NewMarket Corporation (NYSE:NEU) President and Chief Executive
Officer, Thomas E. Gottwald, released the following earnings report
for the second quarter and six months 2006. Earnings for the second
quarter 2006, excluding special items, were $15.5 million, or $.89
per share, a significant improvement over earnings on this same
basis for second quarter last year of $10.6 million, or $.62 per
share. Including special items, net income for the second quarter
of this year was $20.4 million, or $1.17 per share, compared to net
income for the second quarter last year of $13.1 million, or $.76
per share. For the first six months of 2006, earnings excluding
special items also improved significantly and amounted to $29.2
million, or $1.68 per share. This compares to earnings on this same
basis for the first six months last year of $15.3 million, or $.89
per share. Including special items, net income for the first six
months of 2006 was $34.1 million, or $1.96 per share, compared to
net income for the same period last year of $17.8 million, or $1.03
per share. The special items included in the second quarter and
first half of 2006 included a gain on a tax settlement of $2.9
million, or $.16 per share, as well as a gain on the sale of
property of $2.0 million, or $.12 per share. The special item in
second quarter and first half of last year was a $2.5 million, or
$.14 per share, benefit of an insurance settlement. A
reconciliation of net income under U.S. generally accepted
accounting principles (GAAP) to earnings excluding special items is
included at the end of this earnings release for further
clarification. The increase in earnings for the second quarter and
first six months of this year over the same periods last year
reflects significant improvement in the petroleum additives segment
results. For the second quarter of this year, petroleum additives
net sales increased to $325 million, an improvement of 21 percent
over net sales of $269 million for the second quarter last year.
For the first six months of this year, petroleum additives sales
were $624.5 million, up 23 percent over net sales for the same
period last year of $506.2 million. Volumes shipped in the first
half of 2006 improved five percent over the same period last year.
Petroleum additives operating profit for the second quarter of this
year improved to $27.1 million, an increase of 65 percent over
operating profit for the same period last year of $16.4 million.
For the first half of 2006, petroleum additives operating profit
reached $52.8 million, an improvement of 106 percent over results
for the first half of last year of $25.6 million. All of our major
product lines had improved profits in the first half of 2006. The
growth in petroleum additives operating profit for the first half
of 2006 includes the benefit of higher volumes shipped as well as a
favorable sales mix of higher margin products. We also made
progress on restoring margins by increasing prices and introducing
more cost effective products. The improved results further reflect
the benefit of the close partnership of our petroleum additives
customers and our technical, marketing, sales, and product supply
personnel. Tetraethyl lead (TEL) operating profit for the second
quarter and six months of this year amounted to $2.3 and $2.5
million, respectively. As expected, the results were lower than TEL
profit from operations for the second quarter and first half of
2005 of $5.5 and $9.7 million, respectively. The lower profit in
the 2006 periods reflects the expected and continuing decline in
shipments of this product. We are pleased with the continuing
improvement in our petroleum additives business. This business is
experiencing increased raw material and energy costs and remains a
highly competitive marketplace. We remain confident in our team and
their ability to lead us through this on-going condition.
Sincerely, Thomas E. Gottwald As noted, net income for the second
quarter and first half for both 2006 and 2005 include certain
special items. The Company has reported net income including
special items, as well as earnings excluding special items and
related per share amounts in this release. The Company believes
that even though earnings excluding special items are not required
by or presented in accordance with GAAP, this additional measure
enhances understanding of the Company's performance. This is
because earnings excluding special items excludes the impact of
certain non-recurring items and enhances period to period
comparability. Earnings excluding special items should not be
considered an alternative to net income determined under GAAP. The
following table is a reconciliation of earnings excluding special
items, a non-GAAP financial measure, to net income, the most
directly comparable financial measure calculated and presented in
accordance with GAAP. -0- *T Summary of Earnings for the Second
Quarter and Six Months:
--------------------------------------------------------------
Second Quarter Six Months Ended Ended June 30 June 30 -------------
-------------- 2006 2005 2006 2005 ------ ------ ------ ------ Net
Income Net income $ 20.4 $ 13.1 $ 34.1 $ 17.8 (Less) Special items:
Gain on sale of property (2.0) - (2.0) - Income tax settlement
(2.9) - (2.9) - Insurance settlement - (2.5) - (2.5) ------ ------
------ ------ Earnings excluding special items $ 15.5 $ 10.6 $ 29.2
$ 15.3 ====== ====== ====== ====== Diluted Earnings Per Share: Net
income $ 1.17 $ 0.76 $ 1.96 $ 1.03 (Less) Special items: Gain on
sale of property (0.12) - (0.12) - Income tax settlement (0.16) -
(0.16) - Insurance settlement - (0.14) - (0.14) ------ ------
------ ------ Earnings excluding special items $ 0.89 $ 0.62 $ 1.68
$ 0.89 ====== ====== ====== ====== *T As a reminder, a conference
call and Internet web cast is scheduled for 10:00 a.m. EDT on
Thursday, July 27, 2006, to review second quarter 2006 financial
results. You can access the conference call live by dialing
877-407-8033 (domestic) or 201-689-8033 (international) and
requesting the NewMarket conference call. To avoid delays, callers
should dial in five minutes early. The call will also be broadcast
via the Internet and can be accessed through the Company's website
at www.NewMarket.com or www.investorcalendar.com. A teleconference
replay of the call will be available until August 1, 2006 at 11:59
EDT by dialing 877-660-6853 (domestic) and 201-612-7415
(international). The account number is 286. The conference ID
number is 208755. A webcast replay will be available for 30 days.
