Vertex Energy Inc., a publicly traded company on the NASDAQ, said it will launch a finished lubricant product line this year.
“Given our expertise in collecting used motor oil and our significant base oil processing capabilities, the next logical step for Vertex Energy is to produce our own line of finished lubes that can be sold into the market. By doing so, we believe that we can improve margins as we will be able to capture the spread between base oil pricing and finished lube pricing,” said Benjamin P. Cowart, Vertex Energy president and CEO, in a letter addressed to the company’s shareholders.
The Houston, Texas-based company recycles industrial waste streams and off-specification commercial chemical products. Its primary focus is recycling used motor oil and other petroleum by-product streams. Vertex purchases these streams from an established network of local and regional collectors and generators. Vertex also manages the transport, storage and delivery of the aggregated feedstock and product streams to end users, as well as the re-refining of a portion of its aggregated petroleum streams and sells these as higher-value end products.
Vertex Energy’s used oil re-refineries in the United States are located in Houston, Texas (35 million gallons); Marrero, La. (60 million gallons); Columbus, Ohio (18 million gallons); and, Reno, Nev. (23 million gallons).
The move is one of its strategy to improve margins in light of the significant drop in commodity prices.
“The collateral impact of tighter spreads included a slow down in our overall expansion plans and a more deliberate approach to integrating our recent acquisitions. Throughout this challenging period we made significant adjustments that allowed us to weather the storm and position ourselves for what we believe will be a difficult 2016 turning to a more positive environment in 2017 and beyond,” Cowart said in a press release.
At the same time, Vertex Energy said it “will continue to work to improve margins by potentially creating additional finished products, finding new buyers in intermediate markets and generally moving our products to higher margin uses across our used oil, base oil, VGO and our proprietary Thermal Chemical Extraction Process (TCEP) product categories.”
Vertex Energy also said it will launch a new brand identity this year as it continues “to digest the various acquisitions we have made.”