NewMarket Corporation (NYSE: NEU) President and Chief Executive
Officer, Thomas E. Gottwald, released the following earnings report
of the Company’s operations for the first quarter 2010.
Net income for the first quarter 2010 increased to $42.1
million, or $2.78 per share, an improvement of 47 percent over net
income for the first quarter of 2009 of $28.7 million, or $1.88 per
share.
First quarter 2010 results reflect another strong performance in
petroleum additives with operating profit improving to $70.4
million. This represents an improvement of 41 percent over
operating profit for the first quarter of last year of $50.1
million. The increase reflects the benefit of higher lubricant
additives operating profits. Sales of petroleum additives in the
first quarter of this year increased to $389.3 million, an increase
of 16 percent from sales for the first quarter of last year of
$334.8 million. Shipments increased 21 percent for the first
quarter over the same period last year predominately in the
lubricant additives product lines. Shipments were especially weak
in the first two months of last year and are now at a level we
believe is near normal. Our petroleum additives group continues to
focus on providing our customers with the innovative products they
need to serve this market as evidenced by the increased investment
we have made in research and development.
This continued strong operating performance strengthens our
financial position by providing excellent cash flow. During the
first quarter of this year, we utilized cash on hand to acquire
Polartech, a leading metalworking additive company, and to purchase
168,549 shares of our common stock at an average price of $84.70
per share. We also reduced debt on Foundry Park I by over $30
million and obtained five year financing to repay the construction
loan that was due later this year. Our cash position remains strong
with a balance of $88 million at the end of the quarter, compared
to a cash balance of $151.8 million at year end 2009.
We are pleased with our performance in the first quarter of this
year. Our investments in geographic expansion have led to
improvements in all regions. During the quarter, we welcomed over
100 employees of Polartech into our corporate family and are
excited about integrating this business and expanding our global
footprint with the production facilities in India and China. Our
investments in research and development have positioned us well to
meet new industry specifications and increased customer
requirements, and we continue to make the investments in people,
technology and facilities in order to help our customers meet their
needs and to continue to succeed in this marketplace.
Sincerely,
Thomas E. Gottwald
As a reminder, a conference call and Internet webcast is
scheduled for 3:00 p.m. EDT on Thursday, April 22, 2010, to review
first quarter financial results. You can access the conference call
live by dialing 1-877-407-9210 (domestic) or 1-201-689-8049
(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 April 29, 2010 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 349178. 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: availability of
raw materials and transportation systems; ability to respond
effectively to technological changes in our industry; supply
disruptions at single sourced facilities; failure to protect our
intellectual property rights; political, economic, and regulatory
factors concerning our products; hazards common to chemical
businesses; occurrence or threat of extraordinary events, including
natural disasters and terrorist attacks; competition from other
manufacturers; sudden or sharp raw materials price increases; gain
or loss of significant customers; risks related to operating
outside of the United States; the impact of fluctuations in foreign
exchange rates; future governmental regulation; resolution of
environmental liabilities or legal proceedings; inability to
complete future acquisitions or successfully integrate future
acquisitions into our business 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 2009 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 March 31 2010
2009 Revenue: Petroleum
additives $ 389.3 $ 334.8 Real estate development 2.9 - All other
(a) 2.9 2.3
Total $
395.1 $ 337.1 Segment
operating profit: Petroleum additives $ 70.4 $ 50.1 Real estate
development 1.8 (0.2 ) All other (a) 0.9 (0.5
)
Segment operating profit 73.1 49.4
Corporate unallocated expense (4.2 ) (3.5 ) Interest and
financing expenses (3.9 ) (2.9 ) Loss on an interest rate swap
agreement (b) (2.4 ) - Other (expense), net (0.1 ) -
Income before income tax expense $
62.5 $ 43.0 Net
income $ 42.1 $ 28.7
Basic earnings per share $ 2.79
$ 1.89 Diluted earnings per
share $ 2.78 $ 1.88
Notes to Segment Results and Other Financial Information
(a) "All other" includes the results of our TEL business, as
well as certain contract manufacturing of Ethyl Corporation.
(b) The loss on an 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 March 31 2010
2009 Revenue: Net sales - product $ 392,265 $ 337,128
Rental revenue 2,861 - 395,126
337,128
Costs: Cost of goods
sold - product 273,628 246,054 Cost of rental 1,090
- 274,718 246,054
Gross profit 120,408 91,074 Selling,
general, and administrative expenses 30,574 26,267 Research,
development, and testing expenses 21,083
18,754
Operating profit 68,751
46,053 Interest and financing expenses 3,949 2,936
Other expense, net (a)
2,311
80
Income before income tax expense 62,491 43,037
Income tax expense 20,353 14,349
Net income $ 42,138 $
28,688 Basic earnings per share
$ 2.79 $ 1.89
Diluted earnings per share $ 2.78
$ 1.88 Shares used to compute basic
earnings per share 15,118
15,203 Shares used to compute diluted
earnings per share 15,154
15,241 Cash dividends declared per
share $ 0.375 $ 0.20
Notes to Consolidated Statements of Income (a)
On June 25, 2009 we entered into
an interest rate swap. The loss on the interest rate swap was $2.4
million for the three months ended March 31, 2010. 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)
March 31 December 31 2010
2009 ASSETS Current
assets: Cash and cash equivalents $ 87,971 $ 151,831 Short-term
investments 300 300 Trade and other accounts receivable, less
allowance for doubtful accounts
($1,156 - 2010;$1,195 - 2009)
214,026 214,887 Inventories 202,787 192,903 Deferred income taxes
4,064 4,118 Prepaid expenses and other current assets 35,660
39,100
Total current assets
544,808 603,139 Property,
plant and equipment, at cost 932,595 934,382 Less accumulated
depreciation and amortization 633,537 631,967
Net property, plant and equipment
299,058 302,415 Prepaid
pension cost 3,228 2,430 Deferred income taxes 36,756 34,670 Other
assets and deferred charges 88,096 37,475 Intangibles, net of
amortization and goodwill 42,885 45,063
Total assets $ 1,014,831 $
1,025,192 LIABILITIES AND SHAREHOLDERS'
EQUITY Current liabilities: Accounts payable $ 87,025 $
88,186 Accrued expenses 56,571 63,775 Dividends payable 4,936 4,992
Book overdraft 2,994 2,230 Long-term debt, current portion 3,357
33,881 Income taxes payable 16,163 4,988
Total current liabilities 171,046
198,052 Long-term debt 215,611
216,200 Other noncurrent liabilities 154,457 152,755
Shareholders' equity Common stock and paid in capital (without par
value) Issued and Outstanding - 15,042,440 in 2010 and 15,209,989
in 2009 - 275 Accumulated other comprehensive loss (81,477 )
(74,784 ) Retained earnings 555,194 532,694
473,717 458,185
Total liabilities and shareholders' equity $
1,014,831 $ 1,025,192
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