- Petroleum Additives Third Quarter Shipments Strong, Up
11.9%
- Rising Costs Continue to Pressure Margins
- 10.5% Increase in Dividend Declared During the Third
Quarter
- 292,392 Shares Repurchased in the Third Quarter
NewMarket Corporation (NYSE:NEU) Chairman and Chief Executive
Officer, Thomas E. Gottwald, released the following earnings report
of the Company’s operations for the third quarter and first nine
months of 2021.
Net income for the third quarter of 2021 was $52.0 million, or
$4.80 per share, compared to net income of $95.8 million, or $8.77
per share, for the third quarter of 2020. For the first nine months
of 2021, net income was $173.7 million, or $15.94 per share,
compared to $203.7 million or $18.52 per share, for the first nine
months of last year. Both prior year periods include a gain of
$16.5 million related to the sale of a non-operating parcel of real
estate.
Sales for the petroleum additives segment for the third quarter
of 2021 were $619.1 million, up from $510.3 million in the third
quarter of 2020. Shipments increased 11.9% between periods, with
increases in both lubricant additives and fuel additives shipments
across all regions except Europe, which reported a decrease in fuel
additives shipments. Petroleum additives operating profit for the
third quarter of 2021 was $72.1 million, compared to $102.2 million
for the same period last year. The decrease was mainly due to
higher raw material and conversion costs, partially offset by
increased selling prices and higher shipments.
Petroleum additives sales for the first nine months of the year
were $1.8 billion compared to sales in the first nine months of
last year of $1.5 billion. Shipments increased 16.6% 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 third quarter mentioned above.
Petroleum additives operating profit for the first nine months of
the year was $240.4 million compared to $248.9 million for the
first nine months of 2020. The decrease was due mainly to higher
raw material costs, partially offset by increased selling prices
and higher shipments. Petroleum additives operating margin for the
first nine months of 2021 was 13.6% compared to 16.9% in the prior
year nine month period.
We have continued to see downward pressure on our operating
margins due to rising raw material costs, energy costs,
transportation network issues, and other costs associated with the
continuing global supply chain disruptions affecting supply and
distribution. While we have made some progress in adjusting our
selling prices, our costs have continued to rise. Margin
improvement will continue to be a priority until we see margins
consistently within our historical ranges.
During the third quarter of 2021, we increased our quarterly
dividend by 10.5% to $2.10 per share, and we repurchased 292,392
shares of our common stock for a total of $99.5 million. Through
the first nine months of 2021, we funded capital expenditures of
$64.0 million and paid dividends of $64.1 million.
We will remain focused on our long-term objectives. We believe
the fundamentals of how we run our business – a long-term view,
safety and people first culture, customer-focused solutions,
technology-driven product offerings, and a world-class supply chain
capability – will continue to be beneficial for all our
stakeholders.
Sincerely,
Thomas E. Gottwald
The petroleum additives segment consists of the North America
(the United States and Canada), Latin America (Mexico, Central
America, and South America), Asia Pacific, and Europe/Middle
East/Africa/India (Europe or EMEAI) regions.
The Company has disclosed the non-GAAP financial measure EBITDA
and the related calculation in the schedules included with this
earnings release. EBITDA is defined as income from continuing
operations before the deduction of interest and financing expenses,
income taxes, depreciation (on property, plant and equipment) and
amortization (on intangibles and lease right-of-use assets). 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 Tuesday, October 26, 2021 to review
third quarter results. You can access the conference call live by
dialing 1-888-506-0062 (domestic) or 1-973-528-0011 (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 November 2, 2021 at 3:00 p.m.
EDT by dialing 1-877-481-4010 (domestic) or 1-919-882-2331
(international). The replay passcode number is 43080. The call will
also be broadcast via the Internet and can be accessed through the
Company’s website at www.NewMarket.com or
www.webcaster4.com/Webcast/Page/2001/43080. 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
production facilities, including single-sourced facilities; hazards
common to chemical businesses; the ability to respond effectively
to technological changes in our industry; failure to protect our
intellectual property rights; sudden or sharp raw material price
increases; competition from other manufacturers; current and future
governmental regulations; the gain or loss of significant
customers; failure to attract and retain a highly-qualified
workforce; an information technology system failure or security
breach; the occurrence or threat of extraordinary events, including
natural disasters; terrorist attacks and health-related epidemics
such as the COVID-19 pandemic; risks related to operating outside
of the United States; political, economic, and regulatory factors
concerning our products; the impact of substantial indebtedness on
our operational and financial flexibility; the impact of
