Listen to this article

Date: August 16, 1995

Title: Top 20/Intercat

A cat cracker. That sounds horrible, doesn”t it? Actually, it”s short for fluid catalytic cracking unit (FCCU), the heart of the modern oil refinery, which heats up crude oil and passes the vapor through catalysts, which help break it into smaller molecules. This process turns crude oil into gasoline, diesel fuel and so-called feedstock for plastics. The catalysts in the unit”s name are added to improve the efficiency of the operation, cut losses from evaporation and remove harmful substances.

Intercat, a small fish in the huge, rich pond of the oil business, specializes in developing and making additives that refiners place into their FCCUs to improve performance.

In an industry dominated by giants such as Engelhard in Iselin and Boca Raton, Fla.”s W.R. Grace, where does a small company in Manasquan like Intercat fit? According to Regis Lippert, Intercat”s founder and CEO, “A friend of mine suggested there might be a niche for a small company to make specialty catalysts.”

And that”s what he does. While big refineries might use 20 tons of the regular catalyst, “they may use 1,000 pounds of ours,” Lippert says. They use the catalysts to do such things as control the emission of sulfur dioxide and remove lead and other toxins like vanadium.

Lippert, 55, founded the company in 1986 after years in the industry. The firm started out producing material in a 40-ft. sea container–one of those trailers that go onto cargo ships–in Savannah, Ga. Lippert had obtained licensing agreements from companies he had done business with, such as Chevron, Mobil and Amoco, to use some of their production technology. Says Lippert: “I hired some guys to work as consultants and started making more catalysts by leasing time in other people”s plants.”

To get up and running, Lippert “pumped a bunch of money in initially,” but received the majority of his financing from suppliers who gave him generous payment terms. “We were able to turn our receivables over before our payments were due, so we built up the company out of cash flow,” he says.

Intercat”s niche approach has worked. Revenues have increased 57% in the last two years, to $30.2 million in 1994 from $19.3 million in 1992. Lippert expects 1995 revenues of $35 million. Intercat now employs some 85 people, of whom 13 are in New Jersey, where the firm has its administrative offices. The firm has its manufacturing plant in Georgia because of Savannah”s well-developed refining infrastructure.

The company has also evolved small subsidiaries to facilitate sales in Japan, Mexico, Europe and Australia. “Over 50% of our sales are outside the U.S.,” Lippert says. It has also branched out into making machinery to feed its chemicals into customer”s refining equipment

While many in the industry rail against environmental regulation, Intercat benefits from the government”s concern. As Kevin Adler, editor of industry publication Octane Week, points out, Intercat”s niche of improving the efficiency of the refining process “has become increasingly important in the last 10 or 15 years because refiners have to make cleaner fuels.”

A couple of potential clouds are gathering, however, on the horizon. Two of the world”s biggest chemical firms, Akzo Nobel of Holland, and W.R. Grace, have filed separate suits against Intercat claiming patent infringement. Intercat has counter-sued Akzo and is awaiting trial of the Grace claim. Octane Week”s Adler says he doesn”t think either of these suits will doom Intercat. “There is a penalty possible,” he says. “But the company can get beyond that.”

Meanwhile, Intercat will continue to be an innovative and nimble player within an industry of stodgy giants. s