NEU NewMarket Corporation

NewMarket Corporation (NYSE:NEU) President and Chief Executive Officer, Thomas E. Gottwald, released the following earnings report of the company’s operations for the third quarter and nine months of 2009.

Net income for the third quarter of 2009 increased to $56.7 million, or $3.72 per share, compared to net income for the third quarter last year of $16.5 million, or $1.07 per share. For the first nine months of 2009, net income increased to $116.0 million, or $7.61 per share, from net income for the same period last year of $53.9 million, or $3.48 per share.

Net income for both the third quarter and first nine months of this year included a charge from recording at fair value an interest rate swap agreement related to financing on Foundry Park. The loss amounted to $2.4 million, or $.16 per share, for the third quarter, and $9.8 million, or $.64 per share for the first nine months of 2009. Excluding this charge, third quarter earnings were $59.1 million, or $3.88 per share, and for the first nine months of 2009, $125.8 million, or $8.25 per share.

Petroleum Additives continues to perform well with third quarter 2009 operating profit improving to $96.3 million, compared to $28.1 million for third quarter 2008. The results include improvement across all major product lines and all regions. Shipments have improved throughout this year with third quarter 2009 shipments increasing 14 percent from this year’s second quarter. Petroleum additives shipments for the third quarter were 3 percent lower than third quarter 2008, reflecting significant recovery of the market from earlier this year. Sales of petroleum additives for this year’s third quarter amounted to $413.7 million compared to sales of $437.2 million for the third quarter last year.

For the first nine months of 2009, petroleum additives profits improved to $214 million, compared to $97.5 million in the same period last year. The nine month improvement was broadly based on strong performance across all regions and most product areas. While shipments for the first nine months of this year are 16 percent lower than the same period last year, our shipping volumes are now near normal rates that were typical before the market slowdown that we experienced in late 2008 and that continued in the first two quarters of 2009. Sales for nine months 2009 were $1,116.7 million compared to sales for the same period last year of $1,238.8 million.

Our liquidity position improved significantly during the first nine months of this year with cash increasing to $133.8 million, compared to $21.8 million at the end of 2008. The increase in cash of $112.0 million during the first nine months of this year includes a reduction of $67.3 million in working capital requirements. Also during the first nine months of 2009, we paid $41.9 million on our revolving credit agreement leaving this facility with no drawn debt outstanding at September 30, 2009.

Our project to construct a multi-story corporate headquarters for MeadWestvaco continues to progress as expected and will be completed on time and under budget later this year. The receipt of rental income payments from this investment will begin in January 2010. The construction of the petroleum additives supply facility in Singapore is on schedule with the majority of the expenditure in 2009 and production expected during the first half of 2010.

Our petroleum additives business continues to deliver improved results by delivering products and services that bring value to our customers. We are encouraged that demand going forward appears to have returned to levels more consistent with those seen before the world economic slowdown in late 2008. While our business is performing well, it is not without its challenges. We are experiencing increases in raw material cost and some tightness in the availability of certain raw materials. Overall, we expect a general upward trend on raw material costs going forward. We are working diligently to ensure that our customers are fully supplied. Additionally, we continue to spend heavily in R&D in support of our customers as the demand for new and differentiated products and technologies continues unabated. I am confident that our team will continue to perform well and deliver value to both our customers and shareholders.

Sincerely,

Thomas E. Gottwald

Summary of Earnings for the Third Quarter and Nine Months 2009

As noted, net income for both the third quarter and first nine months of 2009 include noncash charges of $2.4 million and $9.8 million, respectively, for an unrealized loss on an interest rate swap agreement. These charges result from the company valuing an interest rate swap agreement at its fair value on September 30, 2009.

The company has reported net income including this loss, as well as income, excluding the loss and related per share amounts in this release. The company believes that even though income, excluding this loss, is not required by or presented in accordance with generally accepted accounting principles (GAAP) accepted in the United States, this additional measure enhances understanding of the company’s performance. The company believes earnings, excluding this item, enhance period to period comparability. The company believes that income, excluding this loss, should not be considered an alternative to net income determined under GAAP. The following table is a reconciliation of net income under GAAP to income, excluding the unrealized loss on the interest rate swap agreement.