NewMarket Corporation through its subsidiaries, Afton Chemical
Corporation and Ethyl Corporation, develops, manufactures, blends,
and delivers chemical additives that enhance the performance of
petroleum products. From custom-formulated chemical blends to
market-general additive components, the NewMarket family of
companies provides the world with the technology to make fuels burn
cleaner, engines run smoother and machines last longer. Some of the
information contained in this press release constitutes
forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Although NewMarket's
management believes its expectations are based on reasonable
assumptions within the bounds of its knowledge of its business and
operations, there can be no assurance that actual results will not
differ materially from expectations. Factors that could cause
actual results to differ materially from expectations include, but
are not limited to: timing of sales orders; gain or loss of
significant customers; competition from other manufacturers;
resolution of environmental liabilities; changes in the demand for
our products; significant changes in new product introduction;
increases in product cost; the impact of fluctuations in foreign
exchange rates on reported results of operations; changes in
various markets; geopolitical risks in certain of the countries in
which we conduct business; the impact of consolidation of the
petroleum additives industry; and other factors detailed from time
to time in the reports that NewMarket files with the Securities and
Exchange Commission (SEC), including the risk factors in Item 1A,
"Risk Factors" of our 2005 Annual Report on Form 10-K, which is
available to shareholders upon request. Readers are urged to review
and consider carefully the disclosure NewMarket makes in its
filings with the SEC. You should keep in mind that any
forward-looking statement made by NewMarket in the foregoing
discussion speaks only as of the date on which such forward-looking
statement is made. New risks and uncertainties come up from time to
time, and it is impossible for us to predict these events or how
they may affect the company. We have no duty to, and do not intend
to, update or revise the forward-looking statements in this
discussion after the date hereof, except as may be required by law.
In light of these risks and uncertainties, you should keep in mind
that the events described in any forward-looking statement made in
this discussion, or elsewhere, might not occur. -0- *T NEWMARKET
CORPORATION AND SUBSIDIARIES SEGMENT RESULTS AND OTHER FINANCIAL
INFORMATION (In millions except per share amounts, unaudited) Three
Months Ended Six Months Ended June 30 June 30
------------------------------------ 2006 2005 2006 2005 --------
-------- ------- ------- Net sales: Petroleum additives $325.0
$269.0 $624.5 $506.2 Tetraethyl lead 5.1 2.8 7.5 4.8 --------
-------- ------- ------- Total $330.1 $271.8 $632.0 $511.0 ========
======== ======= ======= Segment operating profit: Petroleum
additives $ 27.1 $ 16.4 $ 52.8 $ 25.6 -------- -------- -------
------- Tetraethyl lead before special item 2.3 5.5 2.5 9.7 Special
item (a) - 3.9 - 3.9 -------- -------- ------- ------- Tetraethyl
lead 2.3 9.4 2.5 13.6 Contract manufacturing and other 1.2 1.0 2.3
1.7 -------- -------- ------- ------- Segment operating profit 30.6
26.8 57.6 40.9 Corporate unallocated expense (2.8) (3.3) (5.8)
(6.2) Special items (b) 7.7 - 7.7 - Interest expense (3.9) (4.5)
(7.8) (8.8) Other income (expense), net 0.6 (0.2) 1.2 (0.2)
-------- -------- ------- ------- Income before income taxes $ 32.2
$ 18.8 $ 52.9 $ 25.7 ======== ======== ======= ======= Net income:
Earnings excluding special items $ 15.5 $ 10.6 $ 29.2 $ 15.3
Special items (a) (b) 4.9 2.5 4.9 2.5 -------- -------- -------
------- Net income $ 20.4 $ 13.1 $ 34.1 $ 17.8 ======== ========
======= ======= Basic earnings per share: Earnings excluding
special items $ 0.90 $ 0.62 $ 1.70 $ 0.90 Special items (a) (b)
0.28 0.15 0.29 0.15 -------- -------- ------- ------- Basic
earnings per share $ 1.18 $ 0.77 $ 1.99 $ 1.05 ======== ========
======= ======= Diluted earnings per share: Earnings excluding
special items $ 0.89 $ 0.62 $ 1.68 $ 0.89 Special items (a) (b)
0.28 0.14 0.28 0.14 -------- -------- ------- ------- Diluted
earnings per share $ 1.17 $ 0.76 $ 1.96 $ 1.03 ======== ========