fluctuations in foreign exchange rates; resolution of environmental
liabilities or legal proceedings; limitation of our insurance
coverage; 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; the underperformance of our
pension assets resulting in additional cash contributions to our
pension plans; 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 2020 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)
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Revenue:
Petroleum additives
$
619,070
$
510,280
$
1,770,555
$
1,476,355
All other
3,137
2,589
8,988
6,795
Total
$
622,207
$
512,869
$
1,779,543
$
1,483,150
Segment operating profit:
Petroleum additives
$
72,128
$
102,186
$
240,399
$
248,918
All other
(151
)
2,015
(798
)
1,951
Segment operating profit
71,977
104,201
239,601
250,869
Corporate unallocated expense
(8,731
)
(5,565
)
(16,591
)
(15,263
)
Interest and financing expenses
(9,345
)
(6,466
)
(24,557
)
(20,575
)
Other income (expense), net
7,252
25,448
19,128
39,933
Income before income tax
expense
$
61,153
$
117,618
$
217,581
$
254,964
Net income
$
52,038
$
95,794
$
173,702
$
203,684
Earnings per share - basic and
diluted
$
4.80
$
8.77
$
15.94
$
18.52
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED STATEMENTS OF
INCOME
(In thousands, except per-share amounts,
unaudited)
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Net sales
$
622,207
$
512,869
$
1,779,543
$
1,483,150
Cost of goods sold
483,986
346,262
1,338,570
1,038,898
Gross profit
138,221
166,607
440,973
444,252
Selling, general, and administrative
expenses
39,729
34,690
111,379
105,837
Research, development, and testing
expenses
35,387
33,113
107,241
102,168
Operating profit
63,105
98,804
222,353
236,247
Interest and financing expenses, net
9,345
6,466
24,557
20,575
Other income (expense), net
7,393
25,280
19,785
39,292
Income before income tax
expense
61,153
117,618
217,581
254,964
Income tax expense
9,115
21,824
43,879
51,280
Net income
$
52,038
$
95,794
$
173,702
$
203,684
Earnings per share - basic and
diluted
$
4.80
$
8.77
$
15.94
$
18.52
Cash dividends declared per
share
$
2.10
$
1.90
$
5.90
$
5.70
NEWMARKET CORPORATION AND
SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(In thousands except share amounts,
unaudited)
September 30,
2021
December 31,
2020
ASSETS
Current assets:
Cash and cash equivalents
$
59,613
$
125,172
Marketable securities
378,902
0
Trade and other accounts receivable, less
allowance for credit losses
414,847
336,395
Inventories
479,039
401,031
Prepaid expenses and other current
assets
34,459
35,480
Total current assets
1,366,860
898,078
Property, plant, and equipment, net
677,481
665,147
Intangibles (net of amortization) and
goodwill
128,125
129,944
Prepaid pension cost
139,760
137,069
Operating lease right-of-use assets
67,586
61,329
Deferred charges and other assets
57,404
42,308
Total assets
$
2,437,216
$
1,933,875
LIABILITIES AND SHAREHOLDERS'
EQUITY
Current liabilities:
Accounts payable
$
250,658
$
189,937
Accrued expenses
86,677
78,422
Dividends payable
20,600
15,184
Income taxes payable
5,202
3,760
Operating lease liabilities
15,231
13,410
Other current liabilities
13,029
11,742
Total current liabilities
391,397
312,455
Long-term debt
991,919
598,848
Operating lease liabilities -
noncurrent
52,319
48,324
Other noncurrent liabilities
228,808
214,424
Total liabilities
1,664,443
1,174,051
Shareholders' equity:
Common stock and paid-in capital (with no
par value; issued and outstanding shares - 10,637,047 at September
30, 2021 and 10,921,377 at December 31, 2020)
0
717
Accumulated other comprehensive loss
(172,374
)
(173,164
)
Retained earnings
945,147
932,271
Total shareholders' equity
772,773
759,824
Total liabilities and shareholders'
equity
$
2,437,216
$
1,933,875
NEWMARKET CORPORATION AND
SUBSIDIARIES
SELECTED CONSOLIDATED CASH FLOW
DATA
(In thousands, unaudited)
Nine Months Ended
September 30,
2021
2020
Net income
$
173,702
$
203,684
Depreciation and amortization
63,075
63,045
Unrealized (gain) loss on marketable
securities
3,414
0
Cash pension and postretirement
contributions
(7,820
)
(7,717
)
Working capital changes
(98,426
)
(33,493
)
Deferred income tax expense
6,205
5,405
Purchases of marketable securities
(391,429
)
0
Proceeds from sales and maturities of
marketable securities
9,894
0
Capital expenditures
(64,025
)
(60,133
)
Issuance of 2.70% senior notes
395,052
0
Debt issuance costs
(3,897
)
(1,349
)
Net borrowings (repayments) under
revolving credit facility
1,000
(34,678
)
Repurchases of common stock
(91,711
)
(101,434
)
Dividends paid
(64,116
)
(62,667
)
Proceeds from sale of land
0
20,000
Gain on sale of land
0
(16,483
)
All other
3,523
(876
)
Decrease in cash and cash equivalents
$
(65,559
)
$
(26,696
)
NEWMARKET CORPORATION AND
SUBSIDIARIES
NON-GAAP FINANCIAL INFORMATION
(In thousands, unaudited)
Third Quarter Ended
September 30,
Nine Months Ended
September 30,
2021
2020
2021
2020
Net Income
$
52,038
$
95,794
$
173,702
$
203,684
Add:
Interest and financing expenses, net
9,345
6,466
24,557
20,575
Income tax expense
9,115
21,824
43,879
51,280
Depreciation and amortization
20,862
20,414
61,780
61,982
EBITDA
$
91,360
$
144,498
$
303,918
$
337,521
View source
version on businesswire.com: https://www.businesswire.com/news/home/20211025005716/en/
FOR INVESTOR INFORMATION: Brian D. Paliotti
Investor Relations Phone: 804.788.5555 Fax:
804.788.5688 Email: investorrelations@newmarket.com
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