    (In millions, except per-share amounts) Third Quarter Ended   Nine Months Ended September 30 September 30 2009   2008 2009   2008 Net Income Net income $ 56.7 $ 16.5 $ 116.0 $ 53.9 Unrealized loss on interest rate swap agreement 2.4 - 9.8 - Income excluding loss on interest rate swap $ 59.1 $ 16.5 $ 125.8 $ 53.9   Diluted Earnings Per Share: Net income $ 3.72 $ 1.07 $ 7.61 $ 3.48 Unrealized loss on interest rate swap agreement 0.16 - 0.64 - Income excluding loss on interest rate swap $ 3.88 $ 1.07 $ 8.25 $ 3.48

The company has also disclosed its net debt position at September 30, 2009, as the company believes it is a meaningful disclosure of its outstanding debt obligations relative to its cash and cash equivalents on hand. The company defines net debt as total and current long-term debt less cash and cash equivalents. The GAAP financial measure most directly comparable to net debt is total debt as reported in the Notes to the Consolidated Financial Statements included in our Third Quarter Form 10-Q.

  (In millions) Total Current Debt $ 86.0 Total Noncurrent Debt   150.4 Total Debt 236.4 Less Cash and Cash Equivalents   133.8 Net Debt $ 102.6

As a reminder, a conference call and Internet webcast is scheduled for 10 a.m. EDT on Friday, October 23, 2009, to review third quarter 2009 financial results. You can access the conference call live by dialing 1-877-407-0782 (domestic) or 1-201-689-8567 (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 October 30, 2009 at 11:59 p.m. EDT by dialing 1-877-660-6853 (domestic) and 1-201-612-7415 (international). The account number is 286. The conference ID number is 334249. 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: changes in the demand for our products; increases in product cost and our ability to increase prices; timing of sales orders; gain or loss of significant customers; competition from other manufacturers and resellers; resolution of environmental liabilities; significant changes in new product introduction; 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; our ability to complete construction of the office building for MeadWestvaco within budget and in a timely manner and to obtain replacement financing for the construction loan; changes in credit market conditions; and other factors detailed from time to time in the reports that NewMarket files with the Securities and Exchange Commission, including the risk factors in Item 1A, “Risk Factors” of our 2008 Annual Report on Form 10-K, which is available to shareholders upon request.

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.

  NEWMARKET CORPORATION AND SUBSIDIARIES SEGMENT RESULTS AND OTHER FINANCIAL INFORMATION (In millions except per share amounts, unaudited)                 Three Months Ended Nine Months Ended September 30 September 30 2009 2008 2009 2008   Net sales: Petroleum additives $ 413.7 $ 437.2 $ 1,116.7 $ 1,238.8 All other (a)   4.1     3.4     9.2     10.0   Total $ 417.8   $ 440.6   $ 1,125.9   $ 1,248.8     Segment operating profit: Petroleum additives (b) $ 96.3 $ 28.1 $ 214.0 $ 97.5 All other (a)   1.0     0.5     (1.3 )   1.0     Segment operating profit 97.3 28.6 212.7 98.5   Corporate unallocated expense (3.3 ) (3.3 ) (12.1 ) (10.9 ) Interest and financing expenses (2.9 ) (3.0 ) (8.7 ) (8.9 )

Unrealized loss on an interest rate swap agreement (c)

(3.8 ) - (15.7 ) - Other (expense) income, net  

(0.3

)