======= ======= Notes to Segment Results and Other Financial
Information Certain prior period amounts have been reclassified to
conform to the current presentation. There was no impact on net
income in any period. (a)The 2005 special item in TEL represents
the gain associated with the insurance settlement related to
premises asbestos liabilities. The after tax gain amounted to $2.5
million. (b)The 2006 special items include a $4.4 million gain
($2.9 million after tax) for interest on an income tax settlement,
as well as a $3.3 million gain ($2.0 million after tax) on the sale
of property. NEWMARKET CORPORATION AND SUBSIDIARIES CONSOLIDATED
STATEMENTS OF INCOME (In thousands except per share amounts,
unaudited) Three Months Ended Six Months Ended June 30 June 30 2006
2005 2006 2005 -------- -------- -------- -------- Net sales
$330,066 $271,842 $632,016 $510,956 Cost of goods sold 260,365
219,681 498,311 415,682 -------- -------- -------- -------- Gross
profit 69,701 52,161 133,705 95,274 Operating profit from TEL
marketing agreements services 1,850 6,826 3,188 13,277 Selling,
general, and administrative expenses 26,668 23,969 51,466 46,262
Research, development, and testing expenses 17,116 15,797 33,682
32,077 Special items income (a) 3,250 3,868 3,250 3,868 --------
-------- -------- -------- Operating profit 31,017 23,089 54,995
34,080 Interest and financing expenses 3,866 4,455 7,772 8,782
Other income, net (b) 5,046 131 5,643 371 -------- --------
-------- -------- Income before income taxes 32,197 18,765 52,866
25,669 Income tax expense 11,828 5,698 18,725 7,840 --------
-------- -------- -------- Net income $ 20,369 $ 13,067 $ 34,141 $
17,829 ======== ======== ======== ======== Basic earnings per share
$ 1.18 $ 0.77 $ 1.99 $ 1.05 ======== ======== ======== ========
Diluted earnings per share $ 1.17 $ 0.76 $ 1.96 $ 1.03 ========
======== ======== ======== Shares used to compute basic earnings
per share 17,232 17,016 17,177 16,999 ======== ======== ========
======== Shares used to compute diluted earnings per share 17,411
17,305 17,403 17,310 ======== ======== ======== ======== Notes to
Consolidated Statements of Income (a)The 2006 special item
represents a gain on the sale of property. The after tax gain was
$2.0 million. The 2005 special item represents a gain associated
with the insurance settlement related to premises asbestos
liabilities. The after tax gain amounted to $2.5 million. (b)Other
income, net for both six months 2006 and second quarter 2006
includes a gain of $4.4 million for interest on an income tax
settlement. The after tax gain amounted to $2.9 million. NEWMARKET
CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In
thousands) June 30 2006 Dec. 31 (unaudited) 2005 ------------
-------- ASSETS Current assets: Cash and cash equivalents $ 63,872
$ 56,413 Restricted cash 240 1,419 Trade and other accounts
receivable, less allowance for doubtful accounts ($891 - 2006;
$1,045 - 2005) 194,376 189,460 Inventories 168,099 151,999 Deferred
income taxes 7,626 9,289 Prepaid expenses 5,499 3,119 ---------
-------- Total current assets 439,712 411,699 --------- --------
Property, plant and equipment, at cost 737,479 764,945 Less
accumulated depreciation and amortization 582,376 610,939 ---------
-------- Net property, plant and equipment 155,103 154,006
--------- -------- Prepaid pension cost 17,253 18,316 Deferred
income taxes 20,497 23,157 Other assets and deferred charges 42,137
44,480 Intangibles, net of amortization 47,692 49,874 ---------
-------- Total assets $722,394 $701,532 ========= ========
LIABILITIES AND SHAREHOLDERS' EQUITY Current liabilities: Accounts
payable $ 84,636 $ 88,350 Accrued expenses 54,215 58,847 Dividends
payable 2,157 - Book overdraft 4,114 4,222 Long-term debt, current
portion 660 640 Income taxes payable 8,335 14,728 ---------
-------- Total current liabilities 154,117 166,787 ---------
-------- Long-term debt 152,849 153,189 Other noncurrent
liabilities 115,706 115,496 Shareholders' equity Common stock and
paid in capital (without par value) Issued - 17,245,259 in 2006 and
17,081,559 in 2005 86,522 85,162 Accumulated other comprehensive
loss (28,045) (30,511) Retained earnings 241,245 211,409 ---------
-------- 299,722 266,060 --------- -------- Total liabilities and
shareholders' equity $722,394 $701,532 ========= ======== *T
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