- Second Quarter Net Income of $62.7
Million versus $64.4 Million in 2016
- First Half Earnings Per Share of
$10.69 versus $10.65 in 2016
- Petroleum Additives First Half
Shipments Up 10.1%
- Completed Acquisition of Petroleum
Additives Company in Mexico
NewMarket Corporation (NYSE:NEU) Chairman and Chief Executive
Officer, Thomas E. Gottwald, released the following earnings report
of the Company’s operations for the second quarter and first half
of 2017.
Net income for the second quarter of 2017 was $62.7 million, or
$5.29 per share, compared to net income of $64.4 million, or $5.43
per share, for the second quarter of 2016. For the first half of
2017, net income was $126.7 million, or $10.69 per share, compared
to net income of $126.3 million, or $10.65 per share, for the first
half of last year.
Sales for the petroleum additives segment for the second quarter
of 2017 were $544.2 million, up 5.4% versus the same period last
year, mainly due to higher shipments, partially offset by changes
in selling prices. Petroleum additives operating profit for the
second quarter of 2017 was $94.9 million, lower than second quarter
operating profit last year of $102.5 million. The decrease was due
to lower selling prices and increasing raw material costs,
partially offset by increased shipments. Shipments between
quarterly periods were up 6.4% from the same period last year with
increases in both lubricant additives and fuel additives shipments.
Asia Pacific and Europe were the main regions contributing to the
increase in lubricant additives shipments, and Europe was the
primary driver of the increase in fuel additives shipments.
Petroleum additives sales for the first half of the year were
$1.1 billion compared to sales in the first half of last year of
$1.0 billion, or an increase of 6.1%. This increase was due mainly
to higher shipments partially offset by changes in selling prices.
Petroleum additives operating profit for the first half of the year
was $194.0 million compared to $202.9 million for the first half of
2016, or a decrease of 4.4%. The decrease was due to lower selling
prices and increasing raw material costs, partially offset by
increased shipments. Shipments increased 10.1% between periods with
increases in both lubricant additives and fuel additives shipments.
The regional drivers for those increases were consistent with the
drivers in the second quarter discussed above.
The effective income tax rate for the second quarter of 2017 was
26.5%, down from the rate of 30.1% in the same period last year.
The effective rate for the first half of 2017 was 27.0%, down from
the rate in 2016 of 30.2%. The rates in both periods were lower
primarily due to increased earnings in foreign jurisdictions with
lower tax rates.
We continued to generate solid operating cash flows in the first
half of 2017. During the period we paid dividends of $41.5 million
and funded capital expenditures of $85.2 million. We also issued
$250 million of fixed rate long-term debt in a private placement
transaction, and repaid $129.6 million under our revolving credit
facility. We are continuing to use our capital to achieve our
long-term growth plans. In early July, we completed our previously
announced acquisition of Aditivos Mexicanos, S.A. de C.V., a
petroleum additives manufacturing, sales and distribution company
based in Mexico City, Mexico. In addition, construction continues
on phase two of our manufacturing facility in Singapore which is
expected to be completed in the second half of 2017, and we are
continuing to invest in research and development in order to meet
our customers’ ever-changing business needs.
Our petroleum additives business is performing consistent with
our expectations. We continue to make decisions to promote
long-term value for our shareholders and customers, and we remain
focused on our long-term objectives. We believe the fundamentals of
the industry as a whole remain unchanged, with the petroleum
additives market growing at 1% to 2% annually for the foreseeable
future. We continue to believe that we will exceed that growth rate
over the long term.
Sincerely,
Thomas E. Gottwald
The Company has included the non-GAAP financial measure EBITDA
in the schedules to this earnings release. A schedule following the
financial statements provides the calculation of EBITDA, defined as
income from continuing operations before the deduction of interest
and financing expenses, income taxes, depreciation and
amortization. The Company believes that even though this item is
not required by or presented in accordance with United States
generally accepted accounting principles (GAAP), this additional
measure enhances understanding of the Company’s performance and
period to period comparability. The Company believes that this item
should not be considered an alternative to net income determined
under GAAP.
As a reminder, a conference call and Internet webcast is
scheduled for 3:00 p.m. EDT on Thursday, August 3, 2017 to review
second quarter 2017 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. A teleconference replay of the call will be
available until August 10, 2017 at 11:59 p.m. EDT by dialing
1-877-481-4010 (domestic) or 1-919-882-2331 (international). The
replay ID number is 15996. 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 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 additive packages to
market-general additives, the NewMarket family of companies
provides the world with the technology to make engines run
smoother, machines last longer, and fuels burn cleaner.
