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 of 2011.
Net income for the first quarter 2011 increased to $49.6
million, or $3.57 per share, an improvement of 18 percent over net
income for the first quarter of 2010 of $42.1 million, or $2.78 per
share. The percentage increase in earnings per share for the first
quarter was 28 percent reflecting the additional benefit of the
Company’s stock repurchasing activities.
The petroleum additives operation had excellent performance in
the first quarter with operating profit improving to $80.6 million.
This represents an improvement of 14 percent over operating profit
for the first quarter of last year of $70.4 million. Sales of
petroleum additives for this year’s first quarter of $502.7 million
reflect an increase of 29 percent over sales for the first quarter
of last year of $389.3 million. The increase in sales includes the
benefit of a 17 percent increase in shipments during this period.
This strong performance is the result of our continued efforts and
commitment to supply our customers with first class solutions to
meet their needs. We do this by providing differentiating top
quality products and innovative technology driven marketing
solutions as evidenced by our continued increasing investment in
research and development. Our business continues to experience the
adverse effects of increasing raw material costs. We continue work
to recover those increases in the marketplace.
During the first quarter of this year, we repurchased 190,573
shares of our common stock at an average cost of $126.40 per share.
We ended this first quarter with $41 million outstanding on our
revolving credit agreement.
We are very pleased with our performance and the earnings
results in the first quarter of this year. We believe the strategy
we are executing to deliver innovative products and services that
bring value to our customers is one that will continue to produce
good results for our business and our shareholders
Sincerely,
Thomas E. Gottwald
Summary of Earnings for the 2011 and
2010 First Quarter
Net income for the first quarter of 2011 included an income
benefit, while the first quarter 2010 included a charge on an
interest rate swap agreement related to financing on Foundry Park.
These amounts result from the Company valuing the swap agreement at
its fair value.
The Company is reporting net income including these amounts, as
well as income excluding them, and related per share amounts in
this Summary of Earnings. The Company believes that even though
income, excluding these amounts, 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
item, should not be considered an alternative to net income
determined under GAAP. The following table is a reconciliation of
net income under GAAP to net income excluding the gains and losses
on the interest rate swap agreement.
Summary of Earnings (In millions, except
per-share amounts) First Quarter Ended March 31
2011 2010
Net Income Net income $ 49.6 $ 42.1
(Gain) loss on interest rate swap agreement (0.5 )
1.4 Income excluding (gain) loss on interest rate swap $ 49.1
$ 43.5
Diluted Earnings Per Share: Net income
$ 3.57 $ 2.78 (Gain) loss on interest rate swap agreement
(0.04 ) 0.09 Income excluding (gain) loss on interest rate
swap $ 3.53 $ 2.87
As a reminder, a conference call and Internet webcast is
scheduled for 3:00 p.m. EDT on Thursday, April 21, 2011, to review
first quarter 2011 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 28, 2011 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 370546. 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; supply disruptions at
single sourced facilities; ability to respond effectively to
technological changes in our industry; failure to protect our
intellectual property rights; 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; political, economic, and regulatory factors
concerning our products; future governmental regulation; resolution
of environmental liabilities or legal proceedings; inability to
complete recent or future acquisitions or successfully integrate
