. tax reform), with the prior years fourth-quarter loss primarily driven by charges related to the companys initial U.S. tax reform estimates, Quaker stated in its earnings news release.

The Conshohocken, Pennsylvania-based lubricant suppliers net sales topped $211 million in the fourth quarter, virtually unchanged from the year-earlier period. Full-year 2018 net sales reached almost $868 million, up almost 6 percent. The company attributed the net sales increase to slightly higher volumes in the fourth quarter and full year, along with slight increases from selling price and product mix for those periods.

Quaker Chairman, CEO and President Michael Barry remarked in the earnings release that market challenges in the fourth quarter and full year last year included foreign exchange headwinds and a slowdown in automotive markets in Europe and China, especially toward the end of the fourth quarter.

The company stated that it continues to estimate that U.S. Federal Trade Commission and European Commission final approval and closing of its acquisition of Houghton will occur within the next few months.

Heritage-Crystal Clean

Heritage-Crystal Clean reported $41.2 million in revenue for its oil business segment for the quarter ending Dec. 29, up slightly from $41.1 million in the year-earlier period. The flat revenue for the quarter was mainly due to a planned, extended shutdown at the companys rerefinery in Indianapolis, Indiana, and the resulting negative impact on rerefined base oil production, the company noted in its earnings news release.

For the full year, revenue for the oil business segment reached $139 million, up almost 9 percent from 2017.

As expected, we experienced higher than normal maintenance costs and lower production due to our planned rerefinery shutdown at the beginning of the fourth quarter, Heritage-Crystal Clean President and CEO Brian Recatto stated in the earnings news release.

On a positive note, we were able to complete equipment upgrades during the shutdown, which should allow us to operate the rerefinery more effectively going forward. Unfortunately, during the second half of the fourth quarter the market for base oil was in an oversupplied position, which caused a decline in our base oil netback. We reacted by beginning to bring down the cost of our feedstock to try and offset the narrowing of our spread.

While we still have work to do, we are currently back in a charge-for-oil position for used oil collection and we are confident in our ability to operate the rerefinery at higher levels during fiscal 2019.

Elgin, Illinois-based Heritage-Crystal Cleans oil business segment includes used oil collection activities, sales of recycled fuel oil and rerefining activities.