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, the availability
of raw materials and distribution systems; disruptions at
manufacturing facilities, including single-sourced facilities; the
ability to respond effectively to technological changes in our
industry; failure to protect our intellectual property rights;
failure to attract and retain a highly-qualified workforce; hazards
common to chemical businesses; competition from other
manufacturers; sudden or sharp raw material price increases; the
gain or loss of significant customers; the occurrence or threat of
extraordinary events, including natural disasters and terrorist
attacks; risks related to operating outside of the United States;
the impact of fluctuations in foreign exchange rates; an
information technology system failure or security breach;
political, economic, and regulatory factors concerning our
products; future governmental regulation; resolution of
environmental liabilities or legal proceedings; our inability to
realize expected benefits from investment in our infrastructure or
from recent or future acquisitions or our inability to 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 2016
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 arise 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 thousands, except per-share amounts,
unaudited)
Second Quarter EndedJune
30, Six Months EndedJune 30,
2017 2016 2017
2016 Revenue: Petroleum additives $ 544,153 $ 516,112
$ 1,084,186 $ 1,022,255 All other (a) 3,035
5,695 5,820 9,479
Total
$ 547,188 $ 521,807
$ 1,090,006 $ 1,031,734
Segment operating profit: Petroleum additives $ 94,932 $
102,531 $ 194,002 $ 202,920 All other (a) 860
1,355 1,940 1,591
Segment
operating profit 95,792 103,886 195,942
204,511 Corporate unallocated expense (5,003 ) (6,136 )
(11,672 ) (11,406 ) Interest and financing expenses (5,360 ) (3,954
) (10,932 ) (8,142 ) Other income (expense), net (139 )
(1,724 ) 185 (3,945 )
Income before
income tax expense $ 85,290 $
92,072 $ 173,523 $
181,018 Net income $ 62,728
$ 64,389 $ 126,665
$ 126,320 Earnings per share - basic and
diluted $ 5.29 $ 5.43
$ 10.69 $ 10.65
Notes to Segment Results and Other
Financial Information
(a) "All other" includes the results of our tetraethyl lead
(TEL) business, as well as certain contracted manufacturing and
services associated with Ethyl Corporation.
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per-share amounts,
unaudited)
Second Quarter EndedJune 30, Six
Months EndedJune 30, 2017 2016 2017
2016 Net sales $ 547,188 $ 521,807 $ 1,090,006 $ 1,031,734
Cost of goods sold 382,312 343,407
754,885 677,784 Gross profit 164,876 178,400 335,121
353,950 Selling, general, and administrative expenses 38,816 40,388
78,745 81,328 Research, development, and testing expenses
35,581 40,720 72,286 79,936
Operating profit 90,479 97,292 184,090 192,686 Interest and
financing expenses, net 5,360 3,954 10,932 8,142 Other income
(expense), net 171 (1,266 ) 365 (3,526
)
Income before income tax expense 85,290
92,072 173,523 181,018 Income tax expense
22,562 27,683 46,858 54,698
Net income $ 62,728 $
64,389 $ 126,665 $
126,320 Earnings per share - basic and diluted
$ 5.29 $ 5.43 $
10.69 $ 10.65 Cash dividends
declared per share $ 1.75 $ 1.60
$ 3.50 $ 3.20
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts,
unaudited)
June 30, 2017
December 31, 2016 ASSETS Current
assets: Cash and cash equivalents $ 278,035 $ 192,154 Trade and
other accounts receivable, less allowance for doubtful accounts
($598 - 2017; $710 - 2016) 332,372 306,916 Inventories 356,152
311,512 Prepaid expenses and other current assets 28,756
26,301
Total current assets
995,315 836,883 Property, plant,
and equipment, at cost 1,352,487 1,264,957 Less accumulated
depreciation and amortization 791,348 761,212
Net property, plant, and equipment
561,139 503,745 Prepaid pension
cost 36,994 25,800 Deferred income taxes 23,284 29,063 Intangibles
(net of amortization) and goodwill 10,217 10,436 Deferred charges
and other assets 9,834 10,509
Total
assets $ 1,636,783 $
1,416,436 LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities: Accounts payable $ 157,531 $ 141,869 Accrued
expenses 88,719 104,082 Dividends payable 19,125 17,478 Income
taxes payable 12,969 17,573 Other current liabilities 12,138
13,588
Total current liabilities
290,482 294,590 Long-term debt
627,976 507,275 Other noncurrent liabilities 134,620
131,320
Total liabilities
1,053,078 933,185 Shareholders'
equity: Common stock and paid-in capital (without par value; issued
and outstanding shares - 11,852,512 at June 30, 2017 and 11,845,972
at December 31, 2016) 2,961 1,603 Accumulated other comprehensive
loss (168,597 ) (182,510 ) Retained earnings 749,341
664,158
Total shareholders' equity
583,705 483,251 Total
liabilities and shareholders' equity $ 1,636,783
$ 1,416,436
NEWMARKET CORPORATION AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW
DATA
(In thousands, unaudited)
Six Months EndedJune 30, 2017
2016 Net income $ 126,665 $ 126,320 Depreciation and
amortization 24,623 21,082 Cash pension and postretirement
contributions (12,936 ) (13,058 ) Noncash pension and
postretirement expense 4,055 6,111 Working capital changes (51,376
) 29,965 Capital expenditures (85,211 ) (64,289 ) Net (repayments)
borrowings under revolving credit facility (129,574 ) 25,000
Issuance of 3.78% senior notes 250,000 — Repurchases of common
stock — (35,815 ) Dividends paid (41,484 ) (37,917 ) All other
1,119 7,313 Increase in cash and cash
equivalents
$ 85,881 $ 64,712
NEWMARKET CORPORATION AND
SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION
(In thousands, unaudited)
Second Quarter EndedJune
30, Six Months EndedJune 30,
2017 2016 2017
2016 Net Income $ 62,728 $
64,389 $ 126,665 $ 126,320 Add:
Interest and financing expenses, net 5,360 3,954 10,932 8,142
Income tax expense 22,562 27,683 46,858 54,698 Depreciation and
amortization 12,045 10,129 24,079
20,539
EBITDA $ 102,695 $
106,155 $ 208,534 $ 209,699
View source
version on businesswire.com: http://www.businesswire.com/news/home/20170802006170/en/
NewMarket CorporationBrian D. PaliottiInvestor
RelationsPhone: 804.788.5555Fax: 804.788.5688Email:
investorrelations@newmarket.com
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