recent or 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 2010 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 2011
2010 Revenue: Petroleum additives $
502.7 $ 389.3 Real estate development 2.9 2.9 All other (a)
2.5 2.9
Total $ 508.1
$ 395.1 Segment operating
profit: Petroleum additives $ 80.6 $ 70.4 Real estate
development 1.8 1.8 All other (a) 0.2 0.9
Segment operating profit 82.6
73.1 Corporate unallocated expense (4.1 ) (4.2 )
Interest and financing expenses (4.6 ) (3.9 ) Gain (loss) on an
interest rate swap agreement (b) 0.9 (2.4 ) Other (expense), net
(1.4 ) (0.1 )
Income before income tax
expense $ 73.4 $ 62.5
Net income $ 49.6 $
42.1 Basic earnings per share $
3.57 $ 2.79 Diluted
earnings per share $ 3.57 $
2.78 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 gain (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 2011
2010 Revenue: Net sales - product $
505,225 $ 392,265 Rental revenue 2,858 2,861
508,083 395,126
Costs: Cost of goods sold -
product 366,051 273,628 Cost of rental 1,068 1,090
367,119 274,718
Gross profit
140,964 120,408 Selling, general, and
administrative expenses 38,424 30,574 Research, development, and
testing expenses 24,461 21,083
Operating
profit 78,079 68,751 Interest and
financing expenses 4,645 3,949 Other expense, net (a) 67
2,311
Income before income tax expense 73,367
62,491 Income tax expense 23,778 20,353
Net income $ 49,589 $ 42,138
Basic earnings per share $ 3.57
$ 2.79 Diluted earnings per share
$ 3.57 $ 2.78 Shares used to
compute basic earnings per share 13,890
15,118 Shares used to compute diluted earnings per
share 13,906 15,154 Cash
dividends declared per share $ 0.440 $
0.375 Notes to Consolidated Statements of
Income (a) On June 25, 2009 we entered into an interest
rate swap. The gain on the interest rate swap was $0.9 million for
the three months ended March 31, 2011, and 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 2011 2010
ASSETS Current assets: Cash and cash equivalents $
49,803 $ 49,192 Short-term investments - 300
Trade and other accounts receivable, less
allowance for doubtful accounts ($956 - 2011; $733 - 2010)
292,513 257,748 Inventories 295,468 273,215 Deferred income taxes
4,625 6,876 Prepaid expenses and other current assets 15,202
15,444
Total current assets
657,611 602,775 Property,
plant and equipment, at cost 1,019,474 988,180 Less accumulated
depreciation and amortization 667,394 654,204
Net property, plant and equipment
352,080 333,976 Prepaid
pension cost 10,734 8,597 Deferred income taxes 19,318 21,974 Other
assets and deferred charges 47,566 48,893 Intangibles (net of
amortization) and goodwill 44,358 46,526
Total assets $ 1,131,667
$ 1,062,741 LIABILITIES AND
SHAREHOLDERS' EQUITY Current liabilities: Accounts
payable $ 116,279 $ 109,250 Accrued expenses 60,045 71,558
Dividends payable 5,189 5,304 Book overdraft 2,912 1,063 Long-term
debt, current portion 4,347 4,369 Income taxes payable
26,500 14,843
Total current liabilities
215,272 206,387
Long-term debt 253,829 217,544 Other noncurrent liabilities 141,764
147,170 Shareholders' equity
Common stock and paid in capital (without
par value) Issued and Outstanding - 13,845,311 in 2011 and
14,034,884 in 2010
4 - Accumulated other comprehensive loss (64,071 ) (73,820 )
Retained earnings 584,869 565,460
520,802 491,640 Total
liabilities and shareholders' equity $ 1,131,667
$ 1,062,741 NEWMARKET
CORPORATION AND SUBSIDIARIES SELECTED CONSOLIDATED CASH FLOW
DATA (In thousands, unaudited)
Three Months Ended March 31 2011 2010
Net income
$ 49,589 $ 42,138
Depreciation and amortization 10,167 8,779 Working capital
changes (45,598 ) (10,903 ) Capital expenditures (24,151 )
(6,677 ) Acquisition of business 0 (43,748 ) Net
borrowings under revolving credit agreement 37,000 0
Repayment of Foundry Park I construction loan 0 (99,102 )
Borrowing under Foundry Park I mortgage loan 0 68,400
Repurchases of common stock (27,427 ) (14,276 ) Dividends
paid (903 ) (5,641 ) All other 1,934
(2,830 )
Increase (decrease) in cash and cash
equivalents
$ 611 $ (63,860 )
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