  0.6     0.2     1.4     Income before income tax expense $

87.0

  $ 22.9   $ 176.4   $ 80.1     Net income $ 56.7   $ 16.5   $ 116.0   $ 53.9     Basic earnings per share $ 3.73   $ 1.08   $ 7.63   $ 3.49     Diluted earnings per share $ 3.72   $ 1.07   $ 7.61   $ 3.48     Notes to Segment Results and Other Financial Information   (a) "All other" includes the continuing results of our TEL business, certain contract manufacturing of Ethyl Corporation, and the real estate development activities.     (b) Petroleum additives segment operating profit for nine months 2008 includes a gain of $3.2 million from a class action lawsuit related to raw materials.     (c) The unrealized loss on the interest rate swap agreement represents the change, since the beginning of the reporting period, in the fair value of an interest rate swap which we entered into on June 25, 2009. We are not using hedge accounting to record the interest rate swap and, accordingly, any change in the fair value is immediately recognized in earnings.     NEWMARKET CORPORATION AND SUBSIDIARIES CONSOLIDATED STATEMENTS OF INCOME (In thousands except per share amounts, unaudited)               Three Months Ended Nine Months Ended September 30 September 30 2009 2008 2009 2008   Net sales $ 417,832 $ 440,604 $ 1,125,881 $ 1,248,836 Cost of goods sold (a)   274,865     367,026   780,427     1,011,462   Gross profit 142,967 73,578 345,454 237,374   Selling, general, and administrative expenses 27,618 28,476 83,141 87,748 Research, development, and testing expenses   21,602     19,471   61,448     61,579   Operating profit 93,747 25,631 200,865 88,047   Interest and financing expenses 2,909 2,966 8,704 8,854 Other (expense) income, net (b)   (3,804 )   222   (15,734 )   901   Income before income tax expense 87,034 22,887 176,427 80,094   Income tax expense   30,347     6,415   60,394     26,226   Net income $ 56,687   $ 16,472 $ 116,033   $ 53,868     Basic earnings per share $ 3.73   $ 1.08 $ 7.63   $ 3.49   Diluted earnings per share $ 3.72   $ 1.07 $ 7.61   $ 3.48   Shares used to compute basic earnings per share   15,208     15,306   15,205     15,418   Shares used to compute diluted earnings per share   15,245     15,365   15,243     15,493   Cash dividends declared per share $ 0.25   $ 0.20 $ 0.70   $ 0.60     Notes to Consolidated Statements of Income   (a) Cost of goods sold for nine months 2008 includes a gain of $3.2 million from a class action lawsuit related to raw materials.     (b) On June 25, 2009 we entered into an interest rate swap. The unrealized loss on the interest rate swap was $15.7 million for the nine months ended September 30, 2009, representing its fair value at September 30, 2009, and $3.8 million for the three months ended September 30, 2009. We are not using hedge accounting to record the interest rate swap, and accordingly, any change in the fair value is immediately recognized in earnings.       NEWMARKET CORPORATION AND SUBSIDIARIES CONSOLIDATED BALANCE SHEETS (In thousands, unaudited)         September 30 December 31 2009 2008 ASSETS   Current assets: Cash and cash equivalents $ 133,770 $ 21,761 Short-term investments 300 -

Trade and other accounts receivable, less allowance for doubtful accounts ($1,141 - 2009; $1,141 - 2008)

229,603 203,551 Inventories 182,457 201,072 Deferred income taxes 27,677 14,090 Prepaid expenses and other current assets   9,141     5,704   Total current assets   582,948     446,178     Property, plant and equipment, at cost 922,941 848,011 Less accumulated depreciation and amortization   629,492     606,275   Net property, plant and equipment   293,449     241,736     Prepaid pension cost 36 159 Deferred income taxes 40,154 37,744 Other assets and deferred charges 41,283 31,566 Intangibles, net of amortization and goodwill   47,271     54,069   Total assets $ 1,005,141   $ 811,452     LIABILITIES AND SHAREHOLDERS' EQUITY   Current liabilities: Accounts payable $ 100,447 $ 60,505 Accrued expenses 66,992 63,715 Dividends payable 3,319 2,646 Book overdraft 2,896 999 Long-term debt, current portion 86,055 784 Income taxes payable   22,341     7,264   Total current liabilities   282,050     135,913     Long-term debt 150,358 236,378 Other noncurrent liabilities 160,283 148,038   Shareholders' equity

Common stock and paid in capital (without par value) Issued and Outstanding - 15,207,989 in 2009 and 15,199,207 in 2008

266 115 Accumulated other comprehensive loss (79,963 ) (95,750 ) Retained earnings   492,147     386,758     412,450     291,123   Total liabilities and shareholders' equity $ 1,005,141   $ 811,452